Crypto’s desperate turn to Europe
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Want to know how tough things are going to be for crypto in the US? Industry leaders are starting to hold up the EU as a potential digital currency bastion.
“We fully expect Europe to become a natural hub for responsible participants going forward,” says Susan Friedman, head of policy at embattled crypto firm Ripple.
Sure, Europe has been at the forefront of cracking down on Big Tech and crypto. It played a major role in the demise of Facebook’s failed stablecoin, known as Libra and later Diem.
But like POLITICO’s Bjarke Smith-Meyer and I reportis the EU about to pull ahead of the USwith a set of formal laws tailored for crypto businesses. That stands in stark contrast to the patchwork of state and federal regulations in America, where Washington regulators are increasingly enforcing old-fashioned banking and investment laws on digital asset firms. It’s going to be the status quo here for the foreseeable future, with US lawmakers divided on whether to embrace or restrict the digital asset market.
“Regulatory Clarity” The Crypto Lobbyists Say They Want? The EU will have something to offer on that front when the new rules come into force next year. European lawmakers like Stefan Berger are promoting the set of guidelines — known as Markets in Crypto-Assets, or MiCA — as “the best framework in the world in which companies can develop.”
This is already becoming a talking point for some in the US crypto lobby, which seriously lacks political capital after the market nearly collapsed. Advocates are looking for anything to light a fire during Congress.
But let’s get real. Dante Disparte, head of strategy at stablecoin issuer Circle, is not looking for the EU to become a safe haven. He would know from experience. Disparte was one of the leaders of Libra, which triggered the European Union’s move to adopt new crypto laws after officials crushed Facebook’s ambitions.
He will take US regulatory ambiguity over the EU model, which he described as “five years of hurry up and wait” – even though the US’s patchwork approach means it is “stuck in a fintech constitutional crisis.”
“The rest of the world is looking for the puff of white smoke – what political stance the US will take,” he told MM. “And to date we have not concluded the papal conclave on fintech.”
What should we cover this week? — Send tips to [email protected] and [email protected].
Monday … Fed Governor Philip Jefferson talks about inflation during a virtual Harvard lecture at 10:30 a.m. … House rules set up a rejection vote on the DOL’s ESG rule at 5 p.m. … Tuesday … House Financial Services votes on an overhaul of the privacy and other bills at 10.00 … The Senate’s banking services hold a hearing on sanctions and export controls at 10.00 a.m.… Wednesday … The Senate Budget holds a hearing on the financial risks of rising seas at 10 a.m. … Senator Bernie Sanders talks about his new book, “It’s OK to be Angry About Capitalism,” on The Anthem at 8 p.m.… Thursday … Fed Governor Chris Waller discusses the economy at a Mid-Size Bank Coalition of America virtual event at 4 p.m.… Friday … Daniel Hornung, special assistant to the president for economic policy, talks about first-time homebuyers at the Urban Institute at 10.00 a.m.…
Congress is back — The House and Senate will return from a recess at the end of February and have a lot of cooking on the fiscal front. A few things to look at:
House Financial Services will hold its first legislative votes Patrick McHenry era on Tuesday.
The main event will be McHenry’s renewal of privacy. The bill proved difficult for him to put together.
McHenry cut a section that could have changed how financial privacy rules are enforced, after Republicans disagreed over whether to give more power to the CFPB or allow private lawyers to sue companies for violations. The final version of the bill is expected to be opposed by Democrats, in part because it would preempt privacy laws at the state level.
House Republicans will step up their anti-woke campaign. They plan to hold a House vote this week on a Congressional Review Act resolution that would repeal a Labor Department policy that allows pension plan managers to consider ESG factors.
The GOP-led version in the Senate has the support of at least one Democrat, Sen. Joe Manchin(DW.Va.), and could attract more bipartisan support from moderates seeking some political distance from the Biden administration. Even if the House and Senate passed it, President Joe Biden would likely veto it.
Dozens of groups including the AFL-CIO, Interfaith Center on Corporate Responsibility, Public Citizen and Americans for Financial Reform are warning lawmakers against removing the rule.
The AFL-CIO told lawmakers in a letter that “consideration of ESG factors helps protect the hard-earned retirement savings of working people.”
Experts disagree about the direction of the US economy — The National Association of Business Economists is out with its latest survey of macroeconomic whistleblowers. NABE found “significant divergence” in their views. Here are some takeaways:
– Forecasters continue to expect tepid US GDP growth this year and a 2024 recovery, but “expectations are widely dispersed.”
— An American recession is still expected this year, but is now considered to happen later than experts thought in December.
— An overwhelming majority expect the debt ceiling to be raised or suspended, with only 2 percent expecting a breach.
Ex-Biden official: Markets are complacent about the debt ceiling — Daleep Singh, who served as Biden’s deputy national security adviser for international economics until last year, said Friday that markets must start playing the victim to get Congress to act to raise the debt limit.
“They need to produce a sea of red on their Bloomberg screens, because politicians … need to see pain to have coverage,” he told a room of central bankers, economists and investors, reports Victoria Guida.
Minor migrants in the US constitute a ‘new economy of exploitation’ — The New York Times published an investigation over the weekend about migrant children who fill some of the most punishing jobs in the United States, including as roofers and slaughterhouse workers.
First in MM: Coinbase crypto poll — Sam reports that Coinbase is launching a new campaign that showcases crypto’s practical uses. A Morning Consult survey commissioned by the stock exchange found that 80 percent of Americans believe the financial system is unfair, and that more than two-thirds believe major changes or a complete overhaul are needed. 20 percent of Americans own crypto, but 57 percent of respondents said they were unlikely to buy, sell or trade it in the next year.
Trades the flag for not enforcing Russia sanctions — Crypto exchanges Huobi and KuCoin allow customers to trade with debit cards issued by sanctioned Russian banks, according to a blockchain analytics firm.
Reporter hacks bank account with fake AI voice — Vice: “Some banks tout voice identification as the equivalent of a fingerprint, a secure and convenient way for users to interact with their bank. But this experiment shatters the idea that voice-based biometric security provides foolproof protection in a world where anyone can now generate synthetic voices for cheap or sometimes no cost.”
Larry Summers: Russia’s oil price ceiling should be tightened – Bloomberg: “Economic sanctions against Russia ‘have not really bitten that hard’ because countries like China, India and Turkey have not joined in,” Summers said in an interview on CNN’s “Fareed Zakaria GPS” that aired Sunday.
US corporate giants plan China expansions – WSJ: “Major U.S. companies from fast food to high-end fashion are upping their bets on China’s consumers in anticipation of a post-pandemic recovery for the world’s second-largest economy.”
People are moving — Ryann DuRant is now Senior Communications Advisor to the Senate Banking Ranking Member Tim Scott (RS.C.). She was previously communications director for Sen. Tommy Tuberville (R-Ala.) and is a USDA alum, Sen. John Cornyn (R-Texas) and the House.
Correction: This newsletter has been corrected to reflect Susan Friedman’s title, Head of Policy at Ripple.
