- Top Lines
Congressman Tom Emmer (R-MN), Ranking Member of the House Financial Services Subcommittee on Oversight and Investigations and co-Chair of the Congressional Blockchain Caucus, sent a letter to Treasury Secretary Janet Yellen regarding “the unprecedented sanctioning of Tornado Cash, ”an open-source cryptocurrency mixer used for enhancing privacy in blockchain-based transactions. The crux of the issue is the Office of Foreign Assets Control’s (OFAC) use of sanctions against an open-source tool charged with facilitating money laundering as opposed to sanctions against individual wallet addresses only. Rep. Emmer stated that “the growing adoption of decentralized technology will certainly raise new challenges for OFAC. Nonetheless, technology is neutral and the expectation of privacy is normal.”
- Weekly Wrap Up
The Justice Department announced three people were charged with conspiracy to commit wire fraud, bank fraud, and aggregated identity theft after using stolen identities to purchase cryptocurrency and then dispute the transactions with the banks of the identity theft victims.
The Joint Economic Committee Democrats published a report entitled “People of Color and Low-Income Communities Are Disproportionately Harmed by Banking and Financial Exclusion.” The report states that “while innovations in financial technology have led to improved equity in some areas, more data and novel algorithms have failed to eliminate discrimination in lending,” and that “new digital assets in the decentralized finance sector pose serious risks to consumers who need more protection from regulators.”
New York Governor Kathy Hochul declined to say whether she would sign or veto the NY legislature’s bill that would have the effect of putting a two-year moratorium on new fossil fuel-powered cryptocurrency mining operations. Hochul was asked about the moratorium bill, which passed the state legislature in June, on Brian Lehrer’s WNYC show. She stated that “we will get to it,” and that “[she has] to focus on some other issues at the moment.” Our intel suggests Governor Hochul plans to sign the bill.
The Public Company Accounting Oversight Board (PCAOB) signed a Statement of Protocol with the China Securities Regulatory Commission and the Ministry of Finance of the People’s Republic of China – the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong completely, consistent with U.S. law.
In an op-ed, Securities and Exchange Commission (SEC) Chair Gensler called for increased compliance from cryptocurrency platforms that are offering lending products to consumers, stating that they fall under the federal securities laws. Importantly, Chair Gensler said, “the rules have been around for decades. The platforms aren’t following them. Noncompliance isn’t the inevitable result of the crypto business model or underlying crypto technology. Rather, it is as if these platforms are saying they have a choice—or even worse, saying ‘Catch us if you can.’”
- ICYMI
The Federal Reserve Board (FRB) provided additional information for banking organizations engaging or seeking to engage in crypto-asset-related activities. The supervisory letter outlines the steps Board-supervised banks should take prior to engaging in crypto-asset-related activities, such as assessing whether such activities are legally permissible and determining whether any regulatory filings are required. Additionally, the supervisory letter states that Board-supervised banking organizations should notify the Board prior to engaging in crypto-asset-related activities.
- Upcoming Hearings & Events
DC Fintech Week will be held October 11 – 12 and is welcoming submissions of 10,000 words or less from experts from the academy, industry, government, and nonprofits that significantly advance academic and policy understandings of the conference’s themes and panels. Papers are due September 1 and can be submitted to dcfintechweekpapers@gmail.com.
The 2022 Black Blockchain Summit will be held at Howard University from September 22nd to September 24th. Tickets can be purchased here.
The OCC announced that it will host Virtual Innovation Office Hours September 28 – 29 to promote responsible innovation in the federal banking system.