Tag: tokenization

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stablecoin bill – arrival

It has arrived.  History in the making?

In anticipation of this Wednesday’s hearing in front of the Subcommittee on Digital Assets, Financial Technology, and Inclusion, the House Financial Services (HFS) Committee unveiled a discussion draft on Saturday of the new, 73-page stablecoin bill (PDF) – “To provide requirements for payment stablecoin issuers, research on a digital dollar, and for other purposes.”  This bill has been the pet project of Chair Rep. Patrick McHenry (R, NC) and Ranking Member Maxine Waters (D, CA) since last year.

The hearing will be led by Chair French Hill (R, AR) and Ranking Member Stephen Lynch (D, MA), and appears to offer the argument on why a stablecoin regulatory framework is needed in the first place.

stablecoin bill – memo and agenda

In a memorandum produced by House Financial Services for the hearing,  definitions lead: “Stablecoins are a class of digital assets designed to offer price stability by being pegged to another asset’s value. The most popular stablecoins are currently pegged to the U.S. dollar. Stablecoins, as the name implies, are intended to be less volatile than other digital assets and sufficiently stable to enable them to be used in a similar manner to currency.” See the HFS memo (PDF).

Wednesday’s agenda currently includes a state regulator among industry participants.

• • Adrienne Harris, Superintendent, New York State Department of Financial Services (NYDFS)
  • Dante Disparte, Chief Strategy Officer and Head of Global Policy, Circle
  • Austin Campbell, Adjunct Assistant Professor of Business, Columbia Business School
  • Jake Chervinsky, Chief Policy Officer, The Blockchain Association
  • “Additional Witness”

The “additional witness” would seem to ideally include a representative of U.S. Treasury (FDIC?) which has been identified by Chair McHenry in the past as a key participant in the creation of the bill.

Agenda updates, including the live stream, will be here on the HFS website.

stablecoin bill – reaction

Jeremy Allaire, CEO of USDC stablecoin issuer Circle, commented on Twitter regarding the bill, “While comprehensive, there are clearly open and challenging issues with the bill as proposed, and now is the time for our country and political leaders to really dig in and get this right. The role of the dollar in the world is at stake.”

Continue reading “Potentially Historic U.S. Stablecoin Bill Arrives; T-Shirt Requires SEC Registration”

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hearings – stablecoins

House Financial Services’ (HFS) Digital Assets, Financial Technology and Inclusion Subcommittee will reconvene next Wednesday, April 19 at 10 a.m., with a hearing titled, “Understanding Stablecoins’ Role in Payments and the Need for Legislation.” Led by Chair Rep. French Hill (R, AR) and its Ranking Member Rep. Stephen Lynch (D, MA), no agenda is available on the HFS website, yet.

more tips

Digital Chamber’s Cody Carbone tells blockchain tipsheet there is a Markup scheduled for April 26 (Will it include a stablecoin bill?).

And, House Financial Services’ Digital Asset Subcommittee will hold a hearing titled “Identifying the Regulatory Gaps in the Digital Asset Market Structure” on April 27.

Digital Assets, Financial Technology and Inclusion Subcommittee – clerk.house.gov

hearings – Gensler and HFS

Next Tuesday’s House Financial Services oversight hearing of the Securities Exchange Commission (SEC) will give the committee’s Republican members its first chance to question SEC Chair Gary Gensler in person in the 118th Congress. The 10 a.m. hearing will undoubtedly review Chair Gensler’s Howey-Test-is-enough positioning for a digital assets regulatory framework.

HFS Chair Rep. Patrick McHenry (R, NC) and HFS Subcommittee on Oversight and Investigations Chair Rep. Bill Huizenga (R, MI) sent a February letter to Chair Gensler in regards to the curious timing of the arrest of FTX founder Sam Bankman-Fried (SBF) – just prior to his scheduled appearance in front of House Financial Services late last year.

The Congressmen received no response from Chair Gensler, so they followed with another letter (PDF) yesterday.

Continue reading “House Financial Services Hearings Coming This Month; UK And France See Crypto Interest Uptick”

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amicus future

Increasingly, the future of U.S. digital assets appears to be playing out in the courts rather than through legislative action. Grayscale, Ripple, Wahi… and now in the case of ongoing industry concerns about the sanctioning of crypto mixer Tornado Cash by U.S. Treasury and what it represents, industry orgs DeFi Education Fund and Blockchain Association put their legal team to work on an amicus brief.

In a Twitter thread, DeFi Education Fund explains: “In the brief, we argue that OFAC’s sanctioning of Tornado Cash reflected ‘a basic misunderstanding of what Tornado Cash is and how it works,’ and that the decision ‘is both unprecedented and unlawful’ under the [Administrative Procedure Act].” Read the thread.

more tips:

Amicus Brief in support of Tornado Cash Brief of Blockchain Association and DeFi Education fund as Amici Curiae in Support of Plaintiffs’ Motion for Partial Summary Judgment (PDF) – DeFi Education Fund

What is amicus curiae? – law.cornell.edu

debating CBDCs

Rep. Warren Davidson (R, OH) and Rep. Bill Foster (D, IL), both members of the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, explore different facets of the Central Bank Digital Currency (CBDC) opportunity/threat – depending on your point-of-view – in a 7-minute informational video on A Starting Point.

Addressing the pros and cons of CBDCs, Rep. Davidson was unsurprisingly the stronger skeptic given most Republicans anti-CBDC stance to-date, but Rep. Foster offered his own reservations as well: Continue reading “Future of U.S. Digital Assets May Be In The Courts; Blockchain Use Cases For Digital ID And Settlement”

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investors advise enforcement

A letter dated April 6 from the Securities Exchange Commission’s (SEC) Investor Advisory Committee (IAC) – and now published on the SEC’s website – appears to fully support the position of Chairman Gary Gensler on what should be done about digital assets.

The letter reads, in part: “We believe that virtually all, if not all, crypto tokens are securities and that they, as well as the platforms and custodians dealing with them, are subject to regulation under the federal securities laws to protect investors. (…) The SEC should continue to be aggressive in bringing enforcement actions against companies that are violating the federal securities laws in the crypto space, including, issuers, custodians and those acting as unregistered platforms that offer trading in crypto asset investments.”

Read the letter (PDF) – SEC.gov

Among a wide range – in terms of industry – of the letter’s signers is the IAC’s Chair Christopher Mirabile, a venture investor at Boston-area Launchpad Venture Group. It was only in December that Mirabile discussed his role in the committee and was quoted on the Angel Next Door podcast as saying, “The only way crypto really thrives is if we provide it with a regulatory framework that protects investors.” Read that one. Did he change his mind?

Continue reading “SEC Investor Committee Says Crypto Tokens Are Securities; New State Of Crypto Report”

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mining – under the microscope

In a 5,000 word article, The New York Times takes a critical look at Bitcoin mining and identifies 34 Bitcoin mining operations across the United States which it says is putting “immense pressure on the power grid and most finding novel ways to profit from doing so. Their operations can create costs – including higher electricity bills and enormous carbon pollution – for everyone around them, most of whom have nothing to do with Bitcoin.” Read more.

Ben Hertz-Shargel of energy research firm Wood Mackenzie which helps aggregate data for the NYT’s piece says that bitcoin mining is a “a massive financial burden to Texans.” It was only two years ago, in April 2021, that Wood Mackenzie penned “How bitcoin mining can support the energy transition.”

The article’s critique leans more toward additional cost burdens absorbed by consumers adjacent to crypto mining operations versus criticism of mining’s environmental impact. But, both are featured.

more tips:

It would not be surprising to see Senator Elizabeth Warren (D, MA) use the substance of this article to reignite her criticism of bitcoin mining. See her July 2022 letter to the Environmental Protection Agency (EPA) and the Secretary of Energy which raised concerns about mining operations’ environmental impact. Continue reading “Mining Impacting Energy Prices, Environment Says NY Times; China’s Blockchain Platform”

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FedNow and CBDCs

The U.S. Federal Reserve slid out an “FAQ” on Friday regarding its new FedNow payment system. Among the brief series of questions and answers, the Fed tries to debunk the idea that FedNow is replacing cash or has anything to do with a Central Bank Digital Currency (CBDC). It’s an “instant payment system” launching this July.

In the FAQ, the Fed reiterates previous statements on its CBDC strategy saying, “The Federal Reserve has made no decision on issuing a [CBDC] and would not do so without clear support from Congress and the executive branch, ideally in the form of a specific authorizing law. A CBDC would not replace cash or other payment options.” Read the FAQ.

Circle’s Head of Global Policy Dante Disparte tweeted about the FAQ saying it was “a useful myth busting FAQ from the @federalreserve.” Read more.

Meanwhile, on the Unchained podcast last week, Majority Whip Rep. Tom Emmer (R, MN) remains skeptical about FedNow and CBDCs. On FedNow, Emmer said, “Let the private sector do this stuff. This  is our government once again trying to compete with the private sector. This is our government once again, I believe, controlling all finance. You control the money, you control the water -and you control the people. This is literally what defines our freedom, our financial system in our country – our ability to create an idea and then go out and solicit startup  capital. By the way, I should not need my government’s permission or oversight to go out and seek that. That’s the definition of freedom in this country.” Hear the podcast. Continue reading “FedNow Is Not A Cash Replacement Or CBDC Says The Fed”

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dark DeFi report

A new publication released Friday from the U.S. Treasury takes a dark look at  Decentralized Finance or DeFi. Touting itself as “the first illicit finance risk assessment conducted on decentralized finance (DeFi) in the world,” Treasury’s press release on the report tries to tackle a definition of DeFi saying, “…the term broadly refers to virtual asset protocols and services that purport to allow some form of automated peer-to-peer transactions, often through use of self-executing code known as ‘smart contracts’ based on blockchain technology. This term is frequently used loosely by the private sector, often for services that are not functionally decentralized.” Read the release.

Get the report: Illicit Finance Risk Assessment of Decentralized Finance (PDF) – U.S. Treasury

The 42-page report lists 6 recommendations to address the threat it sees with decentralized finance:

• • Strengthen U.S. AML/CFT (Anti-Money Laundering/Countering the Financing of Terrorism)  Supervision of Virtual Asset Activities
  • Assess Possible Enhancements to the U.S. AML/CFT Regulatory Regime as Applied to DeFi Services
  • Continue Research, Private Sector Engagement to Support Understanding of Developments in DeFi Ecosystem
  • Continue to Engage with Foreign Partners
  • Advocate for Cyber Resilience in Virtual Asset Firms, Testing of Code, and Robust Threat Information Sharing
  • Promote Responsible Innovation of Mitigation Measures

more tips:

“THIS IS WHY Biden Admin’s anti-crypto strategy to push crypto into the shadows makes no sense: They want compliance w/ AML/CFT laws, but crypto is just code–so compliance can only be assured at the very connection points that they’re actively choking.” – Caitlin Long, CEO, Custodia on Twitter

TradFi, CeFi, DeFi: A Balance Sheet Journey Through Financial Alchemy – Gordon Liao, Chief Economist, Circle

Continue reading “New US Treasury Report On DeFi Risk Assessment; India Scaling CBDC”

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states – Maine blockchain voting

A new bill titled “LD 1070: An Act to Increase Ballot Transparency with Blockchain Technology” by Maine State Senator Eric Brakey, a Republican, aims to bring blockchain to the voting process. Brakey explained on Twitter, “This bill would build upon our existing system of paper ballots — requiring the digital images of those ballots be uploaded onto a publicly viewable Blockchain. This would ensure that anyone who would like to count the votes for themselves can do so. Full transparency.” Yesterday, during a hearing of the Maine Veterans and Legal Affairs Committee which included public comment, Senator Brakey presented the legislation.

more tips:

An Act to Increase Ballot Transparency with Blockchain Technology (PDF)- MaineLegislature.org

State of Maine Legislature, Summary of LD 1070 – MaineLegislature.org

states – Maine and Custodia

Another bill pulsing in the Maine Senate and also driven by State Senator Brakey is a digital assets bill “which would authorize certain financial institutions in Maine to accept virtual currency deposits while maintaining 100% in reserves,” according to new testimony submitted by crypto advocate John Deaton.” See his testimony (PDF).

The bill received a hearing from the state’s Committee on Health Coverage, Insurance and Financial Services on Tuesday and appears to echo previous legislation from Wyoming on Special Purpose Depository Institutions (SPDI).

The Federal Reserve’s recent rejections of Custodia Bank’s master account and member bank applications centers on Custodia’s SPDI status received in October 2020.  Read a brief summary from law firm Poyner Spruill. Continue reading “Maine Ramps Up Blockchain Legislation; Senator Hagerty Blames Biden Administration”