#DLT – Federal Financial Analytics

21 09, 2022

FedFin Analysis: Treasury Sees Few Crypto Benefits, Much Risk to Contain and Control

Arezou Rafikian2022-09-30T12:11:23-04:00September 21st, 2022|The Vault|

We follow our prior in-depth analysis of Treasury’s CBDC and payments report (see Client Report CBDC14) with a detailed assessment of the Department’s assessment of overall cryptoasset policy. We noted on Friday key recommendations and turn here to a more in-depth assessment of Treasury’s reasoning, recommendations, and likely action. This section of the response to the President’s executive order (see Client Report CRYPTO26) is notably uncharitable to cryptoassets, observing that broader use cases beyond trading and lending within the crypto verse have yet to materialize and may never do so….

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

12 07, 2022

FedFin on: U.S. Digital-Asset Policy

Arezou Rafikian2023-01-23T16:02:08-05:00July 12th, 2022|The Vault|

As part of its response to the President’s digital-asset executive order, the Department of the Treasury is seeking views on the broad policy questions on which it believes answers might guide the Administration’s next steps. The definition of digital assets on which comment is sought includes central-bank digital currency (CBDC) and other digital representations of value delivered via distributed ledger technology (DLT). As a result, Treasury’s inquiry is comprehensive and results could have far-reaching implications, but the nature of the questions posed are so broad as to provide little indication of how Treasury plans to frame its report to the White House and proceed thereafter.

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

14 06, 2022

FedFin On: U.S. Digital-Asset Framework

Arezou Rafikian2023-01-27T15:30:30-05:00June 14th, 2022|The Vault|

After protracted negotiations and much public attention, bipartisan senators have introduced a far-reaching bill designed to encourage digital-asset use without undue risk to consumers, investors, or the financial system. The bill decides most, if not all, of the outstanding regulatory barriers to digital-asset use in favor of digital assets and their providers. Provisions in many cases go farther than public discussion has so far noted – for example, the measure not only expands the ability of digital-asset providers to reach retail and wholesale customers, but also gives them access to FDIC resolution without the cost of paying insurance premiums or coming under many of the rules that govern insured depositories…

The full report is available to retainer clients. To find out how you can sign up for the service, click here and here.…

29 03, 2022

FedFin: Global Securities Regulators Diss DeFi

Arezou Rafikian2023-03-27T15:46:19-04:00March 29th, 2022|The Vault|

As promised, this report provides an in-depth analysis of IOSCO’s new paper on decentralized finance, one sure to advance the FSB’s efforts to bring DeFi systems under greater regulatory scrutiny due to the findings we here detail. In the U.S., President Biden’s crypto-focused executive order (see FSM Report CRYPTO26) highlights DeFi’s risk with regard to illicit finance. IOSCO’s work on this report was headed by the SEC, suggesting rapid U.S. action not only on this concern, but also on many other risks by the Commission, as well as the FSOC and other U.S. agencies…

The full report is available to retainer clients. To find out how you can sign up for the service, click here.…

13 12, 2021

Karen Petrou: Why Pro-Competition Consumer Finance May Not be Pro-Consumer Consumer Finance

Arezou Rafikian2023-05-23T12:35:00-04:00December 13th, 2021|The Vault|

On Wednesday, several major crypto companies told Congress that the best way to govern them – should this be needed at all – is to create a new federal regulator that knows its way around the blockchain. One trusts this proposal is a sincere effort at constructive engagement, but anyone who has run the financial-regulatory traps longer than a DLT minute knows that proposing a single regulator is the most effective way to look earnest and yet still roam free outside the regulatory perimeter. There is simply no way Congress will pull itself together to enact a single crypto regulator. And, even if Congress could do so, it shouldn’t.

Congressional obdurace about regulatory-agency rationalization isn’t because the financial-regulatory construct makes sense or even that Congress somehow thinks it does. Congress knew that the multiplicity of banking agencies created undue opportunities for arbitrage and captivity at least as early as the 1971 Hunt Commission report arguing for what the then head of the Senate Banking Committee, William Proxmire, called the “Federal Banking Commission” when he tried to create one throughout the 1970s and early 1980s. As banking blurred into financial services in the 1990s, the regulatory perimeter became even fuzzier and Congress tried to rationalize it in the 1999 Gramm-Leach-Bliley Act, ultimately having only minimal impact on the alphabet soup.

A new regulator – the Office of Federal Housing Enterprise Oversight – was created in 1992 for Fannie, Freddie, and the Home Loan Banks, but that was because the S&L crisis …

1 12, 2021

FedFin on Federal Crypto Powers

Arezou Rafikian2023-05-23T14:22:26-04:00December 1st, 2021|The Vault|

Although the OCC joined other agencies issuing a non-committal “roadmap” for future cryptography actions, the agency at the same time and far more decisively stated that crypto activities are permissible only if they are also safe and sound. As a result, national banks and federal savings associations (FSAs) may no longer simply undertake approved crypto activities and now instead must receive prior OCC consent to do so. This may prove challenging to banks now using or seeking to use national charters for their own businesses, for partnerships with state-chartered entities, or via their own fintech ventures.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.…

2 11, 2021

FedFin Assessment: The Near-Term Stablecoin Regulatory Agenda

Arezou Rafikian2023-06-02T13:04:23-04:00November 2nd, 2021|The Vault|

As noted yesterday, the President’s Working Group on Financial Markets (PWG) was joined by the OCC and FDIC yesterday issuing a report calling for prompt Congressional action to regulate stablecoins and, even in its absence, also for fast action by federal regulators and the FSOC. In part because it poses the largest regulatory void, the most worrisome of the risks the report details arises from the role stablecoins may play in the payment system and resulting threats to systemic stability and competition. Issues germane to digital-asset trading (defined to include lending and related activities) are described but largely left to regulators; SEC Chairman Gensler has made it clear (see Client Report INVESTOR19) that he intends to act and the CFTC-chair nominee has done the same.

The full report is available to retainer clients. To find out how you can sign up for the service, click here.

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