June 10, 2022

Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY) announced the introduction of the bipartisan Lummis-Gillibrand Responsible Financial Innovation Act (the “RFIA”).

If enacted in its current form, the RFIA will be the first comprehensive federal legislation to tackle cryptocurrency, blockchain, and digital assets across almost all aspects of the regulatory spectrum. The RFIA addresses the most significant issues which arise at the intersection of traditional financial regulation and digital asset innovation across taxation, securities, banking, and consumer protection and helps position the United States at the forefront of the pursuit to set a global regulatory agenda for the space. The bill would task the CFTC as the primary federal authority over digital asset markets.

The bill was praised by CFTC Chair Rostin Benham.

Read our full summary of the bill here

Congresswoman Maxine Waters (D-CA), Chairwoman of the House Committee on Financial Services, Congressman Al Green (D-TX), Chair of the Subcommittee on Oversight and Investigations, and all Subcommittee Chairs, sent requests to the nation’s top ten U.S. banks, top five U.S. property and casualty insurance companies, and top five U.S. life insurance companies to inquire about their involvement in the financing of chattel slavery in the U.S.  

The Chair of the California Assembly’s Banking and Finance Committee, Assemblymember Timothy Grayson (D-Concord), introduced a bill, sponsored by the Consumer Federation of California, which will establish the Digital Financial Assets Law to “protect Californians from financial hardship and foster responsible innovation by licensing and regulating the activities of cryptocurrency exchanges.” Suzanne Martindale, head of California’s Division of Consumer Financial Protection, discussed the bill and expressed concern over fraud occurring within digital asset markets in an interview with Protocol. 

The Department of Justice released a report entitled “How To Strengthen International Law Enforcement Cooperation For Detecting, Investigating, And Prosecuting Criminal Activity Related To Digital Assets.“

The New York State Department of Financial Services (DFS) announced new regulatory guidance on the issuance of U.S. Dollar backed stablecoins. The new standards require issuers to maintain a stockpile of high-quality reserve assets that would allow their tokens to be redeemed on a one-to-one basis with the U.S. dollar.

Senator Pat Toomey (R-PA), the top Republican on the Senate Banking Committee, sent a letter to the Federal Reserve Bank of Kansas City demanding answers about the status of a Federal Reserve master account for Colorado fintech firm Reserve Trust, which recently had its access revoked. “It has been brought to my attention that the Kansas City Fed recently revoked Reserve Trust’s master account after determining, among other things, that the company is no longer eligible for one,” said Sen. Toomey in the letter. He also said he had been “stonewalled” when he sought details on why the company received its master account in 2018. Related to this news, Wyoming-based bank Custodia, a bank formed to be a compliant bridge between digital assets and the U.S. dollar payments system and a custodian of digital assets, recently sued the Federal Reserve and the Kansas City Fed over delays in its application to open a master account.

Deputy Secretary of the Treasury Wally Adeyemo delivered remarks at Consensus 2022 about how the Treasury Department is approaching the digital assets landscape, and the role of regulation in promoting the innovation needed to maintain U.S. leadership of the global financial system.

Lawmakers in New York passed a bill to ban certain proof-of-work mining operations that run on carbon-based power sources. The measure now heads to the desk of Governor Kathy Hochul, who could sign it into law or veto it. If Hochul signs the bill, it would make New York the first state in the country to ban blockchain technology infrastructure.

Russian sanctions expansion has slowed in recent weeks as the Biden Administration continues to wrestle with a series of expiring general licenses for Russia. The buildout from the Administration on Russia sanctions may slow a little more, but may also result in significant action, likely in close coordination with the EU. The Democratic People’s Republic of Korea (DPRK or North Korea) sanctions effort will continue to expand, and the Venezuela sanctions regime will become increasingly a point of contention. For more information, read our latest Sanctions Watch Roundup from May 15 – June 6 here.

Need to catch-up on what happened last week? Check out our June 3 newsletter.

Tuesday, June 14th at 10:00 AM MT/12:00 PM ET – CFPB Director Rohit Chopra will visit Great Falls, Montana for a discussion about challenges faced by rural Montanans and how banking deserts adversely impact Montana’s financial landscape. RSVP to join in person or virtually here.

Tuesday, June 14th at 10:00 AM (and subsequent days if necessary) – The House Financial Services Committee will convene for a hybrid markup.