April 1, 2022

Republican lawmakers are introducing a bill – ​​the Stablecoin Transparency Act – that would require stablecoin issuers to hold reserves in cash, repurchase agreements, or short-duration government securities, which could prevent runs on popular digital assets that fuel surging crypto markets.

The bicameral bill, which is sponsored by Sen. Bill Hagerty (R-TN) and Rep. Trey Hollingsworth (R-IN), would also compel stablecoin issuers to publish audited financial statements every 30 days.

The intent is to “try to strike the balance between promoting the industry but also recognizing that they’re dealing with something that’s really important to people — their money — and that there needs to be safe practices and safeguards in place,” Hollingsworth said in an interview.

Representatives Gregory W. Meeks (D-NY) and Michael McCaul (R-TX), respectively the Chair and Ranking Member of the House Foreign Affairs Committee, introduced the Russia Cryptocurrency Transparency Act, bipartisan legislation that would exercise oversight of the State Department’s use of cryptocurrency as part of its rewards program, as well as measures to improve the efficacy and enforcement of U.S. sanctions against Russia.  

The Russia Cryptocurrency Transparency Act would: 

  • Require the State Department to notify Congress when it pays out rewards in cryptocurrencies to ensure that the Department is not providing bad actors with additional hard-to-trace funds that could be used for illicit purposes; 

  • Authorize the State Department to appoint a Director of Digital Currency in the State Department’s Office of Economic Sanctions Policy and Implementation, in which role the Director would assist in developing sanctions enforcement mechanisms resilient to malevolent actors’ use of digital currencies; 

  • Require a report from the State Department, in consultation with the Treasury Department and USAID, on how blockchain usage could facilitate access to humanitarian aid administered by the United States to Ukrainian persons;  

  • Require the State Department, in consultation with the Treasury Department, to submit to Congress a report assessing how digital currencies could impact the effectiveness and enforcement of the United States sanctions regime against Russian actors. 

We have developed a listserv to provide updates on these sanctions and related matters. To be included in the email distribution list, please email us at

The Senate unanimously confirmed President Joe Biden’s four Commodity Futures Trading Commission (CFTC) Commissioner nominees: Democrats Kristin Johnson, a professor at the Emory University School of Law, and Christy Goldsmith Romero, the special inspector general for the Troubled Asset Relief Program, and Republicans Summer Kristine Mersinger, chief of staff to CFTC Commissioner Dawn DeBerry Stump, and Caroline D. Pham, a managing director at Citi and head of market structure for strategic initiatives in its institutional clients group. 

The Securities and Exchange Commission (SEC) released new accounting guidance calling for digital asset exchanges and other digital trading platforms to mark the crypto assets they hold on behalf of their users as liabilities. “There are risks with respect to both [the] safeguarding of assets and rapidly-changing crypto-assets in the market that are not present with other arrangements to safeguard assets for third parties,” according to a bulletin published by the SEC. 

The Federal Deposit Insurance Corporation (FDIC) published a request for information (RFI) soliciting comments regarding the application of the laws, practices, rules, regulations, guidance, and statements of policy that apply to merger transactions involving one or more insured depository institutions, including the merger between an insured depository institution and a non-insured institution. The FDIC is interested in receiving comments regarding the effectiveness of the existing framework in meeting the requirements of section 18(c) of the Federal Deposit Insurance Act (known as the Bank Merger Act).

The FDIC is also requesting public comment on draft principles that would provide a high-level framework for the safe and sound management of exposures to climate-related financial risks.  Although all financial institutions, regardless of size, may have material exposures to climate-related financial risks, these draft principles are intended for the largest financial institutions, those with over $100 billion in total consolidated assets.  The draft principles were developed to support efforts underway by large financial institutions to consider key aspects of climate-related financial risk management. 

The Office of the Comptroller of the Currency (OCC) will overhaul its supervision of community and midsize banks, including designating one deputy comptroller responsible for overseeing “novel banks and technology service providers,” according to a memo obtained by American Banker. The changes will put a bigger emphasis on supervising fintech and cryptocurrency, as well as creating flexibility the agency might need to account for consolidation of small banks. The reorganization will take effect Oct. 1.

The European Central Bank (ECB) published the findings of commissioned research on citizens’ payment habits and their attitudes towards digital payments in order to gain a deeper understanding of user preferences as part of the digital euro project. Based on the responses of focus groups and online communities across all euro area countries, the report shows a strong preference for payment methods with pan-European reach and universal acceptance in physical shops and online. Participants valued the possibility of instant and contactless person-to-person payments, regardless of the platform or device. Focus group respondents also wished for a one-stop-solution that would incorporate all the current payment options into one system.

The FDIC issued the March 2022 edition of the Consumer Compliance Supervisory Highlights.  The purpose of this publication is to enhance transparency regarding the FDIC’s consumer compliance supervisory activities and to provide a high-level overview of consumer compliance issues identified in 2021 through the FDIC’s supervision of state non-member banks and thrifts. 

Acting Comptroller of the Currency Michael J. Hsu discussed managing low probability, high impact risk events, or tail risks, at the American Bankers Association Risk 2022 Conference. In his remarks, Acting Comptroller Hsu discussed how Russia’s invasion of Ukraine has affected tail risks, and tail risks associated with the trading of crypto-related derivatives.

Senate Banking Committee Chairman Brown (D-OH) sent a letter to federal banking regulators “to encourage [the] agencies to work with banks and credit unions in their communities to offer safe and sound financing access to small businesses.” He was joined on the letter by Senate Majority Leader Schumer (D-NY), Senate Majority Whip Durbin (D-IL) and 7 other Senators. 

U.S. Representative Stephen F. Lynch (D-MA), Chairman of the Task Force on Financial Technology, introduced H.R. 7231, the Electronic Currency and Secure Hardware (ECASH) Act, which would develop an electronic version of the U.S. Dollar for use by the American public. U.S. Representatives Jesús G. “Chuy” García (D-IL), Rashida Tlaib (D-MI), Ayanna Pressley (D-MA) and Alma Adams (D-NC), members of the Committee on Financial Services are original cosponsors of the bill.  

Since March 1, the United States (US), the United Kingdom (UK), and the European Union (EU) have led a campaign to increase the application of sanctions and other restrictive measures against Russia that is unprecedented in its scope, complexity, and impact—which will continue to increase. While Congress has largely taken a back seat to the sanctions developments since late February, when the conflict began, it may soon initiate legislative action to include energy sanctions, expanded financial sanctions, and increased oversight. 

The Biden Administration is close to negotiating the re-entry of the US into the Iran Nuclear agreement leading to a long-term confrontation with Congress, with sanctions relief at the epicenter. 

Read our spotlight on Russia here and our spotlight on the Iran deal here

Senate Banking Committee Chair Sherrod Brown (D-OH) said he expects a Senate vote next week to confirm President Joe Biden’s Federal Reserve nominees, though the timing may be affected by GOP opposition to Lisa Cook, who would be the first Black woman on the Board of Governors. 

Brown said he’s urging Republicans to agree to vote on all of the nominees in one day. That includes Cook, who Republicans unanimously opposed in committee and as a result faces a procedural hurdle before a confirmation vote. She can advance and be confirmed if Democrats stay unified in the 50-50 Senate, with Vice President Kamala Harris able to provide the tie-breaking vote.  

The Senate also has to vote on confirming Biden’s nominations of Jerome Powell to a second term as Fed chair, Lael Brainard as vice chair, and Philip Jefferson as a governor. Powell and Jefferson have broad bipartisan support, while Brainard won four GOP votes in committee.

The FS Vector team will be at Bitcoin 2022 in Miami, FL from April 6–9, 2022! Please let us know if you are attending!