Crypto’s safe place on Capitol Hill

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Die-hard crypto advocates have a new place to gather and talk about Washington regulators: House Finance Committee.

Committee Republicans opened the doors Thursday to a hearing that had a clear tendency, based on the title alone: ​​“Coincidence or Coordinated? The administration’s attack on the digital asset ecosystem.”

What emerged was a first step by Republicans — backed by testimony from crypto executives and a former Trump administration banking regulator — to make the case that Congress must step in with a new rulebook for the industry as it faces a U.S. crackdown that is less than ten years old. regulations. That’s good news for crypto firms fed up with the SEC and federal banking agencies.

The collection was an attempt to go beyond the fallout of the FTX collapse, which distorted the crypto debate in Washington by exposing indisputable mismanagement across the industry. The debacle has emboldened crypto-skeptics on Capitol Hill and made industry-friendly bills harder to sell.

House Republicans are now using the meltdown as a reason to press ahead with sweeping legislation on digital assets — goes beyond minor legislative proposals that have been the committee’s focus until now.

Rep. French Hill, who chairs the digital assets subcommittee that held the hearing, has tried to make it clear in his new position that he has some skepticism about crypto’s place in the economy. He said Thursday that he is a strong advocate of “same risks, same activities same rules.” He wants to create “a functional framework tailored to the specific risks of digital assets.”

But his questions indicated the Republican way forward. He slammed the crypto industry’s criticism of how the SEC and federal banking regulators are approaching the space — so he cast doubt on the “come in and register” pitch from the SEC and set the record straight for a potential regulatory regime tailored to crypto.

“We all recognize that within or outside of a regulatory framework we can still have enormous economic challenges and criminal problems as well,” he said, citing the dot-com bust and mortgage crisis. “In my view, you’re better off with that regulation.”

Crypto leaders love the open approach when they are beaten elsewhere in Washington (a top Fed official compared crypto investing to tulip mania on Thursday morning).

“We are confident in any set of standards [House Financial Services Chair Patrick McHenry] May proposes will reflect not only market realities, but also the need to protect consumers and keep investors safe, says Coinbase CEO. Paul Grewal, who testified Thursday, told MM. “His thought and care and attention is something I have great confidence in.”

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February jobs numbers are out at 8:30 a.m. … Treasury Secretary Janet Yellen testifies on House Ways and Means at 9 a.m. … House Financial Services has a flood insurance hearing at 9 a.m. …

POLITICO Interview: San Francisco Fed Chair Mary Daly — Daly spoke with our Victoria Guida about how the Fed’s next decision on interest rates depends on today’s jobs numbers and next week’s CPI data.

Hot employment and CPI reports will mean “we’re going to have to go higher in all likelihood, and we’re going to have to stay there longer,” she said.

Labor dispute in the Fed — Victoria also reports that cafeteria workers at the New York Fed voted to authorize a strike over pay.

Visa, MasterCard withdraw plan to track gun purchases — Bloomberg reports that the two payments giants — as well as Discover and American Express — are halting efforts to track firearms sales after Republican state officials introduced bills to limit the effort.

FTC fights ICE-Black Knight deal— The FTC sued Thursday to block Intercontinental Exchange’s $13 billion acquisition of mortgage data company Black Knight. The agency said the takeover would reduce competition in key parts of the mortgage lending process, raising costs for lenders and homebuyers.

Biden targets wealthy, big business — President Joe Biden’s $6.8 trillion budget proposes tax increases on wealthy Americans and corporations, plus $3 trillion in deficit reduction.

POLITICO reporters across our vast policy teams broke down how Biden’s budget can also be read as a potential 2024 campaign platform, covering everything from China to housing policy.

House Republicans tackle flood insurance gap – A House Financial Services hearing this morning will begin the committee’s work on reauthorizing the National Flood Insurance Program, which has been operating on short-term expansions without major changes since 2017. As part of an effort to expand the uptake of flood coverage, Republicans have revived a push to support private insurance companies that want to offer flood policies in competition with the dominant government option.

“I hope that we can provide some certainty for the market,” Rep. Warren Davidson, who will chair the hearing in the Housing and Insurance Subcommittee, told our Eleanor Mueller. “Hopefully we can quickly reach a consensus on a way to make the current system a little better and more competitive for the private market as well.”

One of the hearing’s witnesses, Julian Enoizi with reinsurance broker Guy Carpenter, will present a new pilot program in New York that will use a parametric insurance contract to cover relief payments to flood-affected homeowners. Parametric contracts are increasingly in vogue in the insurance world, offering faster, pre-set payouts tied to specific trigger events.

The banks take a beating on bond problems— The FT reports that investors wiped $52.4 billion off the market value of JPMorgan Chase, Bank of America, Citigroup and Wells Fargo on Thursday, amid investor fears about the value of the lenders’ bond portfolios. It appears to have been triggered by problems at the technology-focused Silicon Valley Bank, which on Wednesday disclosed that it lost about $1.8 billion after selling securities in response to a drop in customer deposits.

“The large losses on the sale of the SVB securities shifted investors’ attention to the risks that may lurk in the huge bond portfolios held by other US banks, many of which invested an influx of deposits amid the coronavirus pandemic in long-dated securities such as treasury”, according to the FT.

Venture capital firms including Peter Thiel’s Founders Fund advised their portfolio companies to pull money from Silicon Valley Bank, Bloomberg reports.

New York AG says Ether is a security — New York Attorney General Tish James claims the popular crypto token is an investment security in a new lawsuit against the KuCoin exchange. That puts her at odds with politicians such as CFTC Chairman Rostin Behnam who have said that Ether has the characteristics of a commodity.

Treasury urges trading companies to ship Russian oil — FT: “The US has privately urged some of the world’s biggest commodity traders to drop concerns over freight-price-capped Russian oil, in a bid to keep supplies steady and regain some control over Moscow’s exports.”

Goldman banker convicted in corruption case— Reuters: “Former Goldman Sachs banker Roger Ng was sentenced to 10 years in prison on Thursday after he was convicted of helping loot billions of dollars from Malaysia’s 1MDB sovereign wealth fund.”