Stablecoin Regulation by EOY ?? Oh, & Expect the S.E.C. to Get Worse
Along with EU Passes MiCA, BTC Mining loses NY, & Meet Michelle Bond (R-NY) and Matt West (D-OR)
Key Reads: What to expect from the SEC, and DeFi Education Fund’s response to “Financial Services Regulatory Authority of Abu Dhabi”
In the Government: 🇺🇸 Upcoming stablecoin legislation from the US, 🇪🇺 EU finally passes MiCA, 🇸🇬 Singapore proposes consumer-safeguards
In the Courtroom: Grayscale sues SEC, bitcoin mining in New York loses permit, another crypto exchange files for bankruptcy
Crypto Political Profiles: Meet Michelle Bond (R-NY) and Matt West (D-OR)
Key Reads
The Blockchain Association’s Jake Chervinsky on what to expect from the SEC.
The Conclusion: While other sectors of government such as POTUS and Congress seem to be warming up to crypto, Chervinsky says to brace for more hostility from the SEC in H2 (second half of the year.)
The DeFi Education Fund’s Response to the Financial Services Regulatory Authority of Abu Dhabi on DeFi
The Context: The FSRA maintains “DeFi does not change the underlying nature of financial services” and thus should be subject to the same regulation as traditional finance. This would amount to permissioned DeFi. The DeFi Education Fund, obviously, rejects this.
In Government — (Regulation/Policy)
🇺🇸 - Stablecoin regulation to be introduced by end of year
Why this Matters. The President’s Working Group on Financial Markets met this week to discuss legislation on stablecoin definitions and regulation that will be introduced to the House Financial Services Committee by the end of 2022.
🇪🇺 — MiCA 1.0 passes, now onto MiCA 2.0
Why this Matters. The EU’s Markets in Crypto Assets (MiCA) bill passed at the close of France’s presidency last week, cementing a regulatory framework for centralized crypto exchanges, brokers, and other crypto asset service providers. MiCA will continue to be developed, now with a focus on regulating DeFi.
🇸🇬 - Monetary Authority of Singapore (MAS) may introduce crypto-consumer safeguards
Why this Matters. Based on MAS’s previous warning that crypto assets are risky, and thus "not suitable for the retail public,” the governmental entity is considering placing limits on retail participation in crypto markets, and adding rules for crypto transactions.
From the Courtroom — (Legal news in web3)
🇺🇸 - Grayscale sues SEC over bitcoin ETF rejection
Why this Matters. After the SEC denied Grayscale Investments’s application for a spot bitcoin ETF, Grayscale immediately filed a suit countering the rejection.
🇺🇸 - New York Department of Environmental Conservation (DEC) rejects bitcoin miner Greenidge permit renewal
Why this Matters. New York DEC rejected Greenidge’s air permit renewal, citing that projected green house gas emissions from the mining facility would exceed NY State’s legal limit. Greenidge has announced they will continue mining processes as they seek an administrative adjudicatory hearing.
🇺🇸 - Crypto exchange Voyager Digital files for bankruptcy
Why this Matters. This Toronto-based crypto exchange has petitioned for bankruptcy, estimating to owe creditors between $1 million to $10 billion in liabilities and assets. Voyager is the third crypto exchange to have filed for or flirted with bankruptcy in recent weeks.
Crypto Candidates in the Upcoming Primaries or with Strong Support for Crypto
Up to midterms, Twali Wrapped will be profiling two crypto-friendly candidates either from the nearest, upcoming primaries or politicians with significant support of crypto. This week:
Meet Michelle Bond (R-NY)
CEO of the crypto trade organization the Association for Digital Asset Markets (ADAM). Michelle Bond is running to replace Lee Zeldin in New York’s 1st Congressional district.
Michelle Bond brings deep financial sector expertise and a national reputation to her campaign to replace Lee Zeldin (Zeldin, whom we covered last week, vacated his seat in the NY-1 to run for governor of New York).
She has served in senior policy and regulatory affairs roles for financial technology behemoths, including Bloomberg LP and Ripple.
Prior to this, Bond served as former international counsel for the Securities and Exchange Commission (SEC) and senior counsel for the Senate Banking, Housing and Urban Affairs Committee. Bond calls herself an “America First” candidate, and despite a clear interest in crypto, she is not making it a central focus of her campaign.
Policy Goals and Reasons for Supporting Crypto
Financial Innovation and Economic Prosperity
Crypto has unleashed a new financial world full of innovations that can provide increased prosperity for everyday Americans, as well as the American economy
Cryptocurrencies also provide an important alternative to run-away inflation—a major campaign point for Bond.
Regulating the Crypto Sector
Self-regulation, as opposed to regulations from federal agencies, will be a key for crypto innovation and supporting the US’s position as a leader in digital asset innovation.
Bond also views many cryptocurrencies (i.e., bitcoin, ether) as commodities and as under the jurisdiction of the CFTC: “There is no reason to make all cryptocurrencies digital asset securities—it does not make sense from a securities law perspective, and it does not make sense from a commodities law perspective.”
Additional Policy Goals
(1) Reducing taxes and bureaucratic overreach; (2) fighting crime, terrorism, and illegal immigration; (3) lowering gas prices and inflation; and (4) supporting pro-life regulation.
Legislation
Supports: Lummis-Gillibrand Responsible Financial Innovation Act
Supports: Digital Commodity Exchange Act of 2022 (DCEA)
Against: 2022 Revisions to Securities Exchange Act
Read her official comment to the SEC here.
On stablecoin regulation
Bond believes that stablecoin regulation in the US is around the corner, having said, “Stablecoins are low-hanging fruit."
Meet Matt West (D-OR)
Climate scientist and crypto enthusiast running for U.S. House of Representative seat in Oregon’s 6th Congressional district
A decidedly pro-crypto candidate, Matt West previously worked as a development engineer for Intel. His web3 credentials include mining Bitcoin in 2009 and experiencing a range of decentralized finance protocols, including a stint at Yearn (plus he accepts crypto campaign contributions!). In case that was not enough, West has a doctorate in renewable energy research. This is his first time running for public office.
Policy Goals and Reasons for Supporting Crypto
Building the Economy of the Future
Supports the development of the crypto-economy as a means for creating jobs and delivering user ownership of the internet
Does not believe government should pick “winners and losers” when it comes to validation methods
Supports efforts to secure digital infrastructure and train a next generation workforce (including computer programming)
Enhancing Understanding of Technology in Congress
West feels that current legislators “are passing laws based on things they do not fully understand.”
He views his background in computing and clean technology as key attributes that will help him advocate for technology-literate policies at the federal level.
Protecting Consumer Privacy
Views some Web 2.0 companies as stifling competition and invading privacy
Supports right of U.S. citizens to hold self-custody wallets
Wants digital cash to maintain the same privacy attributes of paper cash
Additional Policy Goals
(1) Climate change; (2) single-payer Medicare-for-All; (3) fighting for progressive wealth tax on billionaires; (4) protecting reproductive freedoms; (5) avid supporter of organized labor.
Legislation
Supports the Keep Innovation in America Act. (H.R. 6006)
The bill would clarify that certain crypto participants should not be treated as financial brokers by the Treasury Department.
Supports repealing recent crypto tax code changes contained in the Infrastructure and Investment Jobs Act (H.R. 3684)