#stablecoin – Federal Financial Analytics

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.

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30 03, 2023

DAILY033023

Eliza Allen2023-03-30T17:27:30-04:00March 30th, 2023|2- Daily Briefing|

Yellen Calls for Bank, Nonbank Regulatory Rewrite

Implicitly confirming press reports that the White House will soon press for tougher bank rules, Treasury Secretary Yellen today said that, as beneficial as the rules imposed since the great financial crisis have been, more stringent standards are necessary.

Hsu Sets Dual OCC Mission: Safety, Fairness

In remarks today, Acting Comptroller Hsu emphatically echoed statements of other top regulators that the banking system is safe and sound, emphasizing that the OCC is monitoring the market and is prepared to use its tools to protect the system.

Basel Updates Global Liquidity, Operational Standards

Although the U.S. has still not even proposed the Basel IV “end-game” standards, the Basel Committee continues to refine them and today issued its latest set of FAQs.

White House Sets Reg-Reform Agenda

As anticipated early this morning, the White House has issued a statement calling on federal banking agencies to roll back rules the President describes as weakening “common-sense bank safety and supervision.”

Senate Dems Press Agencies to Strengthen Capital Rules

Following this week’s hearings (see Client Report REFORM218), Sens. Warren (D-MA), Blumenthal (D-CT), and Duckworth (D-IL) sent a letter to Vice Chair Barr, Chairman Gruenberg, and Acting Comptroller Hsu urging them to strengthen large-bank capital requirements.

CFPB Stands By Its Small-Business Reporting Rules

Despite strong industry and GOP opposition, the CFPB today finalized its small business data collection rulemaking in a sweeping final rule the Bureau says will increase transparency in small business lending, promote economic …

15 02, 2023

DAILY021523

Eliza Allen2023-02-15T17:02:30-05:00February 15th, 2023|2- Daily Briefing|

GOP Launches Anti-SEC Climate-Risk Legislative Attack

As anticipated, House Republicans have gone beyond blasting the SEC’s pending climate-risk disclosure proposal to laying out a consensus bill to force Chairman Gensler in fact to retract it. H.R. 1018 has been introduced by HFSC member Lucas (R-OK) and 55 Republicans to prohibit climate-risk disclosures under securities law.

FDIC Adds Punch to FDIC-Misrepresentation Enforcement Promise

Building on its insurance misrepresentation final rule (see FSM Report DEPOSITINSURANCE113), the FDIC today issued four cease and desist orders demanding the removal of false claims and thus made it clear that it is surveying the marketplace to take far more rapid action than has been the case thus far.

Calling Out Hsu, Warren Demands Merger Reform

In a wide-ranging speech urging tough U.S. antitrust policy, Sen. Warren (D-MA) today reiterated her claims that banking agencies “rubber-stamp” mergers and pressed for immediate reform. She took particular aim at Acting Comptroller Hsu, urging him to prepare new guidelines for the banking industry and to block anticompetitive mergers.

Will SEC Custody Rules Kill Crypto?

Conceding that rulemaking is needed on at least one crypto question, the SEC today voted 4-1 to approve proposed changes to investment-advisor asset custody regulation. The measure would expand assets subject to custody requirements and the protections custody affords as well as revise related record-keeping requirements.

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16 12, 2022

DAILY121622

Eliza Allen2022-12-16T17:19:37-05:00December 16th, 2022|2- Daily Briefing|

GHOS Presses Speedy Bank-Crypto Capital Standards

Basel’s governing body, the Governors and Heads of Supervision, today endorsed the Committee’s planned work schedule.

Fed Finally Finalizes LIBOR Transition Regs

Narrowly ahead of its year-end statutory deadline, the Federal Reserve today issued a final version of its detailed proposal (see FSM Report LIBOR8) to implement the LIBOR Act’s provisions on replacement rates for existing contracts without fallback language (see FSM Report LIBOR7).

Regulators Highlight P2P, Crypto, NBFI Risks at FSOC Meeting

Although most of the FSOC’s discussion today of the LIBOR transition and climate risks was perfunctory, comments on the now-released 2022 Treasury annual report were not.

McHenry, Davidson Point to Forex-Clearing Systemic Risk

Picking up a recent BIS report finding at least $65 trillion at risk in off-balance sheet foreign-exchange clearing, incoming HFSC Chairman McHenry (R-NC) and the top Republican on the panel’s fintech task force, Rep. Warren Davidson (R-OH), called on Fed Chairman Powell and Secretary Yellen to investigate what they consider a looming risk to U.S. financial stability.

Chopra Presses Cloud-Service Provider, Stablecoin Systemic Designation

CFPB Chairman Chopra’s written statement for the FSOC meeting is considerably different than the oral one described in our earlier client alert.

Daily121622.pdf…

14 12, 2022

CRYPTO36

William Cross2022-12-14T17:26:30-05:00December 14th, 2022|5- Client Report|

Brown Backs Away from Crypto Legislation, Presses Again for New Rules

Senate Banking Committee Chairman Brown (D-OH) today backed away from prior statements about crypto legislation, focusing instead on the prospect of additional investigations into failing crypto firms and ongoing work with Secretary Yellen on a government-wide regulatory framework. Today’s hearing still centered on legislative action, with Sen. Warren (D-MA) along with Sen. Marshall (R-KS) releasing new legislation to subject crypto firms to AML rules comparable to those applied to banks along with banning crypto mixers. Sen. Lummis (R-WY) announced that she will reintroduce her stablecoin bill next year with Sen. Gillibrand (D-NY) (see FSM Report CRYPTO28), revising it in light of recent crypto debacles. Sen. Haggerty (R-TN) flagged Binance’s newfound monopoly power and ties to China as a major concern, an issue echoed by Sen. Warner (D-VA) and, in conjunction with Chairman Brown’s investigative agenda, may well subject the world’s largest crypto exchange to U.S. legislative scrutiny if its current liquidity challenges do not preoccupy attention next year.

CRYPTO36.pdf…

29 07, 2022

AL080122

Eliza Allen2023-01-04T13:39:09-05:00July 29th, 2022|3- This Week|

No Summer Sojourn

As noted later in this weekly, Congress is almost completely out of town this week in one sense – the House is all the way gone and most Senate committees are clearing up old business. We expect Senate Banking’s civil-rights hearing to be ornery and the others to be mostly rhetorical, but neither this nor the other evidence of seeming somnolence means nothing much will happen in August.

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25 07, 2022

DAILY072522

Eliza Allen2023-01-04T15:47:24-05:00July 25th, 2022|2- Daily Briefing|

Stablecoin Bill Still in Limbo

As we noted last week, the fate of stablecoin legislation at this week’s HFSC mark-up has been uncertain. The committee staff memo today does not include a bill in this area; it is our understanding that negotiations continue on a draft amenable to both Chairwoman Waters (D-CA) and Ranking Member McHenry (R-NC).

OCC Seeks Fintech, Nonbank Analyses

The OCC today calls for academic and policy-focused papers on the impact of fintech and nonbanks on banking and the markets for lending, deposit-taking, and payment services. This sweeping inquiry is designed to inform the agency as policy continues to take shape in these high-profile areas, with the announcement today providing no insight into whether these papers – which will doubtless come also from trade associations and other advocacy groups – will do more than provide a symposium’s worth of discussion.

Stablecoin Rules – or Lack Thereof – Likely to Remain

As noted in media this afternoon, HFSC will in fact not mark up a stablecoin bill on Wednesday. Instead, some staff indicate that a discussion draft will be released so that the process of crafting a bill can continue in August in hopes of a September vote. However, even if one were to occur, the odds of legislation in this Congress are slim to none at so late a date in the absence of any meaningful Senate Banking action in this arena.

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22 07, 2022

AL072522

William Cross2023-01-04T15:54:54-05:00July 22nd, 2022|3- This Week|

STABILIZING STABLECOINS?

On Wednesday, the House Financial Services Committee will mark up an array of bills that may or may not include as-yet-unintroduced legislation to rewrite the federal framework governing stablecoins. As we noted (see Client Report FSOC27), the sector’s travails have concentrated Congressional attention on the action first outlined in November by the President’s Working Group (see Client Report CRYPTO21), with any legislation brought to a vote this week sure to reflect the latest thinking from both the PWG and at least some of the rest of the Financial Stability Oversight Council. It only leaked revisions to the PWG plan and it’s far from clear if the CFTC agrees with these, but HFSC gives scant thrift to the CFTC. It falls outside the Committee’s jurisdiction and thus what it wants must be advanced by the Agriculture Committee for it to have any bearing on floor deliberations.

AL072522.pdf…

13 07, 2022

DAILY071322

Eliza Allen2023-01-06T15:18:57-05:00July 13th, 2022|2- Daily Briefing|

Small Business Committee Urges Fintech Transparency, New CFPB Role in Fintech Lending

Today’s Small Business Subcommittee on Oversight, Investigations, and Regulations hearing on fintech transparency focused on financial practices that may harm small businesses’ access to credit.

HFSC Party Lines Form on CRA Rewrite

As anticipated, the Subcommittee on Consumer Protection and Financial Institutions today held a hearing examining the banking agencies’ proposed rule to modernize the CRA (see FSM Report CRA32).

Fed Proposes Debit-Card, Payment-System Data Collections

Although the Fed has yet to finalize a controversial proposal related to debit-interchange fees (see FSM Report INTERCHANGE8), it has proposed changes to how it collects debit-card information essential to implementing changes to network selection and, should it come to do so, fee calculations.

FSB Chair Reiterates Need for Crypto Regulation, Highlights Progress on Climate Roadmap

FSB Chair Klaas Knot’s letter today to the G20 ministerial reiterated all the points regarding COVID exit strategies, regulation of cryptoassets, and executing FSB’s climate roadmap outlined after June’s plenary meeting.

Senate Democrats Demand More Stringent, Binding Fed Ethics Standards

Senate Banking Committee Chairman Sherrod Brown (D-OH) joined by four other Democrats today sent a letter to Chairman Powell again calling for more stringent, enforceable Fed ethics standards, and reminded Mr. Powell in strongly-written arguments about the need to do so via binding regulation or by the kind of statutory change they have already introduced.

Global Regulators Press for Global Stablecoin Payment-Risk Standards

Doubtless spurred by FSB requests and market …