19 12, 2022


2022-12-19T16:49:50-05:00December 19th, 2022|2- Daily Briefing|

JEC Report Calls for Crypto Regulation

The Joint Economic Committee (JEC) released a report late Friday arguing that recent contraction in the digital-asset market demonstrates the need for more regulation.  While it does not outline specific policy changes, the report asserts that new regulations must strive to keep digital assets separate from the broader economy to prevent contagion, as well as ensure that investors are properly informed on digital asset’s individual risks.

KC Fed Discounts SLR Relief as Solution to ONRRP Growth

A Friday brief from the Kansas City Fed concludes that limited money-market investment opportunities, policy uncertainty, and ONRRP changes such as easier eligibility better explain the sharp increase in ONRRP than bank-capital shortages as deposits flowed to MMFs.  As a result, the paper concludes that reinstating SLR exemptions for central-bank deposits and Treasury obligations would not materially affect bank use of the ONRRP and thus facilitate Fed balance-sheet reduction.

McHenry Tees Up Fintech Action for New Congress

Incoming Chairman McHenry (R-NC) today reintroduced legislation designed to facilitate financial innovation, kicking off his chairmanship’s focus on fintech, crypto, and other financial technology related matters.  The bill does not address priority policy questions in this contentious arena, instead creating a pathway for financial innovators to request information on whether they are eligible for exemptions from relevant regulations from the banking agencies and CFPB.


16 11, 2022


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.



15 11, 2022


2022-11-22T15:27:38-05:00November 15th, 2022|5- Client Report|

Crypto, Deposit Rates, Capital Top Senate Discussion

At today’s Senate Banking oversight hearing with the banking agencies, Chairman Brown (D-OH) generally applauded the work of regulators, emphasizing the need for tough standards, like-kind rules for bigtech companies, and an inquiry into why depositor interest rates lag Fed rate hikes along lines posed earlier by Sen. Reed (D-RI).  FDIC Acting Chairman Gruenberg concurred, criticizing banks for sluggish rates.  Ranking Member Toomey (R-PA) reiterated his longstanding complaints about regulators straying outside their mission in areas such as climate change.  He also called for SLR relief to reduce Treasury-market risk and opposed pending large-bank resolution guidance (see FSM Report LIVINGWILL19) on grounds that it is unnecessary.


14 11, 2022

FedFin on: Treasury Inches Closer to All-to-All Trading

2022-11-14T16:01:03-05:00November 14th, 2022|The Vault|

Building on our initial assessment, this report goes in-depth into the Treasury assessment of the market for its obligations and reforms necessary to avert another dash for cash.  Although the Federal Reserve, which participated in this study along with other agencies, indicated in 2020 it will review the supplemental leverage ratio (SLR) to…

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14 11, 2022


2022-11-14T15:46:49-05:00November 14th, 2022|5- Client Report|

Treasury Inches Closer to All-to-All Trading

Building on our initial assessment, this report goes in-depth into the Treasury assessment of the market for its obligations and reforms necessary to avert another dash for cash.  Although the Federal Reserve, which participated in this study along with other agencies, indicated in 2020 it will review the supplemental leverage ratio (SLR) to enhance bond-market liquidity, it has yet to do so and no mention is made of any such reform in this report.  To be sure, this is only a Treasury report that does not necessarily reflect the views of these other agencies, but the Fed and Treasury usually work closely on matters such as this and it seems unlikely that the matter would go unmentioned if plans were under way to revise the SLR.  The 2022 report builds on the inter-agency working group’s 2021 analysis (see Client Report TMARKET2) but still does not reach firm conclusions or lay out specific recommendations suitable for near-term action.  However, work is in fact under way at the SEC, which has proposed a new central-clearing mechanism for Treasury obligations that, if finalized, would create at least some of the infrastructure necessary for the all-to-all trading this report now explores in greater detail.  Next steps for Treasury-market reform will be discussed at a conference later this week.


19 05, 2022


2023-02-21T14:33:03-05:00May 19th, 2022|2- Daily Briefing|

BIS Finds New Shadow Crypto Finance, Risks in Spotlight

The BIS yesterday released a paper concluding that, while bank exposures in this high-risk sector are small in aggregate, digital assets nonetheless pose systemic risks.

Commerce Asks About CBDC, Payment System

Following the direction of the President’s digital asset executive order (see Client Report CRYPTO26), the Department of Commerce today released a request for comment on enhancing US competitiveness in  this sector.

Barr Breezes By

Today’s Senate Banking confirmation hearing with Michael Barr showed the Fed vice-chair nominee in careful form likely to assure him confirmation despite strong GOP opposition.

CFPB Tells States to Flex Their Enforcement Muscles

Turning again to actions outside the direct reach of public notice-and-comment requirements, the CFPB today issued an interpretive rule essentially encouraging states to enforce federal consumer-protection standards.

Fed Finalizes FedNow Framework

The Fed today issued a final rule laying out the legal framework governing the FedNow instant payment service it is racing to roll out (see FSM Report PAYMENT20).


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