It’s time for a crypto crackdown – POLITICO

This just in: The White House is beginning to solidify its stance on crypto.

Six months after President Joe Biden signed an executive order requiring a whole-of-government assessment of U.S. digital asset policies, the Treasury Department and other federal agencies released a series of reports this morning that, among other things, encourage the Securities and Exchange Commission and Commodity Futures Trading Commission to “aggressively pursue” investigations and enforcement action against crypto scams, fraud, and other illegal activities in the digital asset space.

“We recommend that agencies continue to rigorously pursue enforcement efforts focused on the crypto asset sector,” Treasury Secretary Janet Yellen said in a Thursday briefing. “Agencies should use existing powers to issue additional oversight guidance and new rules to address current and emerging risks. (Emphasis mine.)

Market regulators have so far avoided crafting new rules for digital asset firms following a crypto market meltdown that wiped out more than $2 trillion of the market value of cryptography.

Although administration officials said the unrest was their primary concern, they refrained from offering recommendations for specific regulations or laws that might address their concerns.

Officials said a separate report from the Financial Stability Supervisory Board will address some of those risks in the coming weeks. (This is already a priority for members of Congress, particularly on the Senate Agriculture Committee, but we’ll get to that in a moment).

Digital assets used for financial services present “real challenges and risks,” Yellen said. “At the same time, if these risks are mitigated, digital assets and other emerging technologies could offer significant opportunities.”

For the moment, Crypto’s potential is most apparent in institutional clearing and settlement systems that are beyond the reach of Main Street consumers who have relied heavily on digital assets for trading, lending and borrowing, officials say. administration.

The reports also focus on the potential development of a crypto-friendly digital dollar – otherwise known as central bank digital currency. The Treasury recommends that US policymakers encourage the use of instant payment systems – which will soon include a Federal Reserve system known as FedNow – as it leads an interagency task force to support the project.

“These reports underscore and advance our understanding of the policy implications and technical choices surrounding a possible U.S. central bank digital currency should it be deemed to be in the national interest,” the Council’s director told reporters. National Economics, Brian Deese.

IT’S FRIDAY “And it’s a fine day to catch a train.” Please send tips, story ideas and feedback to [email protected].

University of Michigan consumer sentiment data released at 10 a.m.

SPEAKING OF CRYPTO — It was a big day at the Senate Agriculture Committee as Congress held its first hearing on proposed regulations for crypto markets that crumbled under the weight of their own hype earlier this year.

Of me: “The law project, S.4760sponsored by the chairman of the committee Debbie Stabenow (D-Mich.) and Sen.John Boozman (R-Ark.), marks the clearest effort by Congress to establish rules for a crypto market that crashed amid a series of scandals and bankruptcies earlier this year. The measure would give the CFTC the role of the industry’s primary regulator even as SEC Chairman Gary Gensler plans to bring high-level digital exchanges under his agency’s jurisdiction…’It’s not about us at the CFTC. It’s not about the SEC. This is the regulatory framework. These are the financial markets. This is about protecting customers,’ CFTC Chairman Rostin Behnam told senators Thursday.

TRAIN STRIKE AVOIDED — POLITICO’s Ben White and Eleanor Mueller: ‘President Joe Biden narrowly avoided an economic and political debacle on Thursday as senior administration officials helped salvage a last-minute tentative deal to avert a devastating railroad strike. iron. And it almost didn’t happen. To avert catastrophe, it took about 20 straight hours of talks beginning Wednesday that taxed Labor Department coffee supplies, kept West Wing office lights on for the first few hours, and left all people involved cloudy eyes and largely insomniac.

MAJOR CHANGE TO CFIUS — POLITICO’s Doug Palmer: “Administration officials said the first-ever presidential directive for the nearly 50-year-old Interagency Committee on Foreign Investment in the United States, or CFIUS, complements other work that the administration made for strengthen supply chains, strengthen U.S. technology leadership, and address the risks of handling sensitive data.”

THE BATTLE OVER FINTECH REGULATIONS IS HEATING — POLITICO’s Katy O’Donnell: “Banks and consumer lending advocates are teaming up to trying to get the Consumer Financial Protection Bureau to crack down on fintech companies that extend credit to consumers. The Center for Responsible Lending and the Consumer Bankers Association are jointly calling on the CFPB to develop a rule that would expand federal oversight to include the new generation of noncustodial lenders, according to letter sent by the two groups to the director of the CFPB, Rohit Chopra Thursday.”

THE GOLDMAN QUOTE — With market rates rising 75 basis points next week, economists at Goldman Sachs Research have updated their projections for the Fed’s December meeting by 25 basis points to 50 basis points, citing strength wages and persistent increases in housing, health care and education.

“We believe the Fed will guide the market into a period – possibly a very long period – of holding the fed funds rate steady at above neutral” after Tuesday’s CPI report, said Goldman’s Josh Schiffrin, co-head of US interest rate products and global interest rate products.

NOBODY KNOWS WHAT IT MEANS, BUT IT’S PROVOCATIVE — Vince Golle and Reade Pickert of Bloomberg: “[Thursday’s economic] data illustrate many economic cross-currents in which the Federal Reserve navigates as he attempts a soft landing for the economy while pressing the brakes on monetary policy harder to stamp out the fastest inflation in a generation.

DROP IN HOUSING — Also from Katy: “Mortgage rates have exceeded 6% for the first time since 2008, reported Freddie Mac on Thursday, as the Federal Reserve struggles to get inflation under control. Mortgage rates have more than doubled over the past year as the Fed raised borrowing costs in an effort to rein in soaring prices.

GOP BLASTS ESG — POLITICO’s Declan Harty: “GOP lawmakers have called on SEC Chairman Gary Gensler to justify his agency’s proposed rule to require publicly traded companies to publish more standardized information about the climate risks their companies pose. companies, warning that the proposal is unlikely to withstand legal challenges once finalized. »

ALANIS MORISSETTE SAYS THE AUDIT KNOWS — Also from Declan: “SEC Chairman Gary Gensler called for speeding up the timetable to expel Chinese and Hong Kong companies from US stock exchanges if the companies do not allow US inspectors to review their financial audits as promised.

A LITTLE SHOCK FOR FALLING I-BANK REVENUES Cara Lombardo and Dana Cimilluca of the WSJ: “Adobe Inc. agreed to buy collaboration software company Figma for around $20 billion, in the tech giant’s biggest acquisition.

SIGNS OF SLOWDOWN — WSJ’s Esther Fung: “FedEx Corp. said its quarterly revenue is below its expectations and it was closing offices and parking planes to make up for the drop in parcel volumes being transported around the world.

FIRST IN MM — Prior to the Treasury crypto reports, Sen. Elizabeth Warren (D-Mass.) sent a long 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 threaten global economic stability – all while lining the pockets of billionaires” .

DOG BITES MAN/FTX BUYS DISTRESSED CRYPTO ASSETS — Ian Allison and Tracy Wang of Coindesk: “The exchange giant FTX in lead to buy assets of Voyager Digitalthe cryptocurrency lender whose bankruptcy filing has deepened the industry’s crisis this year, but higher bids could still come in the coming days, according to a person familiar with the matter.

POST-MERGER HANGOVER — Bloomberg’s Yueqi Yang and Muyao Shen: “Ether drove digital assets lower after the token’s groundbreaking underlying network software upgrade turned into what some market watchers called ‘sell-the-news‘ an event.”

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