#Liang – Federal Financial Analytics

15 02, 2022

FedFin: Stablecoin Legislative Consensus in Sight, But from a Distance

Arezou Rafikian2023-04-04T15:59:02-04:00February 15th, 2022|The Vault|

Despite fierce partisan fighting over pending Fed nominations, today’s Senate Banking hearing on stablecoin regulation was considerably more bipartisan that last week’s HFSC session (see Client Report CRYPTO24). Both Chairman Brown (D-OH) and Ranking Member Toomey (R-PA) are in broad agreement on a two-tier structure in which stablecoins are issued either by banks or by nonbanks subject to strict reserve-asset, AML, and related regulation.

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

14 02, 2022

Karen Petrou: Two Regulatory Decisions That Will Define the Future of Money

Arezou Rafikian2023-04-04T16:07:43-04:00February 14th, 2022|The Vault|

Like all of you, we at FedFin spend a lot of time watching the U.S. Congress, but I’m increasingly wondering why. Sure, there’s the blood and guts. Watching Congressional deliberations is more and more like being a spectator at a hockey game for the fights or NASCAR races for the next fiery crash. Does any of this carnage really matter? Not much when it comes to vital, urgent financial policy questions such as what money has come to be in the United States. With Congress mired in a never-ending cock fight, regulators hold the fate of finance mostly in their own fierce grip. Even without deployment of the Fed’s nuclear CBDC option, two developments last week show clearly how much power regulators have to redefine U.S. digital currency.

First, there was outgoing FDIC Chair McWilliams’ offhand suggestion in her final remarks that stablecoins have all the characteristics of fiat currency deposits and thus could be eligible for FDIC insurance under current law. As soon as he took the helm, Acting FDIC Chairman Gruenberg demanded tough cryptocurrency regulation, but he didn’t rule out deposit status for at least some stablecoins if the agency was satisfied with their stability.

The impact of an FDIC decision deeming at least some stablecoins to be deposits is hard to over-estimate. As I detail in my book, what’s actually in a bank deposit isn’t what most people think they hold, i.e., a virtual pile of dollars. In fact, money in the bank is …

14 02, 2022

Karen Petrou: Two Regulatory Decisions That Will Define the Future of Money

Arezou Rafikian2023-04-04T16:07:34-04:00February 14th, 2022|The Vault|

Like all of you, we at FedFin spend a lot of time watching the U.S. Congress, but I’m increasingly wondering why. Sure, there’s the blood and guts. Watching Congressional deliberations is more and more like being a spectator at a hockey game for the fights or NASCAR races for the next fiery crash. Does any of this carnage really matter? Not much when it comes to vital, urgent financial policy questions such as what money has come to be in the United States. With Congress mired in a never-ending cock fight, regulators hold the fate of finance mostly in their own fierce grip. Even without deployment of the Fed’s nuclear CBDC option, two developments last week show clearly how much power regulators have to redefine U.S. digital currency.

First, there was outgoing FDIC Chair McWilliams’ offhand suggestion in her final remarks that stablecoins have all the characteristics of fiat currency deposits and thus could be eligible for FDIC insurance under current law. As soon as he took the helm, Acting FDIC Chairman Gruenberg demanded tough cryptocurrency regulation, but he didn’t rule out deposit status for at least some stablecoins if the agency was satisfied with their stability.

The impact of an FDIC decision deeming at least some stablecoins to be deposits is hard to over-estimate. As I detail in my book, what’s actually in a bank deposit isn’t what most people think they hold, i.e., a virtual pile of dollars. In fact, money in the bank is …

8 02, 2022

FedFin: Partisan Impasse Suggests Small Chance for Stablecoin Statutory Change

Arezou Rafikian2023-04-05T12:06:36-04:00February 8th, 2022|The Vault|

Today’s HFSC hearing on stablecoins makes it clear that the bipartisan legislation Chairwoman Waters (D-CA) prefers is at best a long way off. Democrats generally agreed with the President’s Working Group stablecoin report (see Client Report CRYPTO21), with Under-Secretary Liang today not only describing its findings but reinforcing the need for rapid regulatory intervention in concert with substantive statutory change.

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