Welcome to State of Crypto, a CoinDesk newsletter looking at the intersection of cryptocurrency and government. If you’re new here, I’m your host, Nikhilesh De.
Congress is holding an increasing number of hearings on issues ranging from bank failures to crypto. Last week I previewed a joint committee hearing on crypto. Now I’m curious: What did we learn? And what comes next?
Last week the House Financial Services and Agriculture Committees held a joint hearing on digital asset market structure regulation. This week, Financial Services will hold a second hearing on stablecoin regulation.
Why it matters
Someday soon we’ll see legislation for crypto out there. We’re getting more hints on what that will look like through the public hearings that are happening now.
Breaking it down
There’s a lot that’s happening right now. The House Financial Services Committee and House Agriculture Committee held its first joint hearing on crypto legislation last week, which started with some discord after Rep. Stephen Lynch (D-Mass.), the seniormost Democrat on the digital assets subcommittee, said “creating a separate regulatory regime through legislation is not the answer” to a lack of crypto-specific legislation.
He went on to echo Securities and Exchange Commission Chair Gary Gensler in saying the issue is really a lack of compliance within the crypto industry.
Still, the hearing – as well as the hearings before and after last week’s – signal Congress is continuing to look at this issue. And while the hearing didn’t provide a firm sense of where the committee will land on an actual bill on market structure, it did provide hints at what the lawmakers are looking at.
These issues include a tailored disclosure regime for crypto issuers and investor protections (duh).
This Thursday, the Financial Services Committee will hold another stablecoin hearing, looking at bills developed by both Republicans and Democrats on the committee.
Matt Homer, a former New York Department of Financial Services official who’s now at venture capital firm called the Department of XYZ, said in his written testimony that any legislation should maintain the dual banking system in the U.S. (where there are both state and federal banking regulators who have similar mandates and authorities).
“The parallel system of state and federal regulation supports economic growth by providing innovators and founders optionality that can reduce barriers to launching new products on a small scale before rolling them out at national scale,” he said. “It benefits consumers by providing access to financial services tailored to local needs and protects them because states are able to move more quickly to fill regulatory gaps.”
Fennie Weng, the founder and CEO of a universal basic income-focused startup called Humanity Cash and another witness at the hearing, provided a more technical background in her written testimony, but argued that communities would benefit if deposits were kept local.
“With the right policies that enable community organizations to safely experiment, the technology can mature to serve as a de-monopolizing force in our highly concentrated banking industry, by enabling community banks and credit unions to cost effectively deploy new products and services that better serve their communities,” she said.
14:00 UTC (10:00 a.m. ET) The House Financial Services Building held a hearing with bank regulators.
14:00 UTC (10:00 a.m. ET) On the other side of the building, the Senate Banking Committee held a hearing with the CEOs of banks that fell apart in March.
Wednesday:
14:00 UTC (10:00 a.m. ET) The House Financial Services Committee is holding a hearing with failed bank CEOs and state bank regulators.
14:00 UTC (10:00 a.m. ET) There will be a Celsius bankruptcy hearing.
20:00 UTC (4:00 p.m. ET) The Financial Industry Regulatory Authority is holding its annual conference. On Wednesday, there’ll be a panel on crypto.
Thursday:
13:00 UTC (9:00 a.m. ET) The House Financial Services Committee will hold a hearing on stablecoin legislation.
14:00 UTC (10:00 a.m. ET) The Senate Banking Committee will hold a hearing with bank regulators.
Friday:
16:30 UTC (12:30 p.m. ET) A federal court in California will hear arguments in the IRS’s ongoing effort to serve summons to Kraken.
Elsewhere
(Bloomberg) Bloomberg spoke to a number of crypto investors about how they’re viewing the bear market.
(Cybersecurity Dive) The White House is reportedly considering banning ransomware victims from paying their attackers.
(The Washington Post) The U.S. tax collector is working on a free electronic filing system people could use, with a test version set to go live next January.
(The Wall Street Journal) Miami, Florida is not quite as crypto-forward as it once was following the last year of collapses, the Journal reports.
Today’s Tweet
If you’ve got thoughts or questions on what I should discuss next week or any other feedback you’d like to share, feel free to email me at nik@coindesk.com or find me on Twitter @nikhileshde.
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