Forces Opposed To Crypto In D.C. About To Make A Big Move?

6/4/2022 9:45:00 PM

Forces Opposed To Crypto In D.C. About To Make A Big Move?

Sec, Washington

Forces Opposed To Crypto In D.C. About To Make A Big Move?

A faction of Washington , D.C. regulators is apparently considering a move to tighten the vice on digital assets that could – if implemented – perversely incentivize unregulated crypto activity in the U.S.

First,the worst-case scenario, in which the FFIEC adopts the proposal too, could render money transmitter licenses inapplicable to crypto intermediaries. Would the crypto assets held for customers on-balance sheet be considered “investments”? If not, what then are they?? If investments, it may be illegal for money transmitters to hold the crypto assets because state money transmitter statutes generally permit money transmitters to invest only in safe, liquid assets like cash, T-bills and money market funds. This worst-case scenario would raise foundational questions about the licensing regime relied on by nearly all crypto intermediaries in the U.S.

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Here are some implications: First, the worst-case scenario, in which the FFIEC adopts the proposal too, could render money transmitter licenses inapplicable to crypto intermediaries.PUEBLO COUNTY, Colo., the Apollo-Soyuz mission, during which Soviet and U.Email this article Friday marked the 100th day since Russian forces invaded neighboring Ukraine.

Would the crypto assets held for customers on-balance sheet be considered “investments”? If not, what then are they?? If investments, it may be illegal for money transmitters to hold the crypto assets because state money transmitter statutes generally permit money transmitters to invest only in safe, liquid assets like cash, T-bills and money market funds. This worst-case scenario would raise foundational questions about the licensing regime relied on by nearly all crypto intermediaries in the U. The error was discovered while the ballots were being printed, and the printing presses were stopped on Tuesday.S. 52 ). Second, adoption of the proposal could massively increase the capital requirement for the crypto industry as a whole. The correct ballots have already been printed. Looking at U."Instead, Russia has become the most sanctioned state in the world, and its activities within international organizations and participation in international events have been significantly limited or stopped.

S. Around 250 voters were sent the incorrect ballot because uniformed military and overseas voters’ ballots were already mailed. 6 ). industry in aggregate, crypto intermediaries today have almost no capital requirement – this is not unique, though, as the same is true of the fintech industry. Why? Because most fintechs and crypto intermediaries are licensed as money transmitters, and money transmission laws do not contain a prudential capital requirement; they instead focus on reserve requirements and the type of “permissible investments” for those reserves. Information about the issue and instructions about voting the replacement ballot have been sent to those voters. A few crypto intermediaries and fintechs are currently licensed as trust companies, and trust companies do have a capital requirement but it is minimal compared to the capital requirement for banks. Questions or comments on this article? E-mail us at. For example, in one instance, a trust company with roughly $30 billion of crypto assets under custody has only a $7 million minimum capital requirement today. Election Day for the Colorado primaries is June 28, and the deadline for ballots to be mailed to voters is June 10. "In order to stop Russia's crimes against the Ukrainian people, destruction of our economy and blackmail of the whole world by famine, consistent support for Ukraine should continue.

Under the possible new rule, its capital requirement could spike to ~5% of assets under custody, or ~$1.5 billion.. From $7 million to $1.5 billion – that would be quite a radical change indeed. Connecting the dots: if the capital-light money transmitter licensing regime doesn’t work anymore, U."A lot has been done in this area: militants of the Azov nationalistic formation have surrendered in Mariupol and the liberation of Donbas has been consistently carried out.

S. crypto intermediaries would need to become licensed as something else (i.e., banks, trust companies, broker/dealers, etc.) – and would become subject to far higher capital requirements. -ABC News'.

To cover the cost of that capital, they would need to charge customers more. It’s also far from clear that the door is even open for crypto intermediaries to become licensed as banks, trust companies or broker/dealers, especially at the federal level. Third, crypto custodians that also provide crypto lending services for custody clients could end up with a double capital charge under the possible new rule: one for the loan and another for the custody asset. Fourth, indefinite intangible assets .” This means the crypto custody assets moved onto the intermediary’s balance sheet will be carried at the lower of cost or market value (subject to impairment testing), while the liabilities will be carried at cost.

This accounting mismatch is a recipe for earnings volatility at the crypto intermediary. What Will Happen? No one knows for sure, and this may all turn out to be a false alarm. But the SEC’s staff bulletin just appeared without warning – it was done in the form of a staff bulletin, which meant it was not subject to a notice and public comment process. Will federal bank regulators use a similar closed-door process? Again, no one knows. Last Friday the banking and securities industry associations submitted a joint letter raising serious questions about the SEC’s staff bulletin – questions that should have been addressed before it was adopted, but there was no public comment process to identify these issues.

Thankfully, when D.C. bank regulators have changed FFIEC guidance historically, they have normally done so via a notice and public comment process. If the possible rule is enacted and the worst-case scenario actually happens, U.S.

crypto companies would likely enlist their ~40 million U.S. customers to start lighting up Congress again, just as they did en masse in the summer of 2021 when the infrastructure bill included a proposal that was similarly serious. Oh, and it’s an election year. Follow me on .