US Congress remains legislatively paralyzed on crypto bills without a House speaker

October 23, 2023 Coin Telegraph

Pieces of legislation aimed at establishing clarity on certain crypto policies are unable to move forward with half of the legislative branch of the U.S. government lacking leadership.

No piece of legislation — crypto-related or otherwise — has largely been able to move through the United States Congress since Oct. 3, when lawmakers voted to oust then-Speaker of the House of Representatives Kevin McCarthy. This marks the first time in U.S. history that the legislative body has been without elected leadership, with no definitive plan to fill the slot.

At the time of publication, there are several candidates in the running for the third most powerful role in the U.S. government, but it’s unclear if any of them have enough support from Republican lawmakers — the political party currently holding the majority of seats in the House — to win. Following Speaker McCarthy, Representative Steve Scalise won a majority of Republican votes in a closed-door session, but he later dropped out, leaving the door open for Representative Jim Jordan to attempt a run.

Jordan went through three rounds of voting — losing more support from his Republican colleagues with each round — before the party voted him out as their nominee in a closed-door meeting. This effectively means the speaker’s position is open to anyone, Democrat or Republican, with no clear path forward. All Democrats present for the three rounds voted unanimously for Representative Hakeem Jeffries, the House minority leader.

Patrick McHenry, chair of the House Financial Services Committee and interim speaker following McCarthy’s ousting, may be a candidate for the full-time role. Preoccupied with his duties as temporary Speaker, McHenry could see Representative French Hill step into the role of leading the Financial Services Committee, overseeing legislation on digital assets and otherwise. Tom Emmer, another crypto-friendly lawmaker, said on Oct. 20 that he planned to seek the speaker seat, drumming up support from some of his Republican colleagues — reportedly including McCarthy.

1) This week in Congress and crypto: Another week of House Speaker drama and intense focus on Israel/Hamas. For crypto there is a lot of tangental elements on both issues. Many of the speaker candidates have a strong record on crypto so let's quickly meet them and fights to come.
— Ron Hammond (@RonwHammond) October 23, 2023

“If the [Republicans] can’t get a consensus on a clear candidate, it is likely McHenry will remain temp speaker,” said the Blockchain Association’s director of government relations, Ron Hammond, in an Oct. 23 X (formerly Twitter) thread. “[Representative Byron Donalds] is also in the race and he has also been a champion for crypto legislation on a variety of fronts with a particular bent on oversight of the current Admin. [Representative Pete Sessions] is another pro-crypto candidate who has been a champion on issues like bitcoin mining.”

Hammond added:

“In the Speaker race there are several pro-crypto candidates. [Tom Emmer] is the frontrunner, but as the past few weeks have shown it is far from a guarantee he will become Speaker.”

The lack of a speaker effectively halts progress on crypto bills passed by the Financial Services Committee, which had been expected to head for a full floor vote. The Financial Innovation and Technology for the 21st Century Act, the Blockchain Regulatory Certainty Act, the Clarity for Payment Stablecoins Act and the Keep Your Coins Act are all legislatively on hold until a speaker is voted in.

Though the House is “legislatively in a standstill,” according to Hammond, certain lawmakers have still moved forward with pushing anti-crypto policies within their power. More than 100 members of the House and Senate signed their names to a letter calling for action from the White House in addressing the role cryptocurrency may play in financing terrorism. The statement followed Hamas’ attack on Israel on Oct. 7.

Magazine: Opinion: GOP crypto maxis almost as bad as Dems’ ‘anti-crypto army’

US official confirms military concerns over China’s access to cloud technology

October 23, 2023 Coin Telegraph

China

The confirmation comes as tensions between the U.S. and China continue to rise.

United States undersecretary of commerce for industry and security Alan Estevez recently told reporters at an event in Tokyo, Japan that the U.S. is currently looking to crack down on Chinese access to U.S. cloud-based technologies.

Speaking to journalists at the Mount Fuji Dialogue policy forum on Oct. 21, Estevez confirmed reports that the U.S. was considering applying similar interventionary measures to China’s cloud technology access as it had to artificial intelligence (AI) chips.

Per a report from Nikkei, Estevez said “cloud-based technologies are already fairly ubiquitous. Now, AI itself is also fairly ubiquitous.”

Estevez continued, clarifying:

“The concern is ... AI in the future will probably command and control military logistics [and] military radar. Electronic warfare capabilities will be advanced. So we want to make sure that we're controlling the use."

As Cointelegraph recently reported, The United States Department of Commerce’s Bureau of Industry and Security released a memo on Oct. 17 shoring up export controls on AI chips. The new requirements would require establishing a worldwide licensing requirement for the export of controlled chips to any U.S.-embargoed country, China included.

In the wake of the recent AI chip export ban, U.S. market leader Nvidia’s stock slipped by nearly 5% as some experts predicted positive movement for Chinese chip manufacturers.

While it remains unclear at this time if U.S. lawmakers intend to introduce a similar ban on cloud computing technology access — the logistics of which would be dynamically different due to cloud-based services requiring no physical export.

Discussions over potential furtherance of export restrictions between the U.S. and China could be aggravated by recent developments. U.S. allied vessels in the Philippines have faced blockades from Chinese coast guard vessels in recent weeks.

A report from Reuters indicates a “slight collision” occurred on Oct. 22 when a Chinese coast guard vessel attempted to block a Philippine resupply ship from reaching its destination.

In response, the U.S. renewed its pledge to protect Philippine vessels “anywhere in the South China sea.”

FinCEN issues alert regarding crypto transactions connected to Hamas

October 20, 2023 Coin Telegraph

Bitcoin Wallet

The government department warned virtual asset service providers and other financial institutions to “identify and report suspicious transactions” related to terrorist groups.

The United States Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, issued an alert for financial institutions as part of efforts to identify “suspicious activity” related to funding terrorist groups.

In an Oct. 20 notice, FinCEN said that the militant group Hamas — behind the Oct. 7 attack on Israel — employed “fundraising campaigns involving virtual currency and fictitious charities raising both fiat and virtual currency” to fund its activities. The government department warned virtual asset service providers and other institutions to “identify and report suspicious transactions” potentially connected to Hamas.

Specifically, FinCEN cautioned financial institutions to be wary of clients who have conducted transactions with a business in a jurisdiction associated with Hamas, entities already on the Office of Foreign Assets Control’s list of Specially Designated Nationals, and those that solicit crypto donations on social media. The announcement came less than 24 hours after the government department proposed designating crypto mixing as an area of “primary money laundering concern” related to terrorism.

Today, Treasury’s Financial Crimes Enforcement Network announced a proposed rule to increase transparency around international Convertible Virtual Currency Mixing to combat its use by malicious actors including Hamas, Palestinian Islamic Jihad, & the DPRK. https://t.co/1atRjZnjwo
— Treasury Department (@USTreasury) October 19, 2023

FinCEN’s alert followed concerns about crypto voiced by U.S. lawmakers in the wake of Hamas’ attack on Israel. On Oct. 17, more than 100 members of Congress called on the administration of U.S. President Joe Biden to “swiftly and categorically act to meaningfully curtail illicit crypto activity.” U.S. Treasury officials also added a Gaza-based crypto operator allegedly tied to Hamas to its list of sanctioned entities.

In March 2022, FinCEN issued a similar warning to financial institutions over Russian entities’ attempts to evade sanctions using crypto. The notice came days after the Russian military invaded Ukraine in February 2022.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

SEC moves to dismiss lawsuit against Ripple’s Brad Garlinghouse and Chris Larsen

October 19, 2023 Coin Telegraph

Coin Telegraph

The civil lawsuit against the Ripple executives had been ongoing since December 2020.

Lawyers representing the United States Securities and Exchange Commission announced they will seek to dismiss all claims against Ripple CEO Brad Garlinghouse and co-founder Chris Larsen.

In an Oct. 19 filing in U.S. District Court for the Southern District of New York, the SEC notified the court that the parties involved in its case against Ripple “have stipulated to the dismissal with prejudice,” suggesting there was no need to schedule an upcoming trial. The filing did not state that the SEC was dropping its civil case against Ripple itself, first filed in 2020.

“The SEC and Ripple intend to meet and confer on a potential briefing schedule with respect to the pending issue in the case—what remedies are proper against Ripple for its Section 5 violations with respect to its Institutional Sales of XRP—and respectfully request until November 9, 2023 to propose such schedule to the Court or, if the parties cannot agree, to seek a briefing schedule from the Court on a contested basis,” said the filing.

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

Advocacy groups push back against Sen. Warren linking crypto with terrorism

October 19, 2023 Coin Telegraph

Coin Telegraph

The Blockchain Association and Crypto Council for Innovation said the terrorist group Hamas had reportedly curtailed using Bitcoin as authorities could more easily track funds.

United States-based crypto advocacy organizations are calling out Senator Elizabeth Warren and other lawmakers for some of the claims made regarding connections between the terrorist group Hamas and financing through cryptocurrency.

On Oct. 17, Sen. Warren and more than 100 lawmakers signed a letter calling for action to “meaningfully curtail illicit crypto activity” used for funding Hamas and the Palestinian Islamic Jihad in the wake of an attack on Israelis. The Massachusetts Senator, a prominent crypto opponent in the U.S. Congress, also penned a Wall Street Journal op-ed with Sen. Roger Marshall on Oct. 18 with claims that “crypto-financed terrorism” endangered U.S. citizens by funding such groups as well as the production of illicit drugs.

Yaya Fanusie, director of anti-money laundering at the Crypto Council for Innovation, said Warren’s proposed solution to some of these issues would not address the problem occurring outside U.S. jurisdictions. Sen. Warren said her bill, the Digital Asset Anti-Money Laundering Act, was aimed at ensuring "that the same rules to protect traditional payment systems from abuse are extended to crypto”.

“They are proposing KYC [Know Your Customer] rules akin to suggesting that copy machine manufacturers would need to KYC anyone using their copiers,” said Fanusie. “[Warren and Marshall] unfortunately fail to understand that the underlying blockchain technology actually makes transactions public, providing investigators a digital paper trail to identify terrorist operatives and their financial contributors.”

The Blockchain Association (BA) responded with similar claims in an Oct. 18 X (formerly Twitter) thread, pointing to reports from April that groups within Hamas stopped using Bitcoin (BTC) for supporting terrorist activities, as authorities could more easily track funds. According to the advocacy group, “only a small fraction of Hamas’s funding has come from crypto” and it was unclear how terrorists benefitted from those funds in the recent attacks on Israel.

“These proposals [Crypto-Asset National Security Enhancement and Enforcement and Digital Asset Anti-Money Laundering Act] will only punish law-abiding U.S.-based users and push all industry actors to other jurisdictions outside the reach of U.S. law enforcement,” said the BA.

1/ Any amount of funding that goes to support terrorist activity – in any form – is too much.

We share many of Sen. Warren’s questions – and we think further examination will reveal the limited and dwindling role that crypto played.https://t.co/jWwHNBe9oH
— Blockchain Association (@BlockchainAssn) October 18, 2023

Sen. Warren’s op-ed as well as sanctions imposed by the U.S. Treasury’s Office of Foreign Assets Control followed an Oct. 7 attack by Hamas that resulted in the deaths of many Israelis. Israel has since declared war on the terrorist organization and began bombarding Gaza, creating a humanitarian crisis for hundreds of thousands of people caught in the crosshairs.

Certain U.S. lawmakers, including Sen. Warren, have sometimes pointed fingers at crypto amid an international crisis, such as digital assets being used to evade sanctions on Russia in the wake of the country’s attack on Ukraine. Prior to Hamas’s attack on Israel, Warren was particularly outspoken in cracking down on crypto’s alleged role in production of the drug fentanyl and other illicit purposes.

“Rather than politicizing this issue, [Sens. Warren and Marshall] should look to better support the talented and deeply knowledgeable people across multiple agencies who could use extra resources to help track down bad actors,” said Fanusie. “The U.S. should take proactive steps to make sure that law enforcement and national security officials have the best access to tools, training and expertise, and information that can be used to combat illicit activity, including around crypto.”

At the time of publication, it was unclear if any of Sen. Warren’s suggested bills would be able to move through Congress amid Republican members of the House of Representatives being unable to unite behind voting in a new Speaker. Since Speaker Kevin McCarthy’s position was declared vacant on Oct. 4, pro-crypto lawmaker and House Financial Services Committee chair Patrick McHenry has been acting as interim Speaker.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

IRS crypto tax reporting rules threat to industry — Coinbase legal chief

October 19, 2023 Coin Telegraph

Coin Telegraph

The IRS proposed the new crypto tax reporting rules in August, and if approved, the new crypto tax regime will come into effect from January 2026.

Coinbase crypto exchange chief legal officer Paul Grewal called on the crypto community to join the movement against the United States Treasury’s proposed tax reporting regulations on cryptocurrencies. Grewal urged the community to oppose the proposed regulations, as they could set a dangerous precedent for surveillance.

Grewal took to X (formerly Twitter) to address the concerns associated with the proposed crypto tax reporting rules and claimed they go beyond the congressional mandate to establish tax reporting rules. He added that if the proposed regulations become a law, it would put “digital assets at a disadvantage and threaten to harm a nascent industry when it’s just getting started.“

Everyone who cares about fairness and supports American innovation should chime in on Treasury's proposed regulations for tax reporting of digital assets. You can join @StandwithCrypto’s opposition to the rulemaking here. 1/4 https://t.co/4eALt1Frxo
— paulgrewal.eth (@iampaulgrewal) October 18, 2023

The U.S. Internal Revenue Service (IRS) released a draft of proposed regulations for crypto tax reporting on Aug. 25. Under the proposed rules, crypto brokers would be required to use a new form to report to simplify tax filing and cut down on tax cheating. The proposed regulations include centralized and decentralized exchanges, crypto payment processors, certain online wallets and crypto brokers.

The Treasury Department claimed that the new form would simplify the tax filing process as it would help taxpayers determine if they owe taxes rather than having to make complicated calculations or pay digital asset tax preparation services to file their tax returns. If approved, the new tax regime will come into effect from 2026 and the brokers will be required to start reporting 2025 transactions in January 2026 via Form 1099-DA. However, many U.S. lawmakers urged the IRS to implement crypto tax reporting requirements before 2026.

The Treasury Department claimed the crypto tax reporting rules would put digital assets in line with traditional financial reporting, but Coinbase's legal officer insists this is not the case. Grewal, in his X post, noted that the proposed rules would set a “dangerous precedent for surveillance of the everyday financial activities of consumers by requiring nearly every digital asset transaction - even the purchase of a cup of coffee - to be reported.”

Coinbase chief legal officer noted that the proposed regulations would require the collection of a significant amount of user data that bears no “legitimate public purpose.” Grewal said the data collection would overburden Web3 startups with costly requirements while offering the “IRS with more data than they can ingest and analyze.”

Collect this article as an NFT to preserve this moment in history and show your support for independent journalism in the crypto space.

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US Treasury sanctions Gaza-based crypto operator allegedly tied to Hamas

October 18, 2023 Coin Telegraph

Coin Telegraph

According to the U.S. Treasury, terrorist groups including Hamas, ISIS, and an al-Qaeda affiliate used the Buy Cash Money and Money Transfer Company to transfer funds.

The Office of Foreign Assets Control (OFAC) of the United States Department of the Treasury has sanctioned a crypto operator allegedly connected to the terrorist group Hamas.

In an Oct. 18 notice, OFAC announced sanctions for Hamas operatives and financial facilitators following the organization’s attack on Israel. The entities added to OFAC’s list of specially designated nationals included a “Gaza-based virtual currency exchange and its operator” with a Bitcoin (BTC) wallet address.

According to the Treasury Department, the sanctions were aimed at “root[ing] out Hamas’s sources of revenue” following an Oct. 7 attack which resulted in the deaths of many Israelis. The exchange using digital currency, named Buy Cash Money and Money Transfer Company, is operated by Gaza resident Khan Yunis — Treasury alleged both the firm and Yunis were “linked to Hamas”. Ahmed M.M. Alaqad, the owner of the business, was also named in the sanctions.

“We will continue to take all steps necessary to deny Hamas terrorists the ability to raise and use funds to carry out atrocities and terrorize the people of Israel,” said Treasury Secretary Janet Yelln. “That includes by imposing sanctions and coordinating with allies and partners to track, freeze, and seize any Hamas-related assets in their jurisdictions.”

Today, Treasury imposed sanctions on ten key Hamas terrorist group members, operatives, and financial facilitators in Gaza and elsewhere as part of a continuous effort by the U.S. to root out Hamas’s sources of revenue. https://t.co/KZtF6K60id
— Treasury Department (@USTreasury) October 18, 2023

Blockchain analytics firm Elliptic reported on Oct. 18 that other terrorist groups had used the money transfer company, with more than $25 million in BTC and Tether (USDT) moving through the firm since 2015. In addition to Hamas, the entities allegedly connected to the firm included an al-Qaeda affiliate and ISIS (Islamic State of Iraq and Syria).

Israel formally declared war against Hamas following the terrorist attack, leading to bombardments over Gaza and creating a crisis as most residents were unable to escape. At the time of publication, U.S President Joe Biden was in Israel meeting with officials, who reportedly agreed to allow humanitarian assistance into Gaza from Egypt.

The U.S. Treasury has often used sanctions as a tool to weaken financial support for entities alleged to have been involved in terrorism or other illicit activities. On Oct. 3, Treasury announced sanctions against crypto wallets tied to China-based chemical manufacturers in parallel with an indictment from the Justice Department over the production of the drug fentanyl.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

UK to target potential AI threats at planned November summit

October 18, 2023 Coin Telegraph

China

The summit scheduled for Nov. 1-2 will place significant emphasis on the potential existential threat that AI represents, a concern shared by several legislators.

The United Kingdom (U.K.) will be hosting the world's inaugural international summit on artificial intelligence (AI) safety in Nov. 2023. This event seeks to establish the U.K.'s presence as a mediator between the United States, China and the European Union in the critical field of technology, post-Brexit.

The summit scheduled for Nov. 1-2 will place significant emphasis on the potential existential threat that AI represents, a concern shared by numerous legislators. British Prime Minister Rishi Sunak, who envisions the U.K. as a center for AI safety, has also expressed apprehensions about AI being exploited by criminals and terrorists for the development of weapons of mass destruction.

Sunak will be the host for approximately 100 attendees at Bletchley Park. Among the distinguished guests will be U.S. Vice President Kamala Harris, alongside Google DeepMind CEO Demis Hassabis, who will be joined by a gathering of legislators, AI visionaries, and scholars.

The summit's objective is to initiate a global conversation on AI regulation, as the agenda released by the U.K. government for the event this week encompasses talks regarding the unpredictable progress of technology and the risk of human loss of control over it.

A group of influential members of parliament (MPs) in the United Kingdom had earlier advised the government to collaborate with democratic allies to address the potential misuse of artificial intelligence (AI), emphasizing London’s aim to be a key player in advancing emerging technology.

In the weeks after Sunak announced the summit, Google published an analysis suggesting further investment in AI would provide a 400-billion-pound ($488 billion) boost to Britain's economy by 2030, while OpenAI announced it would open its first office outside of the U.S. in London.

In August 2023, Cointelegraph reported that British Prime Minister Rishi Sunak is set to spend 100 million pounds ($130 million) to buy thousands of computer chips to power artificial intelligence amid a global shortage and race for computing power.

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Pro-crypto lawmaker stays interim US House Speaker as frontrunner loses first round of voting

October 17, 2023 Coin Telegraph

Coin Telegraph

Ohio Representative Jim Jordan, the Republican Party's nominee for Speaker, won the support of 200 of his colleagues in an Oct. 17 vote — below the 217 needed to hold the position.

North Carolina Representative Patrick McHenry, chair of the United States House Financial Services Committee and crypto proponent in Congress, is still temporarily in the third most powerful role in government after one of his Republican colleagues failed to secure enough votes.

In a vote conducted with members of the U.S. House of Representatives on Oct. 17, no candidate for Speaker won a majority of votes needed to secure the position. Ohio Representative Jim Jordan, the Republican Party's nominee for Speaker, obtained 200 votes — short of the 217 needed to win.

All 212 Democratic members of the House voted for Minority Leader Hakeem Jeffries, with other votes by Republican lawmakers going to Representatives Steve Scalise, Kevin McCarthy, Tom Emmer, Tom Cole, Thomas Massie and Mike Garcia, as well as former New York Rep. Lee Zeldin. According to House rules, a Speaker need not be a member of Congress.

Rep. McHenry, who has been serving as interim Speaker since Republican members voted to oust McCarthy on Oct. 4, currently lacks the authority to move legislation forward in the House, with the exception of the Speaker vote. For the first time in U.S. history, half of the legislative branch of the federal government was largely paralyzed, making it impossible to move forward with crypto-related bills.

*Rep. Patrick McHenry addressing the U.S. House of Representatives on Oct. 17. Source*

Many pro-crypto users on social media have called on lawmakers to make McHenry the next Speaker — an outcome which would also require nearly all Republicans in the House to unite behind one candidate. Behind U.S. President Joe Biden and Vice President Kamala Harris, the Speaker of the House is second in the country's presidential line of succession. However, some experts have reportedly said the line of succession does not apply to an interim Speaker like McHenry.

At the time of publication, it was unclear when McHenry planned to call for a second vote. Many have criticized Jordan for repeating falsehoods surrounding the results of the 2020 presidential election in favor of former President Donald Trump, but he remains the leading candidate with a Republican majority in the House and Democrats united behind Jeffries.

McHenry led the House Financial Services Committee as lawmakers voted in favor of crypto bills including the Financial Innovation and Technology for the 21st Century Act, the Blockchain Regulatory Certainty Act, the Clarity for Payment Stablecoins Act and the Keep Your Coins Act. The pieces of legislation are expected to head to the House floor for a full vote, but the current situation with the Speaker makes that unlikely in the near future.

Magazine: Opinion: GOP crypto maxis almost as bad as Dems’ ‘anti-crypto army’

Federal judge gives Genesis 5 days to comply with Terraform Labs subpoena

October 16, 2023 Coin Telegraph

Coin Telegraph

The order was unclear as to the nature of the documents under subpoena, but stated Genesis had failed to provide the information by Oct. 9.

A United States judge has approved an order requiring Genesis Global entities to produce certain documents in accordance with a subpoena requested by Terraform Labs.

In an Oct. 13 filing in U.S. District Court the Southern District of New York, Judge Jed Rakoff said Genesis would have 5 days — likely until Oct. 18 — to produce documents following a subpoena from Terraform. According to the filing, Genesis failed to provide records by Oct. 9 as was required by an Sept. 12 subpoena, though the order was unclear as to what documents the crypto firm was seeking.

*Oct. 13 order from Judge Jed Rakoff. Source: Courtlistener*

The order was part of the U.S. Securities and Exchange Commission’s (SEC) civil case against Terraform and co-founder and CEO Do Kwon first filed in February. Kwon is currently serving a four-month prison sentence in Montenegro for using falsified travel documents while the lawsuit against Terra continues in the United States.

U.S. regulators have alleged Terra and Kwon “misled and deceived investors” with claims about its algorithmic stablecoin Terra USD (UST). The collapse of Terraform Labs was one of the precipitating events in the crypto market crash of 2022, prior to the bankruptcies of FTX, BlockFi, Celsius Network, Voyager Digital, and others.

Genesis filed for bankruptcy protection in January, estimating its liabilities to be roughly $1 billion with $10 billion in assets at the time. Both the firm and cryptocurrency exchange Gemini have been the targets of a civil suit filed by the U.S. Securities and Exchange Commission in January. The regulator alleged the companies offered unregistered securities through Gemini’s Earn program.

Magazine: US enforcement agencies are turning up the heat on crypto-related crime

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