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House Republicans seek more analysis on a possible US CBDC in letter to the Fed

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Republican members of the US House Committee on Financial Services have sent a letter to Federal Reserve Chair Jerome Powell outlining the tasks they see as most salient in the path toward a central bank digital currency (CBDC). The Fed released a discussion paper on a possible digital dollar in January of this year. In that paper, the Fed identified the pros and cons of a CBDC and invited public comments to open the discussion on how a CBDC could …

Gensler tells Congress that the SEC is ‘really out-personed’ on crypto

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Securities and Exchange Commission chair Gary Gensler told a Congressional subcommittee Wednesday that his agency needs more human resources as it looks to regulate the US crypto space. “I wish we had more to dedicate to this,” he said in response to questioning from Rep. Steve Womack about the SEC’s crypto work to date. Congress is weighing a budget request from the SEC, which has sought $240 million for FY 2023 above the previous year’s appropriation. Part of that push …

South Korean president’s plan to raise crypto tax threshold hits snag, Forkast says

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The South Korean National Assembly Research Service said in a report released on Thursday that a 20% tax on cryptocurrency gains set for 2023 must maintain a 2.5 million won ($1,940) threshold, contradicting new President Yoon Suk-yeol’s initiative to raise the limit to 50 million won, Forkast said. Raising the tax threshold for crypto gains to 50 million won to match that of stock gains was a promise Yoon made to voters while running for office, Forkast noted. The Block …

Terra disaster fuels work of Congress on stablecoin legislation

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As Terra and Luna spiral, lawmakers are finding themselves pulled into the crypto orbit. Stablecoins have been a priority for US lawmakers since November. Following TerraUSD’s collapse this week, Congress is suddenly facing the issue of algorithmic stablecoins.  “This proves that algorithmic stablecoins are probably the riskiest of all,” Rohan Grey, a professor at Willamette University’s law school and author of several pieces of crypto legislation, told The Block.  Maxine Waters (D-CA), chair of the House Financial Services Committee, is …

Yellen says the stablecoin market is still too small to pose systemic risk

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US Treasury Secretary Janet Yellen said Thursday that the stablecoin market has not yet reached a size that would pose a systemic risk to the US financial system. In a hearing before the House Financial Services Committee, Rep. Jim Himes pressed Yellen on where the systemic risk would truly begin. At two trillion in market cap, Himes said he didn’t think the space had broken the threshold. Yellen agreed, though she pointed out that the potential for risk remains: “Although …

FTX’s CFTC proposal faces Congressional grilling, attacks from CME

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The hearing was always going to be bloody.  In opening statements, chairman David Scott called FTX’s new proposed clearing model an “emerging and worrisome threat.”  The proposed model would allow the removal of future commission merchants from its derivatives trading. FCMs are a critical but costly link in the current chain of risk mitigation in futures trading. FTX’s proposal is, fundamentally, bringing that risk in-house by real-time settling and liquidation as well as an internal insurance fund. It’s a big …

‘Unlike Republicans, we recognize that there is real risk’ to stablecoins and crypto, says Senate Banking Committee chairman

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The Democrats of the Senate Banking Committee fear that their Republican colleagues are not taking the risks associated with crypto seriously.  “Their whole caucus are believers in cryptocurrency,” said Sen. Sherrod Brown (D-OH), the chairman of the committee, in conversation with The Block. “Their whole caucus seems indifferent to the risk that cryptocurrency poses.” “Unlike Republicans, we recognize that there is real risk to the system when billionaires are created out of — if we ask where the money comes …

US Treasury Secretary Yellen points to UST slip, asks for new stablecoin legislation by the end of 2022

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Treasury Secretary Janet Yellen is still calling for stablecoin legislation by the end of the year. In response to questioning on stablecoins from Senator Pat Toomey (R-PA) at a May 10 hearing, Yellen confirmed that “it is important, even urgent” that Congress pass stablecoin legislation. She further called it “highly appropriate” that Congress do so by the end of the year.  Yellen specifically highlighted the weekend’s drama surrounding TerraUSD (UST), saying:  “A stablecoin known as TerraUSD experienced a run and …

Congress schedules hearing on FTX’s proposal for disintermediation

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Crypto exchange FTX will be the subject of a Congressional hearing next week.  On May 5, the House Agriculture Committee scheduled a hearing for May 12 entitled “Changing Market Roles: The FTX Proposal and Trends in New Clearinghouse Models.” The Commodity Futures Trading Commission, which the Agriculture Committee oversees, is currently reviewing a proposal from FTX that would disintermediate derivatives trading, among other changes to the cryptocurrency trading platform. FTX says the proposal would reduce friction and free up capital, …

As Congress weighs digital wallet regulation, focus turns to electronic cash proposal

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As Congress weighed US rules for digital wallets on Thursday, lawmakers were particularly keen on the roles of data privacy and consumer protections.  The hearing focused heavily on Representative Stephen Lynch’s (D-MA) new ECASH bill. Introduced at the end of March, the bill calls on the Treasury to put out digital hardware that offers a user experience that’s as much like cash as possible. In practice, this would mean full privacy, and woudl bar a ledger of any kind.  Lynch …