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16 11, 2022

REFORM215

2022-11-22T15:02:46-05:00November 16th, 2022|5- Client Report|

HFSC Session Brings Crypto Action to Fore, “Holistic” Capital Under Scrutiny

HFSC today largely focused bank regulators on the same range of questions posed at yesterday’s Senate Banking session (see Client Report REFORM214).  However, Chairwoman Waters (D-CA) emphasized the importance of federal legislation in sharp contrast to Chairman Brown (D-OH), also announcing a hearing in December on FTX.  Ranking Member McHenry (R-NC), who will become HFSC chairman in the next Congress, concurred with the chairwoman’s views on the need for digital-finance statutory reform.  However, he took strong issue with inter-agency policy with regard to new capital rules, merger restrictions, and third-party relationship constraints.  Republican members also targeted Vice Chairman Barr’s holistic capital review, arguing that banks are currently well capitalized and that additional standards would hamper lending.  Mr. Barr indicated that an SLR rewrite is part of the holistic review but not immediately necessary to quell Treasury-market volatility or illiquidity.  As discussed in more detail below, regulators promised banking-sector crypto rules at least as stringent as Basel’s proposal.

REFORM215.pdf

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15 09, 2022

INVESTOR20

2022-10-13T11:52:44-04:00September 15th, 2022|5- Client Report|

After Senate Banking Session, SEC Stays on Course

The Senate Banking hearing with Chairman Gensler today went as expected:  Democrats generally praised his work while Republicans strongly opposed it on both substantive and procedural grounds.  As a result, we expect the chairman to continue as he has in the wake of prior, comparable hearings – pretty much as he pleases and as the rest of the commission will support.  This will clearly change if Republicans gain control of both Houses of Congress after the midterm. Unless or until it does, the SEC will continue its enforcement-focused approach to cryptoasset regulation and climate disclosures.  Chairman Brown (D-OH) also confirmed our forecast:  he will defend not only his jurisdiction, but also a much more stringent approach to crypto regulation than contemplated  by the Senate Agriculture Committee’s bipartisan legislation.

INVESTOR20.pdf

9 09, 2022

Al091222

2022-10-24T11:55:52-04:00September 9th, 2022|3- This Week|

The Crypto Kid

As we noted last week, SEC Chairman Gensler has made it even clearer that he’s giving no crypto ground to the CFTC or indeed to anyone who doesn’t agree that the Commission has the statutory authority to govern anything crypto token or intermediary that the Commission believes engages in securities offering, settlement, or transactions.  This follows the “same-risk, same-rules” framework most recently affirmed for bank digital standards in Michael Barr’s maiden speech, but Mr. Gensler takes it to a different level.  Unlike his banking-agency colleagues, he doesn’t have to reach inter-agency consensus to get what he wants unless or until Congress or the courts tell him otherwise.  To be sure, some members of Congress will try just this later in the week.  The Senate Agriculture Committee’s hearing will stand by the CFTC and Senate Banking Republicans will excoriate Mr. Gensler on Thursday for his strong stand on crypto along with much else.  As always, we’ll be watching, analyzing, and reporting, but let us know if you’ve any questions in the interim.

Al091222.pdf

8 09, 2022

DAILY090822

2022-11-09T13:00:10-05:00September 8th, 2022|2- Daily Briefing|

Gensler Stands Crypto Ground

In remarks today, SEC Chairman Gensler stood firm: almost all crypto tokens are securities because they are investment contracts under the “Howey Test.”  Further guidance is unnecessary, he said, because the Commission has been clear and crypto companies request it only because they do not like this conclusion, not because they fail to understand it.

GOP Demands Answers On CBDC Authorization, Construct

Ranking Member McHenry (R-NC) and all of the HFSC’s Republicans today sent a letter to Vice Chair Brainard demanding that she clarify several issues germane to U.S. CBDC issuance.  These most notably include the extent to which the “support” from the Administration and Congress she said was needed (see Client Report CBDC13) means express statutory change and Administration order.

Toomey Demands Greater CRA Transparency, Updated Regulations

Ranking Member Toomey (R-PA) today sent a letter to Vice Chair Brainard, Acting Comptroller Hsu, and Director Gruenberg sharply criticizing what he calls a lack of transparency of CRA-derived community benefit plans (CBPs).  Describing these as an “egregious” circumvention of congressional intent, he demands that the banking regulators update regulations implementing GLBA’s CRA sunshine provision, specifically urging them to establish a public database containing all CRA-related agreements in full.

Daily090822.pdf

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