Tag: tokenization

new PayPal stablecoin

Payment platform PayPal arguably made the most pro-crypto announcement of the year yesterday when it announced the introduction of its new stablecoin, PayPal USD (PYUSD) which runs on the Ethereum blockchain. Read the release.

Like many stablecoins PYUSD is backed 1:1 with the US Dollar and this one is managed by Paxos Trust. PayPal was issued a BitLicense by New York Department of Financial Services in June 2022.

TechCrunch looks at PayPal’s crypto development history including when the company introduced crypto services back in 2020. Read it.

The significance of PayPal – with a $71 billion market cap – taking its next step in digital assets is, perhaps, the leading edge of traditional finance firms embracing digital assets and stablecoins, in particular. Equally important is the US Dollar finding another on-ramp into the Web3 ecosystem. Squeaky blockchain transactions are getting a bit more of the oil they need.

The press release explains that the rollout, which started yesterday for PayPal customers, will allow them to: Continue reading “PayPal Announces Stablecoin; Chair McHenry Sees ‘Signal’”

Coinbase seeks dismissal

Cryptocurrency exchange Coinbase asked a judge to dismiss the SEC’s lawsuit against the company on Friday. The company’s Chief Legal Officer Paul Grewal said in a Tweet thread, “Our core argument is simple – we do not offer ‘investment contracts’ as that term has been construed by decades of Supreme Court and other binding precedent.” Therefore, the suit is baseless, reasons the Company. See the dismissal request (PDF).

Coinbase seeks dismissal – reaction

Jason Gottlieb, a partner and digital assets chair with law firm Morrison Cohen, complimented the company’s brief on Twitter, and argued that the Securities and Exchange Commission (SEC) has overreached. Gottlieb made note of the use of the “Major Questions Doctrine” (MQD) in Coinbase’s motion to dismiss tweeting the company could have gone even further in its argument.  Later, Gottlieb argues, “As everything is becoming digitized, this fight isn’t just about cryptocurrency. It’s a much larger battle for the right to your digital life — and whether the Securities and Exchange Commission is the proper regulator for the entire digital economy.”

Digital assets are at the forefront of regulating and integrating technology into U.S. government and its policies today. Continue reading “Coinbase Seeks Dismissal Of SEC Lawsuit; Digital Chamber Advocates Against AML Bill”

Prometheum investor gets license

Hashkey Group, announced it is among the first crypto exchanges to receive “Type 1 and Type 7 Licences” under Hong Kong’s new crypto regulatory framework. Read the release.

U.S. crypto regulation aficionados may recall that Hashkey Group is a subsidiary of Wanxiang Blockchain which is an investor in U.S.-based Prometheum. Prometheum was granted “a first-of-its-kind Special Purpose Broker-Dealer (SPBD) for digital asset securities” earlier this year by the Securities and Exchange Commission (SEC).  Then, in mid-June, Prometheum CEO Aaron Kaplan appeared as a witness at a House Financial Services hearing on digital assets, which raised questions about Prometheum’s SPBD.

On July 10, Republicans led by Senator Tommy Tuberville (R, AL) asked U.S. Attorney General Merrick Garland and Securities and Exchange Commission (SEC) Chair Gary Gensler for an investigation into Prometheum and Wanxiang Blockchain’s relationship expressing concerns about Wanxiang Blockchain’s ties to the Chinese Communist Party.

Yesterday, Hashkey Group emphasized in a press release its consumer protections in light of the new Hong Kong license: “User funds are kept under segregated accounts, separated from platform operations, with 98% in cold storage and 2% in hot wallets. In addition, the platform strictly adheres to regulatory requirements and undergoes regular audits and compliance inspections conducted by the Big 4 auditing firms, establishing itself as one of the most secure exchanges globally.”

Bloomberg reports that Hashkey was looking to raise $100-200 million in May in an effort to support growth of the company. The company’s Chairman and CEO, Dr. Xiao Feng, is also Vice Chairman and Executive Director of China Wanxiang Holding, and Chairman and CEO of Wanxiang Blockchain. Continue reading “Prometheum Investor Gets Hong Kong Crypto Exchange License; CFTC Friction Reported”

Do Kwon ruling

Another court ruling, more rough waters for digital assets. The Wall Street Journal reported Monday that algorithmic stablecoin creator Do Kwon of Terraform Labs did not convince Judge Jed Rakoff of dismissing the Securities and Exchange Commission’s (SEC) enforcement action against him using the recent Ripple/XRP outcome penned by Judge Analisa Torres.

Read the ruling (PDF) on CourtListener.

Judge Rakoff said he disagreed with Torres’ decision and wrote that securities laws do not make the distinctions between institutional and retail investors that Torres identified in her decision two weeks ago. Rakoff said that “secondary-market buyers have the same expectations for an investment as initial purchasers,” according to The WSJ. Read more.

Do Kwon ruling – reaction

Brown Rudnick crypto lawyer Stephen Palley commented on Twitter about Rakoff’s decision saying, “A big [difference] between Rakoff & Torres decisions is that the former was on a motion to dismiss & the latter on summary judgment. Motions to dismiss focus on if plaintiff has stated a cognizable claim in the pleadings. Summary judgment looks outside the pleading, at evidence.” Read Palley’s thread. Continue reading “Reaction To Do Kwon Crypto Securities Ruling; Blockchain For Museums”

state of stablecoins

It’s starting to become clear that the front lines of the stablecoin legislation battle in House Financial Services (HFS) is being fought in the state of New York.

That’s no surprise given Ranking Member Maxine Water’s (D, CA) position (and the White House’s position) on the Federal agencies having the last word on stablecoin registrations. The robust state stablecoin regime currently available through the New York Department of Financial Services (NYDFS) and led by Superintendent Adrienne Harris says a state framework can work – potentially without the Federal “last word.”

Remember that awkward moment in April when Superintendent Harris told Ranking Member Waters about New York’s stablecoin framework at an HFS stablecoin hearing to Waters’ surprise?

Rep. Ritchie Torres (D, NY) and Rep. Gregory Meeks (D, NY) votes in support of the stablecoin bill coming out of the HFS Committee markup last week reinforce the bipartisan interest in preserving state’s rights when it comes to stablecoins.

Punchbowl News’ Brendan Pedersen reported yesterday on NYDFS’s involvement in the stablecoin bill and speaks to Rep. Torres, who said, “New York members, such as myself, take our guidance from Adrienne. If she were dissatisfied with the state option in the bill, then I would have trouble supporting it.”

And then there’s the separate intrastate battle which NYDFS and Superintendent Harris are waging with New York State Attorney General Letitia James.  There was a lof of fanfare when James issued her own legislation (CRPTO) to address the crypto industry – seemingly circumventing NYDFS and Harris. But, with expectations of a June ratification of sorts in New York State’s assembly having quietly fallen by the wayside, nothing has come of James’ legislation thus far. Continue reading “New York State Inserts Itself In Stablecoin Bill Debate; IRS Issues Guidance On Staking Rewards”

Senate AML-KYC

Senator Elizabeth Warren (D, MA) announced the re-introduction of the bipartisan “[S.2669] Digital Asset Money Laundering Act” in the Senate late last week and added two, powerful new co-sponsors and a well-known industry trade group for lenders called the Bank Policy Institute. The bill looks to tighten rules around Anti-Money-Laundering (AML) and Know Your Customer (KYC) requirements.

In addition to Senator Roger Marshall (R, KS) who co-sponsored the bill in the last Congress, Senators Joe Manchin (D, WV) and Lindsey Graham (R, SC) have come aboard. Manchin says in the release, “Our bipartisan legislation would curtail these security risks and require cryptocurrency platforms to abide by the same anti-money-laundering rules that banks have to follow.”

The press release also notes that the recent NDAA amendment co-sponsored by Sens. Kirsten Gillibrand (D, NY), Cynthia Lummis (R, WY), Warren and Marshall overlaps with the re-introduced bill. How the two play out in the coming weeks may be driven on the final version of the NDAA as the Senate and House negotiate.

See the press release. And, download the one-pager and the bill.

The bill has been referred to the Senate Banking Committee.

more tips:

Warren and Graham have separately formed a partnership with a bill called, “Digital Consumer Protection Commission Act” targeting “big tech.” Continue reading “Money Laundering Act Adds Senators Graham, Manchin; Apple And The Blockchain”

Markups – today and tomorrow

Between the House Financial Services (HFS) Committee and the House Agriculture Committee, there are now three (3) markups scheduled which include digital assets legislation crafted by the committees – one markup is today, two are tomorrow.

Markup #1 – Today’s HFS markup led by Chair Patrick McHenry (R, NC) entails six (6) bills including the digital asset market structure bill known as “H.R. 4763 – Financial Innovation and Technology for the 21st Century Act.”

• • Today’s HFS landing page with the bills and live stream are here. Starts at 10 a.m. ET.
  • Among the other bills to watch today is a bipartisan effort introduced by Majority Whip Rep. Tom Emmer’s (R, MN) “H.R.1747 – Blockchain Regulatory Certainty Act” co-sponsored by Rep. Darren Soto (D, FL).

Markup #2 – Tomorrow’s  HFS markup entails seven (7) bills including the stablecoin bill known as “H.R. 4766 – Clarity for Payment Stablecoins Act of 2023.”

• • Tomorrow’s HFS landing page with the bills and live stream are here. Starts at 9 a.m. ET.

Markup #3 – Also tomorrow, the House Agriculture Committee led by Chair Glenn “GT” Thompson (R, PA) will convene their own markup of “H.R. 4763 – Financial Innovation and Technology for the 21st Century Act.”

• • Tomorrow’s House Ag landing page with the bill and live stream are here. Starts at 10 a.m. ET.

Continue reading “Historic Digital Assets Markup Hearings Begin Today”

market structure markup

The House Agriculture Committee confirmed late yesterday that this week’s House Ag markup led by Chair Glenn “GT” Thompson (R, PA) for the digital assets market structure bill – a.k.a. H.R. 4763, “The Financial Innovation and Technology for the 21st Century Act” – is scheduled for Thursday at 10 a.m.

See the hearing’s landing page. Live stream will be here, too.

This is the day after Chair Patrick McHenry (R, NC) will lead House Financial Services Committee and its markup hearing on the market structure bill as well as six others.

With Majority leader Rep. Tom Emmer (R, MN) joining the bill, the hope is that a House vote will be possible in the September-October time frame.

AML-KYC clouds

Even with first-ever, digital assets legislation reaching the markup stage in the House Financial Services and Agriculture Committtees, there are plenty of clouds gathering for crypto in Congress observes Politico’s Eleanor Mueller.

She sees the recent Lummis-Gillibrand and Warren-Marshall partnership over a National Defense Authorization Act (NDAA) amendment as a sign of wider misgivings in Congress – the Senate, in particular – that center around enforcement of anti-money laundering (AML) and know-your customer (KYC) requirements for crypto. The new CANSEE legislation supported by a bipartisan group of Senators including its lead sponsor, Sen. Jack Reed (D, RI), strikes similar AML/KYC “notes.” Continue reading “House Agriculture Schedules Thursday Markup; AML, KYC Meet Crypto Concerns In DC”