Gensler and Behnam Set to Testify for Congress
Senate Agriculture Committee and CFTC Chairman Rostin Behnam:
On September 14th at 10:00 AM, the Senate Agriculture Committee will hold a hearing with two panels to discuss the bill introduced by Senators Stabenow (D-MI), Boozman (R-AR), Booker (D-NJ), and Thune (R-SD). The first panel will be with CFTC Chairman Rostin Behnam. The CFTC would be responsible for regulating “digital commodity” spot markets under the bill. The second panel will feature a lineup of industry representatives.
In its current form, the Stabenow-Boozman bill authorizes the CFTC to regulate digital commodity markets. This authority includes oversight of “digital commodity platforms,” including trading facilities, custodians, brokers, and dealers, and would require these businesses to register with the CFTC. To read more about how the proposed legislation will affect CeFi and DeFi spot markets, check out our blog post on the topic here!
Senate Banking Committee and SEC Chair Gary Gensler:
On September 15th at 10:00 AM ET, SEC Chair Gary Gensler will testify before the Senate Banking Committee in his first appearance before an oversight committee in over a year. With a years worth of questions piled up for the chair, we expect the hearing to touch on a laundry list of issues, including the agency’s regulation by enforcement approach, its rules regarding climate disclosures, and the implications of “SAB-121” (Staff Accounting Bulletin), and more.
While witnesses saying as little as possible in congressional testimony is one of Washington’s most well-established sacraments, Gensler may face some “heat” in next week’s hearing given the SEC’s controversial agenda. Multiple senators on the committee have publicly expressed their discontent with Chair Gensler’s approach. Senator Pat Toomey (R-PA), in particular, has been highly critical of the chairman’s regulation by enforcement approach to crypto and has called for the agency to provide regulatory clarity on numerous occasions.
DEF Twitter Space
On September 15th at 3:00 PM, DEF will be hosting a Twitter Spaces to discuss the aftermath of the hearings and what to expect on the regulatory front going forward. Tune in here!
Chairman Gensler Doubles Down
On Thursday, Chairman Gensler gave a speech at the Practicing Law Institute in which he addressed three topics: (1) digital assets, (2) stablecoins, and (3) digital asset providers. CT read into things a bit, so here’s some clarifying details:
The first rumor that made its way around the trusted bird app was that the chair said something along the lines of “ETH is not a security” or “ETH is a commodity.” Neither is true. No where in the speech does the chair even mention the words ETH, Ethereum, or Ether.
The second rumor was more of a misleading half-truth that originated from a somewhat poorly worded Wall Street Journal tweet. The headline read “Former CFTC chairman signals support for giving CFTC authority over certain cryptocurrencies.” Here is what the chairman actually said when addressing where the CFTC fits into this picture:
What does this mean?
That nothing has changed from Chair Gensler’s perspective. This speech was merely a (more fiery) repackaging of views he’s already shared with the public, namely that the vast majority of tokens being traded in the secondary market are securities and that Bitcoin is the only token he will specifically describe as a “non-security token.”
Fed Vice Chair Barr Says Crypto Regulation is a Priority
On Wednesday, newly appointed Fed official Michael Barr delivered his first speech as the Vice Chairman of Supervision. He outlined his plan for bringing certain crypto activities within the regulatory perimeter. In the speech, Barr specifically highlighted stablecoins, or “unregulated private money,” as he referred to them, as “a priority” for banking regulators and directly called on Congress to “work expeditiously to pass much-needed legislation to bring stablecoins, particularly those designed to serve as a means of payment, inside the prudential regulatory perimeter.”
What does this mean?
Barr’s comments reflect the administration’s view that stablecoin regulation should be Congress’s top priority. With negotiations over a potential bipartisan bill in that vein from the House Financial Services Committee still ongoing and midterm elections upcoming, the chances of a bill passing this Congress are diminishing. Barr’s speech, however, makes clear that crypto generally—and dollar stablecoins specifically—remain top of mind for federal banking regulators.