First, wtf is a CBDC readers might ask.CBDC is an acronym, for Central Bank Digital Currency. Two links: a generic CBDC websearch gives CBDC background, while this link is specific to "Project Hamilton" web content.
From there interested readers can do further research.
Following a recommendation in the report, OSTP and the National
Science Foundation will lead an interagency effort to develop a National
Digital Assets Research and Development (R&D) Agenda. This agenda
will place a high priority on advancing research on topics like
cryptography that could be helpful to CBDC experimentation and
development at the Federal Reserve. This agenda will also cover topics
less related to CBDCs; for example, working with consumer protection
experts, it might support innovations that increase financial inclusion
and equity in the digital assets ecosystem without placing already-financially vulnerable communities at greater risk.
This R&D agenda will take an whole-of-government approach, consistent with the President’s directive to place the highest urgency on R&D efforts related to CBDCs, as well as the fiscal year 2024 budget priority
that requests that Federal departments and agencies collaborate on
critical and emerging technologies, including financial technologies.
This will help bring the Federal Government’s resources and expertise to
bear on hard questions related to digital assets.
This report helps advance the mission of the White House Office of
Science and Technology Policy, which is to maximize the benefits of
science and technology to advance health, prosperity, security,
environmental quality, and justice for all Americans. The American
people deserve to fully benefit from technological possibilities like a
U.S. CBDC, while being protected from the harms it could bring.
We look forward to continue advancing President Biden’s priorities on digital assets.
So that is clear proof of an agenda in motion, presently, and those last two paragraphs bring to mind Reagan's aphorism about, " I'm from the government and here to help you," being words of dread.
The Emmer-McHenry letter, online and by web capture - READ IT:
click each image to enlarge and read
Those questions are important. Whose private sector participation happened? Has that led to private parties having some future regulatory advantage? What is this intended to lead into?
In effect, the project happened, it was somehow funded and coordinated among the players - so who are the players besides MIT and Boston Fed?
What is of major concern, that such key information was not published up front by MIT and Boston Fed, to where Congressmen had to ask. With the obvious ramifications of benefit to those taking part, information is power, and power and information can have major monetary advantage.
Whose game? That is the question. MIT and Fed people come and go, the door revolves and start-ups happen in the regular course of business. But this effort transcends the regular course of business. Funding can have wrinkles. What's up?
Now you know a bit about what's happening, a caveat. This is something Crabgrass is learning more and more about via looking into the FTX - SBF collapse with underlings turning into plea bargainers and all, SBF on an airplane to the U.S. before that "cooperation" was made public - plus crypto hype,CBDC movements, the MetaMask app-scam - - - with all that where the learning curve is steep and Crabgrass not claiming any special expertise in learning while posting.
Caveat emptor is one pole of worry per an unregulated crypto world, while tight centralized digital money poses its own other threats as the other pole. You need a trustworthy product if it is to be a help; but trusting the Fed, (run after all by bankers and the government primarily for the health and well being of bankers - and coincidentally of course, for softening business cycle woes for the public too), has its own privacy worry with direct cash dealings fading and traceable digital dealings being a thicket of "big government" worry.
Crypto was on the ropes before FTX went splat in its Nov. 2022 bankruptcy filing, with that whitehouse.gov stuff getting out a Sept. 2022 notice to curiously precede the splat by mere months. And -
And that was September, this year. Months before FTX went splat. Months after the cryptocurrency bubble burst, this spring, with crypto values plunging.
Coincidences are of interest, including SEC handling of its own crypto-related agenda, prior to the FTX collapse. (That being its own story deserving its own post.) And an interagency task force executive thing, an Executive Order, posted but not made a hot media coverage thing while we mere citizens know nothing of whether there was White House specific notice to and involvement of the Congressional Blockchain Caucus, as the White House went about its various moves in forming a CBDC agenda.
The Emmer press release from which the Crabgrass headline quotes, is online here. In part, it notes:
Congressman Tom Emmer (MN-06), the Ranking Republican on the House
Financial Services Subcommittee on Oversight and Investigations, led a
letter with Ranking Member Patrick McHenry (NC-10) to Susan Collins,
President of the Federal Reserve Bank of Boston, about “Project
Hamilton,” an initiative to research the development of a central bank
digital currency (CBDC).
A central bank digital currency is a programmable digital
currency issued from a federal reserve. If the CBDC is not crafted with
the values of transparency in mind, the currency falls at risk to the
financial privacy violations currently on display in China.
It has come to Congress’s attention that some firms
participating in Project Hamilton intend to use government resources
from the project to design a CBDC with the intent to then sell those
products to commercial banks.
Emmer said, “Any U.S. CBDC must be open, permissionless, and private.”
“The more we learn about the Boston Fed’s work on Project
Hamilton, the more we have become concerned with the lack of
transparency, especially as it relates to their partnership with the
private sector. The unfair advantage that some private companies could
enjoy from this partnership and the failure to ensure the principles of
privacy, sovereignty, and free markets should be concerning to every
American,” Emmer concluded.
[...] Emmer has long expressed concern about the implementation of a
U.S. CBDC. In January, Emmer introduced a bill to prohibit the Federal
Reserve from issuing a CBDC directly to individuals. You can read more
about that bill here.
[italics added]
Having a Blockchain Caucus seems a public good, with there being multiple flavors of blockchain, as well as multiple potentials. Emmer appears still as enthusiastic about blockchain and as cautious about CBDC as he was before the FTX collapse, which might be a good thing. Opinions differ.
All I know is what I read on the Internet.
_________UPDATE________
One paragraph from the Emmer press release issued to give notice of the letter to the Boston Fed -
A central bank digital currency is a programmable digital
currency issued from a federal reserve. If the CBDC is not crafted with
the values of transparency in mind, the currency falls at risk to the
financial privacy violations currently on display in China.
That is not entirely clear re "transparency" yet still a heavily loaded thought. Link. Wikipedia. Wired, in anecdotal story form, from Dec. 2017. Indications are consolidation of centralized government systems in China since 2017.
Where we in the U.S. might be along that road is a separate story, as in the E.U., but the China allusion is sobering. Whether we need a CBDC to get there or not, we are on a trajectory where a tightly monitored CBDC blockchain implementation might assist the trajectory, so that it is proper for Emmer to suggest concern, e.g., buying an over the counter medication at a CVS outlet for cash vs on a to-be-implemented tracking and storage system related to a Fed issued CBDC with overreaching capability. More than minimally needed to provide security, reliability, and trust would be too much. Or is the worry only if you have something clearly wished to be hidden?
Presume that MIT - Boston Fed utilized funding and extended design help from a credit scoring firm with a big growing database. Does that change how you regard the Emmer inquiry or attention? Whether blockchain implementations can be formulated with less anonymity than bitcoin's is a technical question Crabgrass cannot presently answer, the guess being they can, and "money laundering" and "terrorism" are topics pulled out and waved at us if we think where in our lives anonymity might be a benefit to pursue. You're not a terrorist or money launderer, so - Since you're not one of the bad guys, why should you worry? Eh?
Emmer text quoted in the headline, " . . . regarding the dangers a CBDC could pose to financial privacy and financial freedom, which were the subject of over 65% of the letters in response to the Fed’s January 2022 report on CBDCs."
The suggestion of that 65% datum that privacy matters are important to people is hard to deny.
BACKGROUND: That January 2022 report is online here. A Fed intro notice, here, states:
The paper summarizes the current state of the domestic payments
system and discusses the different types of digital payment methods and
assets that have emerged in recent years, including stablecoins and
other cryptocurrencies. It concludes by examining the potential benefits
and risks of a CBDC, and identifies specific policy considerations.
Consumers and businesses have long held and transferred money in
digital form, via bank accounts, online transactions, or payment apps.
The forms of money used in those transactions are liabilities of private
entities, such as commercial banks. Conversely, a CBDC would be a
liability of a central bank, like the Federal Reserve.
While a CBDC could provide a safe, digital payment option for
households and businesses as the payments system continues to evolve,
and may result in faster payment options between countries, there may
also be downsides. They include how to ensure a CBDC would preserve
monetary and financial stability as well as complement existing means of
payment. Other key policy considerations include how to preserve the
privacy of citizens and maintain the ability to combat illicit finance.
The paper discusses these and other factors in more detail.
The
Treasury Department’s top official for financial markets and stability
expressed little urgency over the federal government’s need to prepare
for the potential launch of a digital US dollar.
Regulators need
to examine whether a central bank digital currency — or CBDC — would
actually improve the speed or cost of real time interbank payments,
which the Federal Reserve is aiming to introduce in 2023, said Nellie
Liang, undersecretary for domestic finance at the Treasury.
That suggests that interbank transactions are the more immediate consideration over a CBDC for the general public, while the impact of cryptocurrency failure events might end up having an acceleration effect upon central bank takeover of the market space, with/without decentralization and anonymity. Readers - Guess at it.
Retail CBDC and U.S. Monetary Policy Implementation: A Stylized Balance Sheet Analysis Matthew Malloy, Francis Martinez, Mary-Frances Styczynski, and Alex Thorp - April 2022
Abstract This paper discusses how a Federal Reserve issued retail central bank digital currency (CBDC) could affect U.S. monetary policy implementation. Using a stylized balance sheet analysis, we analyze the effect a retail CBDC could have on the balance sheets of the Federal Reserve, commercial banks, and U.S. households. Then we consider how these balance sheet changes could affect monetary policy implementation for the Federal Reserve. We illustrate that the potential effects on monetary policy implementation from a retail CBDC are highly dependent on the initial conditions of the Federal Reserve’s balance sheet. Moreover, the analysis demonstrates how the Federal Reserve may use its existing tools to manage the effects of a retail CBDC on monetary policy implementation.
FURTHER: Cato Institute is firmly against a CBDC and especially if it would involve Fed or Treasury getting into retail banking with regular citizen accounts. The belief is that banking is a private sector privilege not to be preempted by government.
Readers might need to face a "not a robot" capcha, here, to get to the pdf. The report's abstract:
Central bank digital currencies, or CBDCs, have the potential to radically transform the American financial system. They are no longer merely academic musings. Rather, CBDCs have gained the attention of politicians, central bankers, the tech industry, and even the broader public. Government officials, in the United States and abroad, are now actively working to implement CBDCs and solidify government control over payments systems. But this experiment should be left on the drawing board because CBDCs ultimately usurp the private sector and endanger Americans’ core freedoms. They have no place in the American economy. Congress should explicitly prohibit the Federal Reserve (the Fed) and the Department of the Treasury (Treasury) from issuing a CBDC in any form.
One of the report's authors expressed comparable thinking in an extensively linked Forbes op-ed dated Dec. 15, 2022.
WaPo here, and the entire report is worth reading. The story, Congress voted - both Houses, by a voice vote each - to remove the bust in the Capitol of Chief Justice Roger Taney, author of the Dred Scott decision, to be replaced with a bust of Justice Thurgood Marshall.
The paragraph of interest, mid-item:
Hoyer told reporters Tuesday that Taney’s interpretation of the Constitution is one that every American should reject. “The good news is not only are we replacing the Taney statue but we also provide for a bust of Chief Justice Marshall,” Hoyer said.
While Rep. Hoyer is not old enough to have lived to remember either Taney or Chief Justice Marshall (John Marshall, per Marbary v. Madison, etc.), to have been speaking from personal recollection, he was well alive and in his prime when Thurgood Marshall, was an Associate Justice serving under Chief Justice Warren into the term of Chief Justice Burgher, after he was nominated to serve on the Court in 1967 by Lyndon Johnson.
Thurgood Marshall's most renowned case argued before the Court was Brown v. Board of Education, in 1954.
Thurgood Marshall was succeeded on the Court by the second black man to serve there, the inauspicious _____________, confirmed by the Senate, Joe Biden presiding; _____________, having been nominated by George "Willie Horton" Bush, when Missouri Senator John Danforth put forward _____________'s name to Bush for nomination.
Changpeng Zhao, the founder and chief executive of Binance, was part of a group chat on Signal with key crypto leaders as the rival exchange FTX collapsed. From Dec 9, NYT reporting, Zhao worried that SBF was conducting himself in ways endangering the entire crypto market and market players. Emails were attained by NYT about the interactions among crypto executives.
The health of Thether a key trading firm with its Tether "Stable Coin" crypto pegged to the dollar, was a worry to Zhao. Thether was and for now remains a major player in crypto redemptions, cashing in crypto in exchange for dollars. The continuance of a healthy functionary that way is of obvious importance and Zhao believed SBF was engaging in destabilizing conduct.
Days earlier, a Dec. 7 NYT item suggested SBF was under investigation for market manipulation related to the collapse of an earlier crypto currency:
In May, major cryptocurrency market makers — exchanges or individuals who arrange for buyers and sellers to be matched — noticed a flood of “sell” orders coming in for TerraUSD, said one person with knowledge of the market activity. The orders were in small denominations, but they were placed very quickly, the person said.
The sudden jump in sell orders for TerraUSD overwhelmed the system, making it hard to find matching “buy” orders for them. Under normal conditions, any sell orders that remained unfulfilled for too long would be matched with buy orders at a lower price. The longer the orders lingered without being matched, the more they forced down the price of TerraUSD and caused a corresponding drop in Luna prices because of the way the two coins were linked.
The exact causes of the collapse of the two cryptocurrencies remain unclear. However, the bulk of the sell orders for TerraUSD appeared to be coming from one place: Sam Bankman-Fried’s cryptocurrency trading firm, which also placed a big bet on the price of Luna falling, according to the person with knowledge of the market activity.
Finally, this Dec. 12 NYT item examines exposure possibilities of SBF's parents, who SBF identifies as not insiders, but useful idiots; more or less.
Should authorities vigorously pursue the parents' involvement as possibly having civil or criminal dimensions, they can be dragged over the rocks by the governmental deep pocket to where they may end up bankrupted, or nearly there. To the degree SBF cares for his parents' welfare, this may be an avenue of leverage the feds hold over SBF as events unfold.
Cooperation can vary in degree, from admitting "I fucked up" fault and having memory lapses without records to refresh memory, to something beyond that, depending on whether there is leverage.
From prior written submitted Testimony of Mr. John J. Ray III, CEO, FTX Debtors, December 13, 2022, House Financial Services Committee, there exist many loose ends and unanswered questions about extent and whereabouts of possible off-books FTX assets. Leverage over SBF beyond his personal exposure might help unravel the thicket within bankruptcy proceedings. Maximizing the return to creditors there being the goal, down to the bone pickings.
Not that use of the parents that way appeals to a sense of fairness. But the feds do as they like. As they think best.
In that sense, in closing, the feds having effectively canceled SBF testifying at the Dec. 13 FinServ hearing may have been over a possible concern of the feds to lessen tensions in the crypto market by keeping SBF off record because things he might have said might have adversely impacted the now sensitive public trust held in the entire crypto segment.
The question of why an appearance and testimony was quelled was raised in earlier Crabgrass posting. Something is going on. The range of questions at present is intriguing, and whether many get suitably answered is anybody's guess. The feds know more than the public. That is one certainty. But not too helpful a certainty, as we wonder and speculate. And wait.
Sam BF indicted ahead of Trump could be a headline. Not that they interacted at all, just which shoe dropped first.
SBF's confederates and affiliated persons so far appear to not be named as civil law defendants nor indicted in government court cases. That is at least so, in what Crabgrass has encountered online.
BOTTOM LINE: Both an indictment and civil securities law based action exist, with the best understanding Crabgrass has is that the SEC already has filed, and the indictment will be filed tomorrow.
Apologies to earlier readers who may have accessed the erroneous earlier post.
UPDATE: The Indictment seeks forfeiture, and the bankruptcy court will be seeking clawbacks. The bottom line as to property, SBF will end up with none that has not been artifully hidden away, if there is any of that, and a personal bankruptcy is likely, beyond the business entities involved presently in bankruptcy court.
And other persons are likely to face civil SEC actions and Indictments. The Moonstone Bank situation apparently has not yet been specifically pleaded, by name, but machinery is working. The final Indictment count, the campaign finance law indictment count is of interest as to what evidence will end up in court about that thicket. And clawback dimensions of wrongful money having been infused into and already spent by politicians and political consultants will resonate for some time.
Last, SBF and colleagues had to sense the walls closing in on them. Tense times near the end, but keeping the story going as long as possible with believers still there at the end. It must have been stressful times for the perps and the victims.
People who had money and chased profit making dreams, now holding positions worth nothing, is not the best holiday news. Fool and money soon parted may be said, but it is not at all a cheerful analysis. Trusting crypto, and others are still in that troubled market.
__________UPDATE________
This item by Johnathan Turley coalesced vague thoughts kicking around in my own mind. As in why now, for what purpose would two executive branches of the federal government move in concert with one another and with Bahamian authorities to promptly ice SBF in waning minutes to shut down anticipated next-day Congressional testimony:
The Justice Department Faces Questions After Effectively Preventing Bankman-Fried from Testifying in Congress
The arrest of Sam Bankman-Fried yesterday was sudden and unexpected in light of Bankman-Fried’s plan to testify before Congress. As a criminal defense attorney, my reaction to the arrest last night remains unchanged: this is the first time that I can recall where prosecutors moved aggressively to stop a defendant from making self-incriminating statements. His testimony would have been entirely admissible and likely devastating at trial.
I previously wrote how Bankman-Fried was doing harm to his case by speaking in the media and to Congress. So why would the Justice Department move to stop the self-inflicted damage? You have a major target who was about to voluntarily testify for hours.
That is ordinarily a dream for prosecutors, but the Justice Department moved quickly to prevent that from happening. At that stage, Bankman-Fried was not charged or in custody. He was not protected by Miranda or other constitutional rules from self-incriminating statements.
Indeed, some of us had already warned that he was causing himself considerable damage in making such statements. This was a defendant with a large legal team facing possible criminal charges who seemed eager to speak about his actions and motivations. Most prosecutors would sit back, make popcorn, and watch this unfold.
The curious move led many to question whether the Biden Administration was eager to prevent questions on Bankman-Fried’s political contributions and associations. He was the second highest donor to Democratic causes in the last election cycle. His mother, a law professor at Stanford also heads a major Democratic campaign fund.
[...] The range of charges includes wire fraud, wire fraud conspiracy, securities fraud, securities fraud conspiracy, and money laundering.
Notably, the eight counts include violating campaign finance laws, a charge that could prove embarrassing for some powerful political interests.
The charges are on top of charges announced earlier Tuesday by the Securities and Exchange Commission, which alleged Bankman-Fried defrauded investors and used proceeds from investors to buy real estate on behalf of himself and family.
[...] The item goes further, but the seed is planted well by that quote.
First, the quickness of the coordinated move? The court papers appear well planned.
That suggests the decision to drop the shoe was a policy decision, not a matter of timely preparation. Full prior preparation, not sloppy paperwork, but - WHY NOW?
To forestall the Ollie North improbable claim being dusted off and argued? Ollie used it to skate, but there was official motivation to move on then. What? SBF later to assert, uncertainty over what was heard in testimony and what his memory held, with the government likely having seized communication devices and/or all books and records now in the hands of the bankruptcy trusteeship.
Contrary to the assertion "first time" this time, Ollie North was the first time, and he skated. It is a plausible explanation, but - why not say so?
To cover up something else? To not imperil an ongoing investigation? If that, what target(s) and what expectation(s)? To go after crypto all together in one fell swoop? Not peicemeal? How the government moves next, after poisoning the Congressional hearing opportunity this week may show some reasoning, or none. We wait.
Because they wanted to. That is clear as a cause for their action, but why want such an apparently counterintuitive aim? What underlies the move? How quickly will there be follow-up? When and how? And who else beyond SBF direct affiliates are in the crosshairs?
Nailing down a separation of banking and crypto, where the eastern Washington tiny bank with the Moonstone web presence will be made an example? Forestall SBF testimony now until he can be examined by DOJ agents about the bank? So that, perhaps, his testimony that way can be properly constructed? A consistent story of all he knows about others in crypto, and how they use banking? Money laundering by other nations or other nationals? Delving more into political contributions and non-public interrelationships attaching to the donor status, dealings between politicians and crypto community operators?
They can't breathe? Heavy knee of regulation on their necks?
Now, from one perhaps more a cynic - skeptic than Crabgrass, there is J'accuse, with a suggestive lead photo:
Link. No quote. It is there to read. And to ponder.
While that linked op-ed speculates a bit, it does post a link to a letter, this one, three pages long, by image, note the date, before the fan loaded up:
click each image to enlarge and read
LEAD LETTER AUTHOR: My rep, MN CD6, Tom Emmer, preceeded in office by Michele Bachmann, (but don't blame me), I've voted Dem. all along, but majority rules, however enlightened or ignorant.
That letter indicated Lizzy Fallon as contact person for the esteemed authors.
Lizzy Fallon serves as a Financial Services Policy Advisor in the United
States House of Representatives, leading the Representative’s Financial
Services Committee portfolio, and specializing in policy related to
fintech and blockchain/crypto. Additionally, Lizzy manages the Member’s
co-chair responsibilities on the Blockchain Caucus.
Not an academic finance heavyweight, Fallon holds only a baccalaureate degree attained 2017, and prior to landing on FinServices staff was -
Research Associate - Parkhurst Energy May 2020 - Oct 2020 6 months Houston, Texas, United State
GraphicSpecial Projects Intern - The [Trump] White House May 2019 - Aug 2019 4 months
It is unclear who, if anyone, had any crypto/financial market expertise on the FinServices Committee staff (something that did not stop reps from favoring donor folks in the trade).
The post with the above crypto image of Rep. Emmer and an industry insider has very useful and informative recent links. Check them out.
However, to even better understand today, look to a recent yesterday apart from that DWT item, from before crypto tanked, from the spring of this year, where it had cheerleaders, enablers, advocates, congress critters:
The Skadden Arps lawfirm, possibly having skin in the game, on March 25, 2022, published:
Congressional Blockchain Caucus Challenges SEC Chairman on Web3 Enforcement
The Web3 community has long expressed frustration at the lack of clarity emanating from the SEC regarding the treatment of cryptocurrencies and other digital assets under current securities laws, with many characterizing the agency’s activities as “regulation by enforcement.” The community now has an important ally in the so-called Congressional Blockchain Caucus, a bipartisan group of approximately 35 Congress members who describe themselves as those “who believe in the future of blockchain technology, and understand that Congress has a role to play in its development. As a Caucus, we have decided on a light touch regulatory approach.”
On March 16, 2022, Rep. Tom Emmer (R-MN) and seven other Congressional Blockchain Caucus members sent a letter to SEC Chairman Gary Gensler questioning the commission’s use of the Division of Enforcement and Division of Examination to obtain information related to “cryptocurrency and blockchain firms.” Specifically, the members assert that the SEC has been using the Enforcement Division’s investigative functions to gather information from cryptocurrency and blockchain companies in a manner inconsistent with the commission’s standards for initiating investigations and “at odds with” the Paperwork Reduction Act (PRA). The PRA, which was enacted in 1980, imposes certain approval requirements on government agencies seeking to obtain information from the public in order to minimize the burden on those from whom information is sought. In order to better understand the SEC’s authority to secure the information it seeks from blockchain firms — and to ensure these requests “are not over-burdensome, unnecessary, and do not stifle innovation” — the letter poses 13 questions to the SEC that center around the SEC’s activities in this space over the last five years.
Key Takeaway Over the past year, certain Congress members have expressed frustration with [SEC] Chairman Gensler’s approach to cryptocurrency, voicing concerns that it may stifle innovation and prevent the U.S. from being the global market leader in this area. While legislation to address how cryptocurrencies and digital assets fit within the federal securities laws’ framework is likely not on the short-term horizon, reliance on the PRA could provide an interesting angle by Congress to act as a check on the SEC’s efforts to collect information in this space.
[italics added] The gall of it. "As a Caucus, we have decided on a light touch regulatory approach.” Indeed. Not wanting to impede the new thing shaking things out expeditiously, free of red tape. It turned out to be unsolicited effort toward paying out rope for the perps to hang themselves.
BUT - Donor perps, and that matters.
NOTE - All the regularors were doing is keeping an eye on things, and that to Mr. Emmer and other Blockchain Caucus advocates was too much of a burden? Get real.
Fortune, March 18, 2022 -
“Crypto startups must not be weighed down by extra-jurisdictional and
burdensome reporting requirements,” Emmer wrote in a statement on his congressional website.
“The SEC must ensure that its information-seeking requests to private
crypto and blockchain firms are not overburdensome, unnecessary, and do
not stifle innovation.”
The struggle between Emmer and his cosigners and the SEC boils down
to how much control the agency has over private crypto companies. Emmer
argues that although the SEC is able to request the voluntary
interviews, testimonies, and the production of documents from entities
it regulates, it is overreaching in its power. He also argues that the
regulatory agency is applying this power to companies and entities not
under its jurisdiction.
What is the Congressional Blockchain Caucus?
The Blockchain Caucus was founded during the 2015–16 session of
Congress. It currently includes four chairs and 33 members from both
parties, according to its website.
The U.S. Congress has more than 400 caucuses, or groups of members of
Congress with a common legislative objective. The Blockchain Caucus
advocates for “a light touch” regulatory approach to blockchain
technology like cryptocurrencies and NFTs.
Because of the Blockchain Caucus’s preference for light regulation,
its members have sometimes clashed with the SEC, whose chair, Gensler,
has characterized crypto markets as the “Wild West.”
In their most recent spat, several members of the caucus—though, not
all—argued that two forms the SEC sends to crypto companies, Form 2866 and Form 1662,
ask for much of the same information, which is burdensome to companies.
Form 2866 asks crypto companies to send information like verification
of their assets and an assessment of their company’s risks, and Form
1662 lays out the penalties for not disclosing these details.
Gee. Verification of assets. As in don't blow smoke. And risk assessment. Of all things. Selling investment opportunities, and being requested about such things, to Emmer it is unnecessary burden.
Can you imagine a greater burden? Apparently Emmer cannot. Nor, apparently can he see justification for such investor-friendly inquisition. Fraud prevention? Never enters his mind? More from Fortune -
Emmer wrote in the letter that under the Paperwork Reduction Act of
1980, government agencies, when seeking information from the American
public, “must be good stewards of the public’s time, and not overwhelm
them with unnecessary or duplicative requests for information.”
[...] Under Gensler, the SEC has said little about blanket regulations for
crypto and NFTs. Yet Gensler has made it clear that he has his eyes set
on the industry. The SEC chair said earlier this year that he hopes the regulatory agency will start regulating cryptocurrency exchanges in 2022. Last week, President Biden’s executive order on crypto directed several federal agencies to study the drawbacks and benefits of crypto, possibly opening the door for new regulations.
Emmer said in a tweet that he has heard from many crypto and blockchain firms that
“SEC
Chair @GaryGensler’s information reporting ‘requests’ to the crypto
community are overburdensome, don’t feel particularly…voluntary…and are
stifling innovation.”
Stifling innovative fraud might actually be sound government policy. And there is 20/20 hindsight.
Noteworthy to be sure, via one of the hits from that search, we see congress critters can have some really bad ideas, authoritarian patriarchial anti-privacy ideas to undermine the very grounding of blockchain/crypto appeal and trust. Show sense. Being in Congress and showing sense are not wholly inimical, only too often alien to each other.
Back to the opening for a closing note. Somebody should try to untangle and publish about the follow the money thicket between the crypto promoters, their payments into politicians' campaigns, and the efforts of elected officials and paid political campaign folks to subsequently serve the desires of the donors, not biting the hand that feeds their lust for office and power. The DWT item linked to in opening this post alludes to Emmer as being too grateful for crypto campaign funds; but does not really document any such tie-in. We must be careful to not mischaracterise things.
So -
In effect, back to Emmer, and his hands on money as having been RNCC top dog this past election. What can crypto buy is a multifaceted question. It appears that donors pay real bucks to gain influence, not bit coin, but legal tender.
Yet without hard facts on dark money, we can only speculate; thanks to politics.
Thanks to Citizens United, decided as it was. Thanks to money and politics being of mixed concern to politicians. Regular Citizens are not conflicted that way.
Now, wholly unrelated to Blockchain Caucus, crypto promoters, crypto enablers, political contributions, and claims of over-regulation bordering perhaps (implicitly but unstatedly so) as unmitigated pure harassment of exemplary people. Simply unrelated to any of the preceding. From the 40's, before crypto existed - a tune.
Most likely a Quixotic tune. But catchy. In its own way easy to sing along.
_________UPDATE_________
Emmer on YouTube, about crypto, here, and interestingly here, the latter being interaction with a Financial Services Committee witness which is relevant today.
Both are about from a year ago, not today. The second video was embedded by Emmer into a tweet about "extensive guardrails" some crypto actors embrace. The tweet was noted by the Atlantic, in closing.
These tables list the top donors to candidates in the 2021 - 2022 election cycle. The organizations themselves did not donate,
rather the money came from the organizations' PACs, their individual
members or employees or owners, and those individuals' immediate
families. Organization totals include subsidiaries and affiliates.
No proof of any quid-pro-quo has been found online. Emmer has larger donors than either of the crypto items. Circumstances can be viewed multiple ways, but Emmer is a big crypto booster, that is a fact, and one donor is now in hot water. How those two facts are read together should be leavened by an expectation of propriety.
The American Prospect IS a partisan site, not generally favorable to Republicans.
That said, this item dated Nov. 23, 2022, reports:
The Securities and Exchange Commission was seeking
information from collapsed cryptocurrency exchange FTX earlier this
year, the Prospect has confirmed, bringing a new perspective to
an effort by a bipartisan group of congressmembers to slow down that
investigation.
The March letter
from eight House members—four Democrats and four Republicans—questioned
the SEC’s authority to make informal inquiries to crypto and blockchain
companies, and intimated that the requests violated federal law.
Rep. Tom Emmer (R-MN), whom the Republican caucus just elected as
majority whip, the number three position in the House GOP leadership,
led the letter. In a contemporaneous Twitter thread, Emmer wrote: “My office has received numerous tips from crypto and blockchain firms that SEC Chair @GaryGensler’s
information reporting ‘requests’ to the crypto community are
overburdensome, don’t feel particularly … voluntary … and are stifling
innovation.”
My office has received numerous tips from crypto and blockchain firms that SEC Chair @GaryGensler’s
information reporting “requests” to the crypto community are
overburdensome, don’t feel particularly… voluntary… and are stifling
innovation.
We
now know that FTX was one of those firms receiving information requests
from the SEC, about the very activities that have brought down the
firm. This raises the question of whether Emmer and the other
congressmembers were acting on behalf of FTX (which has been credibly
accused of snatching customer money to make risky bets) to try to chill an ongoing investigation from an independent regulatory and law enforcement agency.
[italics added] Note the posing of a question, and not an expression of probability.Same item, continuing -
Some of the “Blockchain Eight,” as the Prospect termed
them in March, have benefited from crypto largesse. Five of the eight
members received campaign donations from FTX employees, ranging from
$2,900 to $11,600. Rep. Ted Budd (R-NC), one of the signatories,
received half a million dollars in support from a Super PAC created by FTX co-CEO Ryan Salame.
More consequentially, Emmer was the head of the National Republican
Congressional Committee, the campaign arm for House Republicans, this
year. The NRCC’s associated super PAC, the Congressional Leadership
Fund, received $2.75 million from FTX in the 2022 cycle; $2 million from Salame in late September, and $750,000 from the company’s political action committee.
That money helped House Republicans win the majority in 2022. Though
FTX has been portrayed as a Democratic firm, thanks to the high profile
of former co-CEO Sam Bankman-Fried, the company sprinkled around
campaign donations fairly evenly, with a shade over 50 percent going directly to congressional Republicans and a shade under 50 percent to Democrats this cycle.
In an email, the SEC declined to comment. Six of the eight congressmembers have yet to respond to the Prospect’s inquiries.
[...] REUTERS REPORTED LAST FRIDAY
on an internal FTX document, showing that the SEC had made informal
inquiries earlier this year to FTX and other firms about how they
handled customer deposits. As we now know, FTX was funneling customer funds to its associated trading firm Alameda Research. The newly installed CEO of FTX, John Ray, told a bankruptcy court last week about a “complete lack of corporate controls” at the company.
The SEC also asked FTX about a rewards program that gave depositors
interest on their crypto assets, which could make them a security. SEC
chair Gary Gensler has been adamant
that crypto platforms are trading and minting securities, and that
these securities needed to be registered with the agency. Crypto firms
have generally failed to register anything.
In response to the inquiry, FTX asserted that the rewards program did
not involve any lending and was aboveboard. The SEC then replied that
it did not need further information “at this time.”
Timing of such FTX and SEC activity, re the timing of the Emmer - Blockchain Eight letter would be of interest, but timing of the SEC - FTX dealings could not be pinned down. More from the American Prospect item:
Emmer made clear in his March Twitter thread
that the letter was based on complaints from crypto firms, and that his
intent was to stop the SEC from making these inquiries. “Crypto
startups must not be weighed down by extra-jurisdictional and burdensome
reporting requirements,” Emmer wrote. “We will ensure our regulators do
not kill American innovation and opportunities.”
On the flip side, Emmer was quick to laud Bankman-Fried for his
integrity and compliance with the law. In December 2021, Bankman-Fried
testified before Congress, and Emmer told him, “Sounds like you’re doing a lot to make sure there is no fraud or other manipulation.”
Emmer and Gottheimer led the Blockchain Eight in donations from FTX with each receiving $11,600. FTX was in the top 15 of Emmer’s biggest donors in the 2022 cycle. Auchincloss received $6,800, and Budd and Torres received $2,900.
Coinbase has also contributed to members of the Blockchain Eight.
Emmer received $2,900 from Coinbase’s PAC in 2022; Gottheimer got $2,900
from a Coinbase employee, and Auchincloss got $2,000.
Budd was the beneficiary of roughly $517,000 in spending from co-CEO Salame’s Super PAC, American Dream Federal Action.
But the millions in funds from FTX’s PAC and Salame to the House
Republicans’ Congressional Leadership Fund dwarf the spending to
individual candidates. As the lead signatory of the letter and the
member who said he’d received “tips” from crypto firms that informed
that letter, and as the head of House Republicans’ campaign arm, Emmer
had the most to gain from a large donation to help the GOP win the
majority. “We delivered,” Emmer said after the majority was secured.
Salame gave $23.6 million to exclusively Republican candidates and causes in the 2022 cycle, in contrast to Bankman-Fried, whose $40 million went to Democrats. A handful of members, including Reps. Chuy GarcÃa (D-IL) and Kevin Hern (R-OK), have returned FTX donations, and Sens. Dick Durbin (D-IL) and Kirsten Gillibrand (D-NY) have donated the contributions to charity. None of the Blockchain Eight have yet said what they would do with their own FTX donations.
The catastrophe at FTX hasn’t stopped Emmer from continuing to boost crypto.
THE UNORTHODOX LETTER IS ANALOGOUS to the 1987
“Keating Five” scandal. Then, five senators (including a young Arizona
Republican named John McCain) pressured the Federal Home Loan Bank Board
(FHLBB) into shutting down an investigation into Lincoln Savings and
Loan and its chair Charles Keating Jr. Keating was a donor to all five
senators, giving $1.3 million over the years.
There is a bit more, but comparing the Emmer situation to the Keating Six and the S&L failure is speculative, and suggestive. At present it is premature conjecture.
Congressman Emmer partnered with the Chamber of Digital Commerce PAC to
facilitate the town hall and featured leaders from the blockchain &
crypto industry, including Jeremy Allaire, CEO of Circle, Brad
Garlinghouse, CEO of Ripple, Guy Hirsch, USA Managing Director at eToro,
Stephen Pair, CEO of BitPay, Matthew Roszak, Chairman and Co-Founder of
Bloq, and Chad Cascarilla, CEO and Co-founder of Paxos.
This suggests a political operative, not an economics heavyweight, where the expectation is that Freimark is not the driving force behind Emmer's understandings of cryptocurrency value, trading, market, and credability.
That in turn suggests Emmer's reliance in and promotion of crypto has another base than Freimark, presumably the host of Townhall participants above named, and the Chamber of Digital Commerce PAC, above named.
Reliance upon market participants carries a bias, if that is how Emmer relied.
It seems incumbent upon Emmer, now in today's realities, to explain what he and the witness are saying in the video (posted first online by Emmer) now placed onto the sidebar. As best as Crabgrass understands it, Emmer is complaining that crypto exchanges are under SEC scrutiny, denial, or discrediting while derivatives on crypto are SEC-allowed to be traded, presumably by conventional derivative trading houses.
If that is incorrect, we hope Emmer will be enlarging and revising his video remarks in the near future for clarity, i.e., to make clear to regular people why he is so avid a crypto promoter. And not in easy generalities, touting the next big thing, but how in detail he sees investor reliance in crypto a sound thing. He should identify his advisors on the technicalities of what he is promoting. Else, conclusions can range into areas Emmer might want to disarm.
Of those Townhall participants, readers, have you ever heard of any or have any idea of professional credibility any one of them holds among economists and bankers? Yes, crypto is a challenge to central banking and central bankers, and to banks happily under the Fed's umbrella while they run the Fed, but that does not gut nor bolster crypto credibility.
In effect: What's the story, Tom? Spell out a host of detail, please? Make it hang together and make sense to ordinary minds, and to lawyers who might wonder.
Something beyond a puff-piece in Breitbart, please.
click image to enlarge and read
That Breitbart item continues beyond the screen capture:
As the Fed failed to curb inflation, it has moved to hike interest rates to fight back against decades-high inflation.
To aid cryptocurrencies’ mission to serve as a counterbalance to
mismanaged monetary policy, Emmer said the federal government could
provide a more clear regulatory environment and ensure that Securities
and Exchange Commission (SEC) chairman Gary Gensler does not have “rogue
authority” to regulate the burgeoning crypto industry.
Emmer said, “In order for us to start to move forward on this you
have to at least start to define what is cash? What is a commodity, what
is a security? It makes, frankly, securities lawyers rich. They like to
go when we got the Howey Test. The Howey Test was created during a time
when digital currencies weren’t even a thing. I think it’s time to
define those terms.”
The Howey Test refers
to the U.S. Supreme Court case for determining whether a transaction
amounts to an “investment contract” and would be a security and thus
subject to disclosure and registration requirements under the SEC.
The Howey Test is an important issue in the digital currency
community, as many digital currencies and blockchain technologies such
as Ethereum may qualify as a security, and thus fall under Gensler’s
regulatory purview.
The Minnesota Republican sponsored
the Securities Clarity Act to help innovation flourish by clarifying
that a digital currency token is separate and distinct from a
traditional security.
Emmer continued, “I don’t believe in creating another regulatory or
regulator and other regulatory agency. I think we can do it within the
ones we already have. But we have to start defining them so we know that
Gary Gensler does not have rogue authority over every aspect of the
crypto community. I think that would be first and foremost from a
general statement, what we’d need to do.”
Emmer, a member of the Congressional Blockchain Caucus, sponsored
many bills to provide a more clear regulatory approach and to prevent
stifling innovation in the financial technology sphere. This includes:
H.R. 6415, which would prohibit Federal Reserve banks from offering central bank digital currencies (CBDCs), which many argue would grant nearly totalitarian levels of control over Americans’ money
The Blockchain Regulatory Certainty Act, which would provide regulatory clarity to blockchain innovators.
Emmer also said that Republicans, if they take the House majority
during the congressional midterms, would hold members of the Biden
administration accountable, such as Gensler, Consumer Financial
Protection Bureau (CFPB) Director Rohit Chopra, and Treasury Secretary
Janet Yellen.
“These people think they’re above the law, above Congress’s
supervision, and they’re not,” Emmer said. He said the Biden
administration remains hostile to crypto despite the potential it has
for the country and the world.
Emmer said, “This administration is not just the guy at the top, but
the administration is littered with people who I would argue are not
favorable towards the crypto space in frankly, the promise that it holds
in terms of opportunity for all Americans and people around the world.”
Does this "exposition" pass your credibility litmus test, where admittedly the Fed and monetary policy can be criticized? How does crypto make things more stable and less cyclical, when co-existing with the Fed, and beyond current players not wanting competition, why would the Fed issuing its own crypto be a bad (or good) thing? Right now we have crypto, decentralized - spun off in different "token" batches by private sector promoters, as "money" but does it carry the trust that a fiat currency must have, such as the dollar or treasuary bonds?
I don't know. Do your know? Does Tom Emmer know? Does Tom Emmer really care beyond crypto folks funding campaigns? Only Tom Emmer knows the answer to that last one.
Emmer appears to have made statements - bald assertions - without any bases in truth or logic offered to justify or underpin what he says.
Do you understand why any prudent person should invest in and rely on crypto?
Why crypto trading is anything beyond a casino with insiders who Townhall us along with Emmer, while you have never heard of them and have no real cause offered to trust their product?
___________FURTHER UPDATE___________
To the extent context might help readers focus upon the Emmer questioning aimed specifically at FTX, the hearing from which that segment was excerpted and posted by Rep. Emmer is online here, two and a quarter hours, and the Emmer interchange is at roughly the 54 and a half minute mark. The item seems to start without an identification of witnesses, etc., but mid hearing.
From following the entire process it is easier to understand the committee members each had particular focused attention toward one or another specific aspect of crypto/blockchain and the distributed vs. centralized nature of the process, as well as other dimensions. With five minutes per member, nobody could range too widely in attention and inquiry. Emmer seemed focused upon price discovery, in derivative trading. The reliability of it. Other Reps. during their time looked at Blockchain apart from crypto usage, and the caucus is "The Blockchain Caucus," not specifically focused upon crypto, which is the major Blockchain application domain at present.
A much wider range of utilization of Blockchain has been noted as feasible, and arguably desirable, with its uniqueness. Crabgrass is not yet versed in the nuances and potential, not owning or following crypto until reading the DWT item critical of Rep. Emmer. Keeping an open mind because of such ignorance of the topic is necessary, and an effort is being made to "study up" to gain a better understanding. E.g., online hearings touch policy and regulatory possibilities or needs, while this link might start a reader on technical discovery.
[UPDATE - As one example, one Rep. noted how crypto might allow prompt low cost sending of money by a worker stateside to family in another nation without the cost, delay, and impediments of using banking intermediation to handle such transfers. Clearly a different focus than Emmer's in that questioning segment. Emmer however has otherwise touted crypto as an empowering thing for low end folks in the economy, and such sending aid back home fits Emmer's general remarks in that direction.]
FURTHER: Ars Tech. indicates Bankman-Fried may likely be testifying before a House Committee, with possibly a Senate hearing too, both later this month. Rep. Emmer would likely be questioning him again, if the anticipated House hearing actually comes to pass. Moreover -
Websearch = Bankman-Fried testifying this month congress
The likelihood of such upcoming testimony is widely reported.
.....................................
Those interested in blockchain, an easy non-tech online item, here. Enthusiastic. Dated.
More recent, last month, here, make of it what you will.
