Lack of stablecoin regulation could push issuers out of US: Austin Campbell

April 19, 2023 Coin Telegraph

Lawmakers didn't reach a consensus between political parties on a stablecoin bill, as one witness warned this lack of regulatory clarify could drive certain projects abroad.

United States lawmakers discussed the role of stablecoins in a committee hearing, but some experts expressed concern about the country’s regulatory environment.

In an April 19 hearing of the U.S. Subcommittee on Digital Assets, Financial Technology and Inclusion, Austin Campbell, an adjunct assistant professor at the Columbia Business School, said areas including Singapore, Dubai, Abu Dhabi, and the United Kingdom have already proposed frameworks for stablecoins that could offer a competitive regulatory environment for issuers looking for a home.

“If you look around the world, you’re starting to see legislation that deals specifically with fiat-backed stablecoins,” said Campbell. “I think we can do better in America. Our financial regulation and systems are more robust [...] If we don’t act, those are the best options and people will take advantage of them.”

In Campbell’s written testimony, he added:

“When I am asked to consult or advise for projects attempting to build stablecoins or use stablecoins, my first advice has now become to avoid US operations and a US domicile. The jobs are going elsewhere.”

#WATCH: Subcommittee Chairman @RepFrenchHill at today's hearing on stablecoins:

"It’s time for Congress to act and pass legislation to establish a regulatory framework for payment stablecoins."

Read more https://t.co/eFqzkCC1Zi

Watch his opening remarks pic.twitter.com/VYHgJRHqOD
— Financial Services GOP (@FinancialCmte) April 19, 2023

Some lawmakers on the committee echoed similar concerns about legislation proposed to handle stablecoins in the United States. House Financial Services Committee chair Patrick McHenry released a discussion draft bill on how Congress could address stablecoins used for payments and a central bank digital currency.

However, ranking member Maxine Waters said “A lot of things have happened” affecting how the legislation could be drafted, saying the published draft was not representative of a compromise between the Democratic and Republican party members. Arkansas Representative French Hill, who chairs the digital assets subcommittee, referred to the previous compromise bill as an “ugly baby.”

“In addition to FTX and a lot of other things going on, this bill that we have posted in no way represents any final work because so much has happened in between,” said Waters. “We need to get back together in negotiations.”

Major stablecoins including Tether (USDT) and USD Coin (USDC) have previously temporarily de-pegged from the dollar in response to various market forces, including perceived contagion from the collapse of FTX and Alameda Research as well as Silicon Valley Bank. Drafts of bills proposed by some U.S. lawmakers have also suggested banning algorithmic stablecoins such as TerraUSD Classic (USTC), which lost its peg from the U.S. dollar in May 2022.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Hong Kong Judge Rules Crypto Assets as ‘Property,’ Following Similar Rulings Worldwide

April 19, 2023 Bitcoin.com

Speakers prepare to tell US House Financial Services Committee about stablecoins

April 18, 2023 Coin Telegraph

CFTC

Five experts will testify at a hearing titled “Understanding Stablecoins’ Role in Payments and the Need for Legislation,” with two of them releasing their scripts in advance.

The United States House of Representatives Committee on Financial Services will hold a hearing on stablecoin regulation on April 19. The hearing follows the announcement of a new draft bill in the House to provide a framework for stablecoins regulation. Some of the speakers invited have released advance transcripts of their planned testimony.

Stablecoins “look a lot like pretty basic cash instruments. […] Stablecoins are actually mundane,” Austin Campbell, a managing partner at Zero Knowledge Consulting and adjunct professor at Columbia Business School, will tell the committee. Campbell is convinced that stablecoins will expand the reach of the U.S. dollar and increase financial inclusion if legislation does not derail their progress.

According to Campbell, the United States has a lot to lose from driving stablecoin issuers away:

“The biggest winner of the US regulatory actions and legislative inaction over the past year has been Tether, an offshore stablecoin that provides very little in the way of transparency or consumer protection.”

Blockchain Association chief policy officer Jake Chervinsky will call stablecoin “a revolutionary upgrade” of the traditional payment systems. Like Campbell, Chervinsky touts dollar-denominated stablecoins as increasing financial inclusion and preserving the dollar’s role in the international economy.

Neither the Securities and Exchange Commission (SEC) nor the Commodity Futures Trading Commission (CFTC) currently have the regulatory authority necessary to regulate stablecoin, Chervinsky argued. It is hard to construe stablecoin as a security, Chervinsky said, and the CFTC lacks the jurisdiction to oversee spot markets.

Absolutely sensational testimony from @CampbellJAustin who will be testifying in the House hearing on stablecoins tomorrow. Probably the single best document I've read that makes the case for stablecoins as favorable to US interests https://t.co/kuQcTR9sCk
— nic c4rter (@nic__carter) April 18, 2023

Legislation of stablecoin should follow eliminate competition between regulatory agencies, Chervinsky said:

“At the federal level, stablecoins should be overseen by a prudential regulator such as the Fed or the OCC. […] Stablecoins should also be exempt from overlapping federal regulation by the SEC or the CFTC, so as to provide regulatory clarity and clear delineation of responsibility between agencies.”

New York State Department of Financial Services Superintendent Adrienne A. Harris, Circle chief strategy officer and global policy head Dante Disparte and Consumer Reports director of financial fairness Delicia Reynolds Hand will also testify before the hearing.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

US House committee chair repeatedly presses SEC chair: ‘Is Ether a commodity or a security?’

April 18, 2023 Coin Telegraph

Coin Telegraph

Securities and Exchange Commission chair Gary Gensler has said the SEC considers Bitcoin a commodity, but refused to pin down Ether at an oversight hearing.

Patrick McHenry, chair of the United States House Financial Services Committee, jumped right into criticism of the Securities and Exchange Commission and its leadership over digital assets at an oversight hearing.

In an April 18 hearing on oversight of the SEC, Representative McHenry used his opening statement to bring up the commission’s “punishing” of digital asset firms through regulation by enforcement without a clear path to compliance. The congressman reiterated calls for U.S. lawmakers to provide “clear rules of the road” for crypto through legislation. In addition, he pressed SEC chair Gary Gensler to give a definitive answer on whether Ether (ETH) qualified as a security under the SEC’s purview, or a commodity under the Commodity Future Trading Commission’s.

McHenry repeatedly talked over Gensler’s responses that did not include specifics, citing the SEC chair’s willingness to label Bitcoin (BTC) as a commodity and hinting at private discussions on ETH prior to the hearing.

“Clearly an asset cannot be both a commodity and a security,” said McHenry. “I’m asking you, sitting in your chair now, to make an assessment under the laws as exist, is Ether a commodity or a security?”

He added:

“You have pre-judged on this: you’ve taken 50 enforcement actions. We’re finding out as we go, as you file suit, as people get Wells notices, on what is a security in your view, in your agency’s view.”

.@GaryGensler's tenure has been defined by recklessness. His agenda runs roughshod over process, precedent, & the #SEC’s statutory authority. I look forward to speaking with him today.

Tune in at 10:00am https://t.co/qNdJ4wDkw5
— Patrick McHenry (@PatrickMcHenry) April 18, 2023

Representative Maxine Waters, ranking member of the House committee, did not press Gensler on ETH but focused her questioning on the SEC’s enforcement capabilities. According to the SEC chair, the commission had the means, the authority, and the will to bring crypto firms into regulatory compliance.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

This is a developing story, and further information will be added as it becomes available.

All eyes are on stablecoins: Law Decoded, April 10–17

April 17, 2023 Coin Telegraph

A week before a hearing in Congress, the United States gets stablecoin regulatory framework.

Last week came in preparation for April 19, when the United States House Financial Services Committee will hold a hearing on stablecoins. The hearing will include information collected by various federal government agencies over the last year. Among the participants are Jake Chervinsky, the chief political officer at the Blockchain Association, and Dante Disparte, the chief strategy officer of Circle.

On the hearing threshold, a new draft bill appeared in the House of Representatives document repository. The draft provides a framework for stablecoins in the United States, putting the Federal Reserve in charge of non-bank stablecoin issuers. According to the document, insured depository institutions seeking to issue stablecoins would fall under the appropriate federal banking agency supervision, while non-bank institutions would be subject to Federal Reserve oversight. Failure to register could result in up to five years in prison and a fine of $1 million. Foreign issuers would also have to seek registration to do business in the country.

Among the factors for approval is the ability of the applicant to maintain reserves backing the stablecoins with U.S. dollars or Federal Reserve notes, Treasury bills with a maturity of 90 days or less, repurchase agreements with a maturity of seven days or less backed by Treasury bills with a maturity of 90 days or less, and central bank reserve deposits.

SEC targets DeFi in a vote to revisit proposal concerning the definition of ‘exchange’

The U.S. Securities and Exchange Commission (SEC) has announced it will be revisiting the proposed redefinition of an “exchange” under the agency’s rules — a move that could include crypto market participants in decentralized finance (DeFi). Under the proposal, an “exchange” would be more closely defined as a system that “bring[s] together buyers and sellers of securities through structured methods to negotiate a trade” and explicitly include DeFi.

The commission proposed similar amendments in January 2022, keeping the comment period for the public open until June. Some crypto advocacy groups criticized the SEC’s actions at the time, suggesting it was an overreach of the commission’s authority.

Arizona governor vetoes bill targeting taxes on blockchain node hosts

Katie Hobbs, the governor of the American state of Arizona, has vetoed legislation that would have largely stopped local authorities from imposing taxes on individuals and businesses running blockchain nodes. The governor vetoed Arizona Senate Bill 1236, first introduced in January. The legislation aimed to revise sections of statutes pertaining to blockchain technology, mainly reducing or eliminating regulation and taxation of node operators at the state level.

The Italian regulator sets strict guidelines for OpenAI’s ChatGPT

Italy’s data protection agency, known as Garante, has specified the actions that OpenAI must take to revoke an order imposed on ChatGPT. OpenAI must increase its transparency and issue an information notice comprehensively outlining its data processing practices. Additionally, the statement requires OpenAI to implement age-gating measures immediately to prevent minors from accessing its technology and adopt more stringent age verification methods.

In addition, the regulatory agency mandated that OpenAI allow users to object to processing their data to train its algorithms. Also, OpenAI is required to conduct an awareness campaign in Italy to inform individuals that their information is being processed to train its AIs.

FTX’s Bankman-Fried Is Allegedly Using Alameda Funds to Pay for Legal Defense

March 29, 2023 Bitcoin.com

FDIC plans to return $4B in Signature crypto deposits ‘by early next week’ — Martin Gruenberg

March 29, 2023 Coin Telegraph

<div>FDIC plans to return B in Signature crypto deposits 'by early next week' — Martin Gruenberg</div>

Coin Telegraph

The Treasury Department's Under Secretary for Domestic Finance Nellie Liang said at the same hearing she didn’t believe crypto “played a direct role” in the failure of the banks.

Martin Gruenberg, chair of the United States Federal Deposit Insurance Corporation, has said the FDIC plans to return roughly $4 billion in deposits connected to Signature Bank’s digital asset banking business by early April.

In a March 29 hearing of the U.S. House Financial Services Committee exploring federal regulators' responses to recent bank failures, Gruenberg said the deposits that were not included in the bid from a New York Community Bancorp subsidiary for Signature would be returned “by early next week” — roughly $4 billion tied to digital assets. Reports had suggested that the FDIC would close all crypto-related accounts not part of the NYCB deal by April 5 if depositors didn’t move their funds.

*FDIC chair Martin Gruenberg speaking at a March 29 hearing of the U.S. House Financial Services Committee*

According to Gruenberg, Signature’s payments platform Signet — which, along with the digital asset deposits, was not included in the NYCB bid — was “in the process now of being marketed” to potential buyers. The FDIC, along with New York financial regulators, closed the crypto-friendly bank on March 12, citing risks to the U.S. economy after Silicon Valley Bank and Silvergate Bank had failed.

Nellie Liang, Under Secretary for Domestic Finance at the U.S. Treasury Department, said she didn’t believe crypto “played a direct role” in the failure of either Signature or Silicon Valley Bank:

“I know that Signature had activities involved in digital assets, but I don’t believe that is the main [cause].”

The March 29 hearing marked the second time Liang, Gruenberg, and Fed vice chairman for supervision Michael Barr addressed lawmakers following the collapse of three major banks in the United States. The Senate Banking Committee held a hearing on March 28, in which Gruenberg said Silvergate Bank had not adequately managed risks that led to its failure.

Though some lawmakers and regulators have seemingly pointed to the banks’ ties to digital asset companies, many have criticized the association as being without merit. Former House of Representatives member and Signature board member Barney Frank reportedly said officials wanted to send a “very strong anti-crypto message,” claiming that the bank had no issues with solvency at the time of its closure.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

SEC Chair Gary Gensler To Face Congress Over Strategy on Digital Assets

March 29, 2023 The Daily Hodl

Ted Cruz and Ron DeSantis take on the ‘digital dollar’: Law Decoded, March 20–27

March 27, 2023 Coin Telegraph

CBDC

Two lawmakers in one week weighed in against the possibility of a United States central bank digital currency.

Two lawmakers in one week weighed in against the possibility of a United States central bank digital currency (CBDC). Florida Governor Ron DeSantis — expected by many to throw his hat into the ring for the 2024 U.S. presidential race — has called for a ban on a digital dollar in the state. DeSantis spoke out against the Federal Reserve issuing and controlling a CBDC, claiming the initiative would grant “more power” to the government.

Texas Senator Ted Cruz went even further, introducing a bill to block the Fed from launching a “direct-to-consumer” central bank digital currency. Cruz stated it’s “more important than ever” to ensure U.S. policy on digital currencies protects “financial privacy, maintains the dollar’s dominance and cultivates innovation.” The anti-CBDC bill is a second attempt by Senators Cruz, Braun and Grassley, who introduced a similar bill on March 30, 2022, to prohibit the Fed from issuing a CBDC directly to individuals.

Representative Tom Emmer introduced another anti-CBDC bill in February. The bill could prohibit the Fed from issuing a digital dollar directly to anyone, bar the central bank from implementing monetary policy based on a CBDC, and require transparency for projects related to a digital dollar. It’s also presented as an apparent effort to protect Americans’ right to financial privacy.

G7 to collaborate on tighter crypto regulation

The next G7 meeting in May might bring a push from seven of the world’s advanced economies for stricter regulations on cryptocurrencies globally. Together, leaders from Japan, the United States, the United Kingdom, Canada, France, Germany and the European Union will outline a cooperative strategy to increase crypto transparency and enhance consumer protections, as well as address potential risks to the global financial system, officials told journalists.

Recommendations on the regulation, supervision and oversight of global stablecoins, crypto assets activities and markets are scheduled to be delivered by July and September 2023. It is unclear, however, what the overall tone of the recommendations will be.

IRS calls for public feedback on taxing NFTs

The U.S. Internal Revenue Service (IRS) said it plans to release guidance on having nonfungible tokens (NFTs) treated as collectibles under the U.S. tax code. According to the government body, collectibles under U.S. tax law “do not have as advantageous capital-gains tax treatment as other capital assets,” seemingly referring to how crypto assets are currently taxed in the country. Under the U.S. tax code, selling collectibles such as coins or artwork is subject to a maximum capital gains tax rate of 28%. The proposed IRS guidance could apply the same standard to an NFT certifying ownership of a coin, piece of art or similar collectible.

Texas lawmaker introduces resolution to protect Bitcoin miners

Cody Harris, a member of the Texas House of Representatives, has introduced a resolution to have the legislature say the “Bitcoin economy is welcome” in the state. Harris encourages Texas lawmakers to “express support for protecting individuals who code or develop on the Bitcoin network,” as well as miners and Bitcoiners operating in the Lone Star State. House Concurrent Resolution 89, if adopted, would largely not apply to Texas’ laws and regulations but instead express a certain sentiment among lawmakers.

Treasury Secretary Yellen Holds Unscheduled Meeting With Top Financial Regulators Amid Turmoil in Banking Sector

March 25, 2023 Bitcoin.com

congress