That straight in: The White House is starting to solidify its stance on crypto.
Six months after President Joe Biden signed an executive order calling for a state-wide evaluation of U.S. digital asset policies, the Treasury Department and other federal agencies this morning released a series of reports encouraging — among others — the Securities and Exchange Commission and Commodity Futures Trading Commission to “aggressively pursue” investigations and enforcement actions into crypto scams, fraud and other illegal activities in the digital assets space.
“We recommend that authorities continue to vigorously pursue their enforcement efforts focused on the crypto-asset sector,” Treasury Secretary Janet Yellen said during a briefing on Thursday. “Authorities should use existing authorities to issue additional supervisory guidance and New rules to address current and emerging risks.” (Emphasis mine.)
Market regulators have so far avoided new regulations for companies with digital assets after a crypto market meltdown that wiped out more than $2 trillion of crypto’s market value.
While administration officials said turbulence was the forefront, they refrained from offering recommendations for specific regulations or legislation that might address their concerns.
Officials said a separate report by the Financial Stability Oversight Council will look at some of those risks in the coming weeks. (This is already a focus for members of Congress, particularly on the Senate Agriculture Committee, but more on that later).
There are “real challenges and risks with digital assets being used for financial services,” Yellen said. “At the same time, digital assets and other emerging technologies could offer significant opportunities if these risks are mitigated.”
For now, Crypto’s potential is most evident in institutional clearing and settlement systems that are beyond the reach of Main Street consumers, who have largely relied on digital assets for trading, lending, and borrowing, administration officials say.
The reports also focus on the possible development of a crypto-friendly digital dollar – also known as a central bank digital currency. The Treasury Department is recommending that US policymakers encourage the use of instant payment systems – which will soon include a Federal Reserve system called FedNow – as it leads an interagency working group to support the project.
“These reports underscore and expand our understanding of the policy implications and technical decisions related to a potential Federal Reserve digital currency, if one is deemed to be in the national interest,” Brian Deese, director of the National Economic Council, told reporters.
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University of Michigan consumer sentiment data is released at 10 a.m
Speaking of crypto – It was a big day in the Senate Agriculture Committee as Congress held its first hearing on a proposed rulebook for crypto markets that collapsed under the weight of their own hype earlier this year.
From me: “The bill, S. 4760, sponsored by Committee Chairs Debbie Stabenow (D-Mich.) and Sen. John Boozman (R-Ark.), marks Congress’ clearest effort to establish rules for a crypto marketplace that amid a series of scandals and bankruptcies earlier this year. The move would place the CFTC in charge as the industry’s top regulator, even as SEC Chairman Gary Gensler seeks to bring high-profile digital exchanges under his agency’s jurisdiction… “This isn’t about us at the CFTC. It’s not about the SEC. It’s about the regulatory framework. It’s about financial markets. It’s about protecting customers,” CFTC Chairman Rostin Behnam told senators Thursday.”
STRIKE DERIVED — POLITICO’s Ben White and Eleanor Mueller: “President Joe Biden narrowly avoided an economic and political debacle on Thursday when top administration officials helped salvage a last-minute tentative deal to stave off a devastating railroad strike. And it almost didn’t happen. Avoiding disaster required around 20 hours of talks from Wednesday that taxed the Labor Department’s coffee stocks, left office lights in the west wing on into the early hours and left everyone involved bleary-eyed and largely sleepless.”
BIG CHANGE AT CFIUS — POLITICO’s Doug Palmer: “Administrative officials said the president’s first-ever directive to the nearly 50-year-old US Inter-Agency Committee on Foreign Investment (CFIUS) complements other work by the administration to strengthen supply chains and strengthen US technological leadership and risks in the US related to the handling of sensitive data.”
THE BATTLE FOR FINTECH REGS IS GETTING HOTTER – POLITICO’s Katy O’Donnell: “Banks and consumer credit advocates are teaming up to try to get the Consumer Financial Protection Bureau to crack down on financial technology companies that lend to consumers. The Center for Responsible Lending and the Consumer Bankers Association are jointly requesting the CFPB to develop a rule that would extend federal oversight to the new breed of depositless lenders, according to a letter the two groups sent Thursday to CFPB Director Rohit Chopra sent. ”
GOLDMAN’S LEGACY — With the market pricing in a 75 basis point rate hike next week, economists at Goldman Sachs Research have updated their forecast for the Fed’s December meeting to 50 basis points from 25 basis points, citing wage strength and continued increases in housing, healthcare and education .
“We believe that the Fed will lead the market into a period — perhaps a very long period — of keeping the federal funds rate stable at above-neutral interest rates,” said Josh Schiffrin, Goldman’s US co-head. after Tuesday’s CPI report, interest rate products and global interest rate products.
NO ONE KNOWS WHAT IT MEANS, BUT IT IS PROVOCATIVE — Vince Golle and Reade Pickert from Bloomberg: “[Thursday’s economic] The data illustrates the many economic countercurrents the Federal Reserve is navigating as it seeks a soft landing for the economy while simultaneously tightening the monetary brakes to stamp out the fastest inflation in a generation.”
housing recession — Also from Katy: “Mortgage rates topped 6 percent for the first time since 2008, Freddie Mac reported Thursday, as the Federal Reserve struggles to get inflation under control. Mortgage rates have more than doubled over the past year as the Fed has hiked borrowing costs to curb rising prices.”
GOP BLASTS ESG — POLITICO’s Declan Harty: “GOP lawmakers called on SEC Chairman Gary Gensler to justify his agency’s draft rule requiring publicly traded companies to disclose more standardized information about the climate risks posed by their companies, and warned that the proposal probably won’t even withstand legal challenges will be completed.”
ALANIS MORISSETTE SAYS YOU KNOW AUDIT – Also from Declan: “SEC Chairman Gary Gensler has called for an acceleration in the timeframe for delisting Chinese and Hong Kong companies from US stock exchanges if the firms do not allow US inspectors to scrutinize their financial audits as promised.”
A LITTLE MOVE FOR MARKING I-BANK REVENUES — WSJ’s Cara Lombardo and Dana Cimilluca: “Adobe Inc. agreed to buy collaboration software company Figma for around $20 billion, the tech giant’s largest acquisition.”
INDICATION OF A SLOW DOWN — WSJ’s Esther Fung: “FedEx Corp. said its quarterly earnings were below expectations and that the company will close offices and park planes to offset the declining volume of packages being shipped around the world.”
FIRST IN MM — Ahead of the Treasury Department’s crypto reports, Sen. Elizabeth Waren (D-Mass.) sent a lengthy letter to Yellen warning that “the crypto ecosystem has the ability to undermine our national security, worsen the climate crisis, harm consumers and retail investors, and affect overall economic stability threaten—while lining the pockets of billionaires.”
DOG BISS MAN/FTX BUYS NECESSARY CRYPTO ASSETS – Coindesk’s Ian Allison and Tracy Wang: “Stock exchange giant FTX is leading the buyout of the assets of cryptocurrency lender Voyager Digital, whose bankruptcy filing has deepened this year’s industry crisis, but higher offers could still come in the coming days, the statement said a person familiar with the matter.”
POST-MERGE HANGOVER — Bloomberg’s Yueqi Yang and Muyao Shen: “Ether led digital assets lower after the groundbreaking software upgrade of the token’s underlying network became what some market watchers called a ‘sell-the-news’ event.”