Update: September 12th - 25th, 2022
The White House issued its first framework for the responsible development of digital assets...
Welcome back,
This week there was one major crypto regulatory news story: the White House issued guidance around the digital asset industry. I summarize this guidance below and provide links for those who want to find out more.
Besides that, these past two weeks witnessed a historic moment for the crypto industry, when Ethereum transitioned from a Proof of Work to a Proof of Stake consensus mechanism (an event called The Merge). This transition reduced Ethereum's energy consumption by ~99.95%, which is immensely important to note considering the climate and energy concerns around blockchain.
If you have time, I would highly recommend reading about The Merge and its impact on the industry.
In the meantime, I hope you enjoy and see you soon.
-Katja
September 12th - 25th, 2022
The White House issued its first framework for the responsible development of digital assets.
President Biden’s executive order in March called on government agencies to submit reports on various topics surrounding the blockchain space. After receiving nine reports back, the White House developed a “fact sheet” that outlines “recommendations to protect consumers, investors, businesses, financial stability, national security, and the environment.”
[If you’re interested in the submitted reports, you can find the list here. If you want to understand what they’re like, the Coin Bureau discussed one of them (all about climate and energy) in a recent video. If you want to read the criticisms around that climate report, see this article.]
Without surprise, the language of the fact sheet remained generally anti-crypto and mainly focused on the risks around crypto. The White House outlined several key priorities for the future,
Protecting Consumers, Investors, and Businesses - Federal agencies should “aggressively pursue” bad actors, enforce against misleading information, monitor emerging risks, and educate the public on (the risks surrounding) digital assets.
Promoting Access to Safe, Affordable Financial Services - Agencies are encouraged to adopt instant payment systems, with an emphasis on blockchain-alternative systems like FedNow, and create a framework to regulate non bank payment providers.
Fostering Financial Stability - The Treasury should work with agencies and financial institutions to identify and mitigate new cyber vulnerabilities and risks.
Advancing Responsible Innovation - Agencies and regulators should collaborate and work with the private sector to provide regulatory guidance, develop performance standards and (more generally) establish a working relationship between key stakeholders.
Reinforcing Our Global Financial Leadership and Competitiveness - US agencies should work with international organizations to proliferate the US position and attitude towards digital assets while also working with developing countries on their technological solutions.
Fighting Illicit Finance - Both the public and private sector should continue monitoring and fighting back against illicit activity and actors across the digital assets sector (with a particular focus on decentralized finance).
Exploring a US Central Bank Digital Currency (CBDC) - The Administration has a positive stance on a US CBDC and developed “Policy Objectives” for such a system, while calling on the US Treasury to lead an interagency working group to consider the implications of a CBDC.
As you probably noticed, the framework lacks any clear policy recommendations. Because of that, this White House fact sheet has received much criticism from the industry.
[If you want more context, a deeper dive into this framework, or to understand the criticisms around it, watch this video.]
In other US news,
Colorado residents can now pay state taxes using cryptocurrency through PayPal’s payments portal.
The Blockchain Association, the main crypto lobbying group in the US, launched a new PAC to promote pro-crypto candidates from both political parties.
California Governor Gavin Newsom vetoed a bill requiring crypto financial-service providers to get a special license to operate.
The SEC Chairman, Gary Gensler, testified before a Senate committee on various issues including digital assets. Although his attitude is not optimistic towards crypto, it’s important to understand how the SEC (a potential regulator of the industry) is thinking about the space. [You can also watch this recap of the hearing.]
More news …
Uruguay’s executive branch submitted a bill to Congress which would give the Central Bank of Uruguay power to regulate digital assets.
Australian Senator introduced a bill to regulate crypto exchanges, stablecoins, and China’s CBDC (e-yuan). [This comes at the same time as a new draft of the markets in crypto-assets (MiCA) regulatory framework dropped the stablecoin restrictions it initially proposed.]
The UK introduced a bill for seizing, freezing, and recovering crypto when used for illicit activity.