Ron Hammond this week in Congress and crypto

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3) Last week's final rule published by the Fed is one making a lot of noise in DC. The February 7th letter reads as a breakup text rather than a policy statement. Not only does it ban state member banks from crypto activities, but also restricts stablecoin issuance and more.

4) Back in 2021 when the Presidential Working Group released its guiding principles on stablecoins, the regulators said they would act if Congress did not. We are now seeing that come in full force as the bipartisan stablecoin bills failed to get finalized in 2022.

5) This isn't the only area stablecoins are experiencing heightened scrutiny in absence of legislation. The SEC has said BUSD is a money market fund/security, but the CFTC argues UST is a commodity. This "love triangle" is causing a lot of confusion for the crypto ecosystem.

6) Then there's the staking enforcement action against US company Kraken by the SEC. Since the debacle only ended in a settlement, many crypto firms who offer staking services are now having the "sooooo what are we..." chat with their legal teams.

7) The need for legislation in the stablecoin space is critical now more than ever. Unfortunately, it will be some time to get a bill across the finish line. Congress just restarted so every bill needs to get reintroduced and go through the legislative process which takes time.

8) The House is farther along in those talks and has buy-in from D's, R's, and the White House. Still the bill couldn't get finalized in 2022. This will be the theme of 2023 for ANY piece of legislation. You need a lot of bipartisan support, political capital, and regulator love.

9) With that, expect more regulatory actions over the coming weeks. Congress has the ability to conduct rigorous oversight of these regulators and challenge rules proposed in a variety of methods. The good news: scrutiny of the regulators is both bipartisan and bicameral.

10) Tomorrow's Senate Banking hearing will be much more substantive than the December one with the celebrities and that is by design. Detractors likely will endorse the divorce of crypto from financial institutions while supporters of crypto will be quick to attack the Fed/SEC.

11) Other things to monitor will be the Wednesday IRS confirmation hearing in Senate Finance and SEC amendments to the Investment Advisers Act around the issues of custody. Both of these events could have a significant impact on crypto policy going forward.

12) For now, it seems as if things will get worse before they get better. In absence of legislation, this will fall to the courts for years. Education still continues though with the hope that crypto will find love in a hopeless place (also sorry for the TERRIBLE V-DAY puns).