#cryptocurrency – Page 4 – Federal Financial Analytics

9 06, 2023

DAILY060923

Eliza Allen2023-06-09T16:39:43-04:00June 9th, 2023|2- Daily Briefing|

HFSC GOP Press Crypto Rewrites

The HFSC majority memo for Tuesday’s full committee hearing on digital assets reinforces Chairman McHenry’s (R-NC) determination to press ahead with legislation redesigning the federal crypto-regulatory ecosystem. As noted, the draft bill constructed with House Ag is generally unacceptable to HFSC Democrats, ensuring a more acrimonious hearing than last week’s Ag session. The witnesses all represent the private sector and generally support the new bill.

OCC Launches Consumer-Trust Campaign

The OCC last night launched a new customer-trust initiative with a new survey proposal and RFI. In accompanying remarks, Acting Comptroller Hsu emphasized that consumer trust in banks must be earned by banks that responsibly and fairly use their market power. Bolstering this new campaign, Mr. Hsu also argues that consumer trust reduces reliance on higher-risk nonbanks and gives banks the funding with which to provide through-the-cycle community lending. For its part, the OCC is working to finalize the longstanding CRA rewrite (see FSM Report CRA32), with Mr. Hsu noting the need through these rules and the OCC’s recent fair-lending rewrite to ensure fairness and LMI-household access to national banks.

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7 06, 2023

DAILY060723

Eliza Allen2023-06-07T16:50:58-04:00June 7th, 2023|2- Daily Briefing|

Basel Advances Supervisory Rewrite, Wants Quick End To End-Game

The Basel Committee’s release today of its latest meeting confirms that global regulators plan to revise 2012’s core supervisory principles (see FSM Report REFORM92) in light of recent events, releasing a consultation next month. Work is also under way to update the 2022 crypto standards (see FSM Report CRYPTO37) to address permissionless blockchains and stablecoins.

HFSC Urges Careful Use of China Sanctions

At today’s HFSC National Security Subcommittee hearing on maintaining the dollar’s global dominance, Subcommittee Chairman Luetkemeyer (R-MO) and Reps. Petterson (D-CO) and Kim (R-CA) argued that the sanctions that would follow an invasion of Taiwan need to be used carefully to avoid unintended harm to the dollar’s global status.

Durbin Leads Renewed Charge For Credit-Card Network Choice

As anticipated, Senate Judiciary Committee Chairman Durbin (D-IL) along with Sens. Welch (D-VT), Marshall (R-KS), and Vance (R-OH) today reintroduced legislation to extend routing-system requirements to credit cards. The bill, which has also been reintroduced in the House by Reps. Gooden (R-TX) and Lofgren (D-CA), slightly revises last year’s measure (see FSM Report INTERCHANGE10) by addressing security and operational risks associated with unaffiliated network routing requirements.

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2 06, 2023

DAILY060223

Eliza Allen2023-06-02T17:01:47-04:00June 2nd, 2023|2- Daily Briefing|

HFSC Looks To Next Debt-Ceiling Fight

Following the near-death experience of a Treasury default, the HFSC Financial Institutions Subcommittee on Wednesday will hold a hearing on U.S. fiscal management. The memo lists the draft legislation to be considered, with the panel advancing substantive measures with at least some chances of bipartisan agreement. These include bills to require Treasury via the FSOC to make official contingency plans for Treasury-bond default.

GOP Crypto-Jurisdiction Bill Slams SEC

Ahead of a hearing next week, House Financial Services and Agriculture Republicans today released a draft bill allocating digital-asset jurisdiction largely to the CFTC. This was previewed at the joint panel’s last hearing (see Client Report CRYPTO43), where Democrats strongly objected to this approach. Press indicate that the draft has not been shared with Democrats and our read of the measure makes it clear that little has been done to mollify them. The bill would give the SEC jurisdiction over certain securities-related crypto activities and entities, but in several cases expressly prohibits it from preventing trading-platform operation or contesting CFTC jurisdiction.

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23 05, 2023

DAILY052323

Eliza Allen2023-05-23T17:15:40-04:00May 23rd, 2023|2- Daily Briefing|

House Advances Consensus Anti-China Reporting Legislation

The House yesterday voted 400-5 to approve H.R. 1156, bipartisan legislation addressing Congress’ China concerns by mandating a new study.

Gruenberg Endorses Bank On Accounts, Notes Continuing Racial Gaps

In remarks today largely devoid of policy implications, Chairman Gruenberg praised Bank On’s impact on financial inclusion, but noted that racial divides still persist as Black and Hispanic households are more likely to be unbanked than White ones at every income level.

IOSCO Aims at Ending Crypto-Market Arbitrage

Advancing global crypto standards, the International Organization of Securities Commissions today released a consultative report on the contentious question of centralized-market regulation with which a joint HFSC/AG Committee process is now wrestling (see Client Report CRYPTO43).

HFSC GOP Blasts GSE Fees, Supports FHLB System

Today’s HFSC hearing with FHFA Director Thompson was largely the LLPA battle we anticipated, with Republicans lambasting recent actions and Democrats tartly responding that Republicans did not know what they were talking about.

Hsu Echoes Gruenberg’s Bank-On Praises

Following Chairman Gruenberg’s remarks earlier today, Acting Comptroller Hsu similarly praised Bank On’s impact on financial inclusion while highlighting racial and income gaps.

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19 05, 2023

DAILY051923

Eliza Allen2023-05-19T17:03:07-04:00May 19th, 2023|2- Daily Briefing|

Bowman Strengthens Stand Against New Rules, Possible Supervisory Overkill

In case anyone doubted her meaning last week, FRB Gov. Bowman today repeated her strong opposition to the regulatory rewrites spelled out in what at first seemed the Fed’s but is now apparently only Vice Chairman Barr’s report (see Client Report REFORM221). Ms. Bowman also reiterates her call for an independent study, continued tailoring, and improved supervision.

Bills To Reduce Regulatory Independence Advance

As anticipated at his last hearing, HFSC Financial Institutions Subcommittee Chairman Barr (R-KY) has now formally introduced three regulatory transparency bills. We will shortly provide clients with in-depth analyses of these bills, which we expect quickly to proceed to mark-up on largely party-line votes.

Warren Pounces On Reports Of Treasury-Bond Assessment Proposal

Sen. Warren (D-MA) yesterday sent a strongly-worded letter to FDIC Chairman Gruenberg demanding that the FDIC reject reported big bank plans to replenish the DIF with at-par Treasury bonds rather than the proposed special assessment (see FSM Report DEPOSITINSURANCE120).

BIS’s Carstens Dismisses Crypto, Calls For Tighter Non-bank Controls

In a wide-ranging speech today, BIS General Manager Agustín Carstens sharply criticized cryptocurrencies and called for greater regulation of the nonbank sector to avert a systemic financial crisis.

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15 05, 2023

DAILY051523

Eliza Allen2023-05-15T17:23:44-04:00May 15th, 2023|2- Daily Briefing|

Yellen Highlights Investor – Not Uninsured-Deposit – Runs, Buoys Sector Mergers

In an interview over the weekend, Treasury Secretary Yellen struck a decidedly different tone on bank mergers than voiced in the Administration’s policy prior to recent failures.

Gensler Outlines Top Financial Stability Concerns

In remarks today, SEC Chair Gensler outlined his financial-stability priorities.

Failed-Bank CEOs Defend Themselves, Contest Need For Receivership

Ahead of testimony tomorrow before Senate Banking, the CEOs of SVB and Signature have filed statements defending their actions and those of their colleagues.

FHFA Seeks Views On New Pricing Framework

Following last week’s announcement that it would postpone its controversial decision to retain an upfront fee related to a borrower’s debt-to-income level, the FHFA today released a Request for Input on the Enterprises’ single-family pricing framework as well as the process for setting their upfront guarantee fees.

Barr Stands His Supervisory, Regulatory Ground

Vice Chairman Barr’s testimony for Congressional hearings this week has just been released along with the Board’s 2023 supervision-and-regulation report.

Gruenberg Sticks To His Guns

FDIC Chairman Gruenberg’s Congressional testimony largely recounts prior statements about the condition of the banking system, recent bank failures, the new special-assessment proposal (see FSM Report DEPOSITINSURANCE120), and the agency’s deposit-insurance reform conclusion (see Client Report DEPOSITINSURANCE119).

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25 04, 2023

DAILY042523

Eliza Allen2023-04-25T17:12:43-04:00April 25th, 2023|2- Daily Briefing|

Stablecoin 2.0 Is Controversial 3.0

Ahead of Thursday’s stablecoin hearing, HFSC Republicans late yesterday released a second discussion draft of legislation that received a most equivocal response at last week’s subcommittee hearing (see Client Report CRYPTO42).

Treasury Finds Profitability to Blame for De-Risking

Treasury today released its 2023 De-Risking Report, finding that profitability principally explains why financial institutions choose to de-risk.

OFR: No Single Factor To Blame For 2019 Repo Spike

A new OFR paper on the September 2019 repo rate spike concludes that while a confluence of factors – large Treasury issuances, corporate tax deadlines, and lower levels of reserves – caused the crisis, none of them individually would have been disruptive enough to trigger the spike, although limited transparency and market segmentation exacerbated it.

Federal Agencies Launch New Anti-AI Enforcement Effort

The FTC, the Civil Rights Division of the DoJ, CFPB, and EEOC today released a joint statement pledging to enforce all relevant consumer protection, anti-discrimination, and fair competition laws not only on AI, but indeed also on all “automated systems” that the agencies believe to be within their jurisdictions.

HFSC Digital Assets Hearing Set For Jurisdictional Debate

Ahead of Thursday’s hearing on the latest stablecoin discussing draft, HFSC’s staff memo today reiterates GOP opposition to the SEC’s jurisdictional arguments.

ONRRP Revised

The Federal Reserve Bank of New York today revised the terms of access to the overnight reverse-repo program, adding financial stability and bank safety-and-soundness to monetary-policy implementation as ONRRP criteria for eligible counterparties …

18 04, 2023

DAILY041823

Eliza Allen2023-04-18T17:03:30-04:00April 18th, 2023|2- Daily Briefing|

FRB-NY Finds NBFIs a Source of Systemic Risk Over the Centuries

Reflecting renewed interest in “narrow banks,” the Federal Reserve Bank of New York blog posted evidence of systemic risk from nonbanks in the absence of any banks at all.

Stablecoin Compromise Faces Steep Challenges

As noted yesterday, HFSC’s Digital Asset Subcommittee is set for a Wednesday hearing clearly intended to lay the groundwork for near-term action on Chairman McHenry’s (R-NC) longstanding goal of enacting stablecoin legislation.

Despite Failures, DIF Restoration Ahead Of Schedule

At the FDIC Board’s meeting today, FDIC staff said that – while the timing for restoring the DIF to its 1.35% statutory minimum remains uncertain – the DIF could reach its statutory minimum ahead of time and by 2024.

Bowman Remains Staunch CBDC Skeptic

Reiterating that any U.S. CBDC requires Congressional approval, Gov. Bowman today also reiterated her longstanding skepticism to any such instrument.

CFPB Plans Timing Study to Buttress Junk-Fee Regs

The Federal Register today includes a CFPB comment request on its “Junk Fees Timing Study,” which would be part of a series of online lab experiments testing differences in consumer choices across different information presentations.

Warren, Reed Demand OFR Use Subpoenas To Obtain Systemic Data

Sens. Warren (D-MA) and Reed (D-RI) today urged OFR Acting Director Martin to fill data gaps around financial stability risks posed by climate change, cryptocurrencies, and repo markets.

Daily041823.pdf…

6 04, 2023

DAILY040623

Eliza Allen2023-04-06T17:06:35-04:00April 6th, 2023|2- Daily Briefing|

Treasury Reiterates AML/CFT DeFi Concerns

Following on the President’s executive order (see Client Report CRYPTO26) and its own reports (see FSM Report CRYPTO30), Treasury today released its DeFi Risk Assessment, finding as prior reports have presaged that AML/CFT noncompliance is the sector’s primary vulnerability. Indeed, the analysis strongly states that firms must comply with these standards no matter their business model. It also highlights a regulatory gap where DeFi firms not classified as financial institutions under the BSA are exempt from stringent standards, suggesting both statutory and regulatory changes.

Daily040623.pdf…

31 03, 2023

DAILY033123

Eliza Allen2023-03-31T16:49:24-04:00March 31st, 2023|2- Daily Briefing|

Senate Presses Fed Transparency, Accountability

Responding in part to testimony earlier this week (see Client Report REFORM217), Sens. Tillis (R-NC), Warren (D-MA), and seven colleagues have introduced legislation (S. 1160) to bring Federal Reserve Banks under the FOIA and force greater responsiveness to Congress – a response also to last year’s battle over master-account data and continuing crypto controversies. The measure would also mandate an independent IG, force the Fed to respond to Congressional ethics inquiries, and allow Senate Banking and HFSC bipartisan leadership to review confidential supervisory data. Sen. Tillis and three other Republicans also introduced S. 1155 to redesign the Fed.

Senate Dems Implicitly Chide Administration Reg-Reform Agenda, Demand Holistic Assessment

Following one of the somewhat surprising lines of inquiry at Senate Banking’s SVB hearing, Senate Banking Chairman Brown (D-OH) and all the Committee Democrats today pressed back against the list of rules the White House yesterday prioritized for rewrites. While they did not take issue with that list, they also want FSOC to undertake a holistic review of banking, consumer, and systemic rules, noting the importance in this effort of also protecting small banks from undue harm. The senators expressly want FSOC to go beyond the President’s focus on what they call “traditional” prudential standards also to examine non-quantifiable risks such as social media and AI.

Daily033123.pdf…