Tag: tokenization

SEC closes Utah office

With the Securities and Exchange Commission (SEC) sanctioned by U.S. District Court in Utah for its handling of the DEBT Box case, which also resulted in the SEC paying $1.75 million to DEBT Box, appears to have led to the closing of the regulator’s Utah office.

A brief SEC press release yesterday states, “The [Salt Lake Regional Office (SLRO)] has long been the SEC’s smallest regional office and recently has experienced significant attrition.” Read the release.

Three SEC lawyers and/or employees involved in the DEBT Box case resigned in April and May. Read even more in The Wall Street Journal.

what you should know: Ouch. The SEC made the argument yesterday that the agency is just consolidating due to “attrition.” Unfortunately, it was self-imposed.

House Approps + SAB 121

Former SEC Deputy Director Anne-Marie Kelly “digs up” a new SEC budget proposal from House Appropriations which says that if the SEC continues to  move forward with its Staff Accounting Bulletin 121, it will no longer receive funding for that work.

She shared a screenshot of the proposal on X and said, “The work around to a Veto? Appropriation. Prohibiting the use of appropriations for specific actions is a great check on SEC actions like SAB 121. The reduction of $144 million also coincides with the FY22 shortfall to match 31 fees and the FY22 Appropriation. To quote Pres. James Madison, “power over the purse may, in fact, be regarded as the most complete and effectual weapon”.” Read it. Continue reading “SEC Closes Utah Office After DEBT Box Debacle; Today’s Tokenization Hearing”

FIT 21 – Senate Ag

Noting renewed “pressure” on the Hill to get a crypto regulatory framework in place after the House’s passage of the “Financial Innovation and Technology for the 21st Century Act” (FIT 21), Politico reported yesterday on scuttlebutt shared by an anonymous Senate aide: “Senate Majority Leader Chuck Schumer (D, NY) has spoken with Senate Agriculture Chair Debbie Stabenow (D, MI) in recent weeks about her bill to overhaul how the SEC and CFTC share oversight of crypto.” Read more.

Senate Ag Chair Debbie Stabenow sponsored the Digital Commodity Consumer Protection Act (DCCPA) [S.4760] in the last Congress which – at the time – looked like it was on its way to passage. But, then the implosion of FTX and the involvement of FTX CEO Sam Bankman Fried in the legislation stopped DCCPA in its tracks.

what you should know: There appears to be scrambling by Democratic leadership. And Sen. Stabenow has now appeared on both sides of the fence: rumors of her working on new crypto legislation (yesterday and February) while at the same time voting against the CRA resolution rescinding Staff Accounting Bulletin 121. Perhaps the SAB 121 “no” was an attempt to compromise with the White House, which could have looked like this:  “I’ll vote ‘no’ and support your already-expressed veto on SAB 121 and you support me on my new crypto legislation.” Also, Sen. Stabenow’s term ends in January. This could be another race for burnishing her legacy just like House Financial Services Chair Patrick McHenry’s (R, NC) own race against time.

FIT 21 – wedge issue

Other than the extremely compressed schedule to get a new digital assets framework done in the 118th Congress – and more “cooks” in the FIT 21 “kitchen” (Lummis-Gillibrand, for example) -, could Republicans try to scuttle any legislative deal before the election in the interest of maintaining crypto as a wedge issue between the two parties much like the Congressional machinations around the border? Continue reading “Crypto Framework Passage In The 118th Congress Discussed; Rep. Khanna Supports FIT 21”

SAB 121 veto – Friday

Late Friday, President Joe Biden tried to quietly veto the Congressional Review Act resolution rescinding the Securitiess and Exchange Commission’s (SEC) rule barring traditional finance firms from providing crypto custody solutions to its customers – a.k.a. Staff Accounting Bulletin 121 (SAB 121).

The President’s reasoning, according to the short veto memo, was two-fold – undercutting the SEC and consumer protections:

“This reversal of the considered judgment of SEC staff in this way risks undercutting the SEC’s broader authorities regarding accounting practices.  My Administration will not support measures that jeopardize the well-being of consumers and investors.”

Read the memo.

what you should know: Nothing like a Friday release. Surely, no one will notice?

SAB 121 veto – duplicate

Notably, the President’s sentence in the veto offering an olive branch to Congress for creating a digital assets regulatory framework was nearly identical to the one he used when encouraging a vote against the digital asset market structure bill (FIT 21).

On Friday (May 31), the President said:

“My Administration is eager to work with the Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system.”

On May 22, in regards to FIT 21, the President said:

“The Administration is eager to work with Congress to ensure a comprehensive and balanced regulatory framework for digital assets, building on existing authorities, which will promote the responsible development of digital assets and payment innovation and help reinforce United States leadership in the global financial system.”

what you should know: In spite of the sudden burst of “pro-crypto” bipartisan momentum of Congress signified by the passage of FIT 21 in the House and the SAB 121 CRA resolution in the Senate/House, the SAB 121 veto was never going to change. There is a sense of commitment by the President, at this point, to an anti-digital assets stance. Continue reading “Biden Administration’s SAB 121 Veto Gets Swift Rebuke From Republicans; On Stablecoins And NatSec”

letter – no veto, please

WIth the deadline approaching early next week, Senator Cynthia Lummis (R, WY) and a bipartisan group of Congressmen appealed directly to President Joe Biden with a Congressional letter urging him to NOT veto H.J.R.109. The resolution rescinds the SEC’s Staff Accounting Bulletin 121 and was passed by a bipartisan majority in both houses (1, 2) of Congress this month.

Sen. Lummis and the House reps say in a statement, “Given the overwhelming bipartisan votes, we urge you to sign H.J. Res. 109 into law or work with the SEC to rescind the staff guidance…. Rescinding SAB 121 is well within the SEC’s authority and there is ample precedent for revisiting a staff accounting bulletin. In fact, most staff accounting bulletins over the last three decades have been revisions and recessions of prior guidance.” Read the release.

Lummis is joined by House Majority Whip Tom Emmer (R, MN), House Financial Services (HFS) Chair Patrick McHenry (R, NC) and Reps. French Hill (R, AR), Wiley Nickel (D, NC), Ritchie Torres (D, NY), Andy Barr (R, KY), Mike Flood (R, NE) and Dan Meuser (R, PA).

And, read the letter (PDF).

what you should know: If President Biden signs H.J.R.109 into law, would SEC Chair Gary Gensler decide to leave? The President’s signature would be a damning statement on Gensler’s leadership at the agency – even if was just following orders from Dem leaders. It would also follow the ouster of Chair Gensler’s policy director Heather Slavkin Corzo on May 17. The announcement came one day after the SAB 121 resolution vote in the Senate and was one of the first signs that Dem leaders were potentially changing their collective mind on digital assets.

storm for Dem leadership

Ohhhhh, the storm continues to brew for Democratic leadership…

According to Bloomberg yesterday, former President Donald Trump and Elon Musk “are discussing cryptocurrency policy as the former president increasingly highlights Bitcoin and other digital assets on the campaign trail as a way to reach new voters,” says an unnamed source. Read it. Continue reading “Congress Urges President To Support SAB 121 Resolution; Storm Swirls For Dem Leadership”

Whip Emmer on lame duck

House Majority Leader Tom Emmer (R, MN) said that the “lame duck” session after the election and before the 119th Congress starts may be the best opportunity for Congress to advance the big digital asset market structure bill.

Speaking in front of an audience at CoinDesk’s Consensus conference yesterday, Whip Emmer said that the Financial Innovation and Technology for the 21st Century Act (FIT 21) will likely see changes from Senate colleagues, which will mean yet another vote in the House – and all before year end.

CoinDesk’s Jesse Hamilton reports Emmer had sharp words for Securities and Exchange Commission Chair Gary Gensler saying he was “‘on his way out’ and losing favor in the administration” and adding in regards to the Chair, “I’d be very careful about trusting a cornered animal.” Read more in CoinDesk.

more tips:

• • NYSE Would Consider Crypto Trading If Regulatory Picture Were Clearer, President Says at Consensus 2024 – CoinDesk

what you should know: FIT 21 making it into law by the end of the year seems improbable. Nevertheless,  the groundwork is being laid for the 119th Congress. Continue reading “House Majority Whip Emmer Sees End Of Year Opportunity; NFTs Probed By Treasury”

PayPal gets state charter

Payments company PayPal, and its PayPal Digital subsidiary, have received a limited purpose trust charter from the New York State Department of Financial Services (NYDFS) according to Ledger Insights.

It was just last August that PayPal launched its PYUSD stablecoin.

Shortly thereafter, House Financial Services (HFS) Ranking Member Maxine Waters (D, CA) expressed strong reservations in an August 9 statement: “I am deeply concerned that PayPal has chosen to launch its own stablecoin while there is still no Federal framework for regulation, oversight, and enforcement of these assets” – keyword “Federal” because there is one in New York State, for example.

Ledger Insights explains the weeds if yesterday’s announcement, “The stablecoin issuer is Paxos Trust Company which also has an NYDFS limited trust charter. Paxos has also been PayPal’s partner for its cryptocurrency offering since its launch. Hence, there’s a possibility that the aim of the Trust charter is to take on the custody of PayPal client crypto-assets and move the issuance of the stablecoin in-house.” Read more.

what you should know: Is this yet another piece of news which pushes stablecoin legislation over the line in Congress?

stablecoins and trade

Bloomberg reports that Chinese and Russian commodity traders are increasingly turning stablecoins – Tether’s USDT stablecoin, in particular – to facilitate international payments.

The alternative to stablecoins, according to Bloomberg “is often slower transactions, or worse, risking an overseas bank account that could be frozen, the executives said. Some unsanctioned companies opened dozens of accounts in different countries only to see them frozen one after the other.'” Read more. Continue reading “PayPal May Be Updating Stablecoin Strategy; Crypto ‘Bursting On To The Political Scene’”

Donald Trump on crypto

With Democratic leadership appearing to turn toward supporting digital assets legislation, former President Donald Trump poured on the gasoline on his Truth Social platform on Saturday saying, “I am very positive and open minded to cryptocurrency companies, and all things related to this new and burgeoning industry.”

Arguably, Trump’s professed interest in crypto – beginning in early May – has helped improve the prospects for bringing digital assets under the umbrella of the U.S. financial system. Read more from Forbes.

more tips:

• • Trump Vows to Aid Convicted ‘Silk Road’ Founder in Crypto Appeal – Bloomberg

risky stablecoins

Treasury Secretary Janet Yellen speaks to Punchbowl News’ Brenden Pedersen on the latest effort to regulate stablecoin markets. All Yellen sees are risks and advocates for regulation – coming from Congress – sooner than later. She tells Pedersen, “PayPal now has a coin… This could become a widely used payments network. If something is a widely used payments network that involves stablecoins, I think there is serious financial stability risk.” Read more in The Vault (subscription).

what you should know: Given the significant change in tone towards digital assets coming from the White House in the past two weeks, Yellen’s comments do not echo a similar change as of yet. The Biden Administration has seemingly held fast to Federal Reserve pre-emption when it comes to stablecoin issuance versus the dual banking (states/Federal) solution preferred by Republicans.

Continue reading “Trump Is Open-Minded On Cryptocurrency; Biden SAB 121 Veto Decision This Week, Early Next”