November 4, 2024
This week decoded
Executive agencies in the Biden-Harris Administration released multiple reports and advisories that mentioned digital assets, including Treasury publications and a CFTC advisory. Of note for those entities subject to AML/CFT requirements, FATF updated its list of jurisdictions under increased monitoring.
Members of Congress, meanwhile, spent the final days before the U.S. general election highlighting their support for blockchain and digital asset technologies, including marking the 16th anniversary of the Bitcoin White Paper and looking ahead to potential legislative action in the lame duck and next Congress.
Read more below
Congress
Hearings
- Congress is in recess until November 15.
Legislation
- Congress is in recess until November 15.
Correspondence
- There was no relevant correspondence this week.
Biden-Harris Administration
Financial Crimes Enforcement Network (FinCEN), Treasury Department
- FinCEN alerted U.S. financial institutions that the Financial Action Task Force (FATF) updated its lists of jurisdictions with strategic AML/CFT/CPF deficiencies, adding Algeria, Angola, Côte d’Ivoire, and Lebanon to its list of Jurisdictions Under Increased Monitoring and removing Senegal from the list. (Press release)
Treasury Department
- The Treasury Borrowing Advisory Committee submitted its quarterly report to Treasury Secretary Janet Yellen regarding its observations on the overall strength of the U.S. economy and recommendations on debt management issues. The report included discussion of digital assets and tokenization of U.S. treasuries, stating, “Growth in digital assets has been significant, though impact to Treasury markets has been muted as of yet. Initial intersectionality is likely to continue to be in demand for short-end Treasuries, to support growth in stablecoins. As institutions further evolve in their use of digital assets, the Committee felt that, on balance, this could drive additional hedging demand for US Treasuries… The charge also explored tokenization of US Treasuries (and other assets). While this could facilitate enhanced operational and economic efficiency, the legal and regulatory infrastructure would need to evolve meaningfully, with strong official sector oversight. Additionally, technological and financial stability related risks would need to be considered. As noted in the charge, the way forward should involve a cautious approach spearheaded by a trusted central authority, with widespread buy-in from private sector participants.” (Report)(Meeting minutes)
- In its first-ever National Strategy for Financial Inclusion in the United States, Treasury included a brief mention of digital assets, “…Treasury cultivates financial inclusion by developing and promoting research and policies that support the financial well-being of American consumers. Recent Treasury efforts related to consumer and household financial activities include a report on household financial impacts of climate change, and a series of publications on consumer activities and risks related to digital assets.” (Report)
Commodity Futures Trading Commission (CFTC)
- The CFTC Office of Customer Education and Outreach released a customer advisory entitled Use Caution Responding to Messaging Apps highlighting the default settings of WhatsApp, Telegram, other messaging apps, telephone networks, and mobile devices that allow messaging via group chats regarding crypto asset fraud such as pump-and-dump scams. (Press release)
Noteworthy Quotes and Events
ADMINISTRATION
Commodity Futures Trading Commission (CFTC)
- Regarding crypto scam group texts, Melanie Devoe, director of the CFTC’s Office of Customer Education and Outreach, said, “People who use these apps may not be familiar with the risks and frauds commonly associated with crypto assets. Receiving a group message promising 300% or 1,000% returns with zero risk or getting in on a supposed crypto opportunity, can be enticing, but it is best to not engage.” (Press release)
CONGRESS
- Looking ahead to the next Congress as the potential chair of the Senate Banking Committee in a Senate Republican majority, the spokesperson for Banking Committee Ranking Member Tim Scott (R-SC) said, “The senator will work to build a regulatory framework that establishes a reliable pathway for the trading and custody of digital assets that will promote consumer choice, education and protection and ensure compliance with appropriate Bank Secrecy Act requirements.” (PoliticoPro)
- During a fireside chat with Rep. Mike Flood (R-NE) during the Fintech Flyover, House Financial Services Chair Patrick McHenry (R-NC) said, “Market structure and Stablecoin are two open questions for lame duck… The election outcome will dictate much of what happens in lame duck. The National Defense Authorization Act and government funding are the two major pieces of legislation we have to wrestle with between now and the end of the year, and those two must-pass bills have traditionally taken a larger policy set with them… The Senate is unlikely to take an independent Senate banking bill across the Senate floor… You have Members that want to offer amendments… to cut other people up or to go make a point, not to make policy. So, what happens is we have to build consensus for our products, and then those consensus items can make their way into law as a part of a larger package.” (Press release)
- Retweeting a Coindesk opinion piece, the House Financial Services GOP tweeted, “Embracing blockchain and digital asset technology would strengthen U.S. national security, not weaken it. Experts say this requires clarity for innovators and a regulatory structure that fosters growth in American markets. FIT21 delivers this.”
- House Financial Services GOP also tweeted, “16 years after the Bitcoin White Paper was published, Congress is finally catching up. With good public policy, like the bipartisan FIT21, we can ensure the U.S. leads the world in digital assets and blockchain technology.”
- Retweeting a New York Times article, House Oversight Committee Democrats tweeted, “From Big Crypto to Big Oil, Big Tobacco to Big Tech, Trump is pocketing special interest $$$ while promising to put their interests before those of the American people. A Trump White House is always for sale to foreign autocrats and billionaire plutocrats.”
- House Financial Services Chair Patrick McHenry (R-NC) tweeted, “Today, we celebrate the 16th anniversary of the Bitcoin White Paper. Innovators, entrepreneurs, and developers are building the financial infrastructure of the future. Their work is bringing Satoshi’s vision is closer than ever to reality.”
- Rep. Tom Emmer (R-MN) tweeted, “Happy 16th Anniversary to Satoshi’s Bitcoin White Paper! I am confident that Bitcoin and digital assets have a bright future here in the United States.”
- Retweeting a Margaret Thatcher quote, Rep. Warren Davidson (R-OH) tweeted, “This is why socialists love Central Bank Digital Currency. BanCBDC”
- Rep. John Rose (R-TN) tweeted, “It was a pleasure to join the DigitalChamber to discuss my bill the BRIDGE Digital Assets Act, which establishes a joint advisory committee between the SECgov and CFTC on digital assets regulation. Thank you for having me, PerianneDC!”
- Rose also tweeted about a NASDAQ crypto update, “This article highlights the real-world consequences of overregulation by the Biden-Harris Administration on digital currencies. It also shares information about my legislation that would protect consumers and foster growth and innovation.”
About Zero One Strategies
Zero One Strategies is a boutique government relations practice dedicated to navigating the complex landscape of U.S. federal policy in emerging technologies. As advancements in technology continue to outpace regulatory frameworks, Zero One Strategies aims to provide strategic guidance and bipartisan advocacy for innovators and businesses operating at the forefront of technological development.
The practice focuses on key areas such as artificial intelligence, blockchain, decentralized technologies, cybersecurity, data, and digital infrastructure, as well as the multiple policy issues impacting these sectors, including tax and financial services.
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