united states

Draft bill to ban China’s digital yuan from US app stores

Three ​​Republican senators introduced a bill to protect Americans from the “Authoritarian Digital Currencies Act.”

Lawmakers in the United States are moving to protect the country from the potential undesirable impacts of the global adoption of China’s national digital currency.

Three ​​Republican senators, Tom Cotton, Mike Braun and Marco Rubio, introduced a bill on Wednesday, aiming to limit the use of China’s central bank digital currency (CBDC) in the United States.

The bill is referred to as “Defending Americans from Authoritarian Digital Currencies Act” and proposes to prohibit the use of China’s digital currency payment system, e-CNY, for U.S. app stores and other purposes.

The term “app store” covers all publicly accessible websites, software apps or other electronic services distributing apps from third-party developers to users of computers, mobile devices or any other “general-purpose computing device,” the senators noted.

According to the bill, app and software distributors in the U.S. shall not support or enable transactions in e-CNY or support any app that features such transactions in the country.

The senators reasoned that banning China’s digital yuan in the U.S. would help the nation avoid “direct control” and surveillance of users’ financial activity.

Cotton, a known proponent of the U.S. digital dollar project, specifically argued that a CBDC could be used to spy on the financial activity of people, stating:

“The Chinese Communist Party will use its digital currency to control and spy on anyone who uses it. We can’t give China that chance — the United States should reject China’s attempt to undermine our economy at its most basic level.”

“We cannot allow this authoritarian regime to use their state-controlled digital currency as an instrument to infiltrate our economy and the private information of American citizens,” senator Braun said. “This is a major financial and surveillance risk that the United States cannot afford to make,” Rubio stated.

Related: Brainard tells House committee about potential role of CBDC, future of stablecoins

China is one of the world’s first countries to pilot its own digital currency, launching its first digital yuan trials in April 2019. Following multiple internal tests, the Chinese government has been actively promoting cross-border implementations of the digital yuan, working with central banks of Hong Kong, Singapore and others.

Historically, U.S. authorities have viewed the Chinese CBDC as a national security threat. In March, another bill also proposed to limit the use of China’s digital yuan as it may be used to circumvent sanctions and compromise users’ personal information.

Cathie Wood’s Ark and 21Shares refile for spot Bitcoin ETF

The U.S. SEC rejected the application for the ARK 21Shares Bitcoin ETF in early April and has not approved a spot Bitcoin ETF so far.

ARK Investment Management, an investment firm founded by veteran investor Cathie Wood, is taking another try to launch a spot Bitcoin (BTC) exchange-traded fund (ETF) in the United States.

ARK Invest submitted on May 13 yet another application for its physical Bitcoin ETF, the ARK 21Shares Bitcoin ETF, according to a filing with the U.S. Securities and Exchange Commission (SEC). The application includes a proposed rule change from the Chicago Board Options Exchange (CBOE) BZX Exchange.

According to Bloomberg ETF analyst Henry Jim, the latest deadline for approval or disapproval of the ARK 21Shares Bitcoin ETF is January 24, 2023.

The latest filing comes shortly after the SEC rejected the application for the ARK 21Shares Bitcoin ETF in early April. Ark Invest had initially partnered with the European ETF issuer 21Shares to file for a spot Bitcoin ETF listed on CBOE BZX Exchange in June 2021.

According to the latest filing, the investment objective of the ARK 21Shares Bitcoin ETF is to seek to track the performance of Bitcoin, in accordance with the performance of the S&P Bitcoin Index. “In seeking to achieve its investment objective, the trust will hold Bitcoin and will value the shares daily based on the index,” the application reads.

Related: Why the world needs a spot Bitcoin ETF in the US: 21Shares CEO explains

A potential approval of a spot Bitcoin ETF by the SEC remains one of the most anticipated events in the community as the SEC has not approved any of multiple spot Bitcoin ETF applications so far. According to ETF analysts, a spot Bitcoin ETF could become real in mid-2023.

Cryptocurrency investment giant Grayscale is among several companies that have been moving aggressively to launch a spot BTC ETF in the United States. In late March, Grayscale CEO Michael Sonnenshein said the firm was ready to initiate a legal fight if Grayscale’s BTC Spot ETF is denied by the SEC.

Law Decoded: The long waves in the aftermath of UST’s crash, May 16-23

Officials from all over the world continue discussing the solutions for stablecoins’ risks

It’s been two weeks since the shock of the TerraUSD (UST) depegging, but the long waves of this event are still coming in. The Congressional Research Service described the UST crash as a “run-like” scenario and claimed that the crypto industry has not reached the same level of “adequate regulating” as the traditional finance market. 

Michael Barr, former advisory board member of Ripple Labs and United States President Joe Biden’s pick for a vice chair for supervision at the Federal Reserve, definitely agrees with that. During the confirmation hearing, he mentioned “some significant risks” that innovative technologies and cryptocurrencies, in particular, bring along. 

It’s not only in the U.S. where the regulators got concerned about stablecoins. The executive director of markets of the United Kingdom’s Financial Conduct Authority (FCA), Sarah Pritchard, reassured journalists that the FCA will “absolutely” take the depegging incident into account, which is hardly surprising, given the intention of the British Treasury to make stablecoins a payment method

The recent turmoil even made the Group of Seven nervous, putting spurs on the Financial Stability Board to speed up crypto-asset regulation. Officials from Canada, France, Germany, Italy, Japan, the United Kingdom and the United States even had to set up a special meeting in the 40,000-populated town of Koenigswinter, while the Conservative Party of South Korea went as far as to request a parliamentary hearing on the matter. 

17 questions about crypto 

How can the U.S. bolster its economic competitiveness in digital assets? The United States Department of Commerce believes that 17 other questions would help us to answer this one. The department will publish a series of 17 questions in a request for comment through the International Trade Administration. Hopefully, the public response will help the department develop a comprehensive regulatory framework.

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A battle for 401(k) continues

In another recap of a heated discussion that took place several weeks ago, Florida congressman Byron Donalds introduced the Financial Freedom Act into the United States House of Representatives. The main mission of the bill is to prevent the U.S. Department of Labor from limiting the types of investments that can be included in Americans’ self-directed 401(k) retirement plans that seek to ban retirees from including crypto in their 401(k) plan. 

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The launch of Chainabuse 

Binance, Circle, TRM Labs and four other major crypto companies are aiming at self-regulation by launching a community-driven scam reporting tool, Chainabuse. The platform will help users actively report and discuss fraud cases and get the help of a free-to-use database of illicit activities to investigate projects before making an investment

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Biden’s pick for Fed vice chair for supervision calls for congressional action on stablecoins

Fed nominee Michael Barr said that the government agency potentially releasing a central bank digital currency was an issue that required “a lot more thought and study.”

Michael Barr, a law professor and former advisory board member of Ripple Labs who is United States President Joe Biden’s pick for vice chair for supervision at the Federal Reserve, called for U.S. lawmakers to regulate stablecoins in an effort to address “financial stability risks.”

In a confirmation hearing before the Senate Banking Committee on Thursday, Barr said innovative technologies including cryptocurrencies had “some potential for upside in terms of economic benefit” but also “some significant risks,” citing the need for a regulatory framework on stablecoins to prevent the risk of runs. Barr added that the Fed potentially releasing a central bank digital currency was an issue that required “a lot more thought and study,” echoing Fed chair Jerome Powell’s views concerning due diligence.

Prospective Fed vice chair for supervision Michael Barr addressing the U.S. Senate Banking Committee on Thursday

According to Barr, “other agencies” within the U.S. government were responsible for addressing investor protection around cryptocurrencies. In attendance at the same hearing were prospective commissioners for the Securities and Exchange Commission — Jaime Lizárraga and Mark Uyeda — who, if confirmed, would serve under chair Gary Gensler. 

Responding to questioning from Massachusetts Senator Elizabeth Warren at the hearing, Barr confirmed that he would not work in “any financial services company” potentially having assets under the Federal Reserve’s purview for four years following his prospective time at the government agency. Warren cited the recent market volatility, which included TerraUSD (UST) depegging from the dollar and then attacked unnamed celebrities for endorsing certain crypto projects.

“Any investment involves risk — that’s how markets work,” said Warren. “But a market without rules is theft, and right now regular investors in stablecoins and crypto aren’t getting the baseline protections available in other financial markets.”

Related: Bitcoin shakes off Fed volatility as analysts remain split on return under $24K

Barr was Biden’s second nomination for Fed vice chair for supervision following the withdrawal of Sarah Bloom Raskin in March. If approved by the full Senate, Barr’s position at the Fed would allow him to help develop policy recommendations on supervision and regulation for other board members, including governors Michelle Bowman, Christopher Waller, Lisa Cook and Philip Jefferson, vice-chair Lael Brainard, and chair Powell — the latter four of which were confirmed in May. 

The vice chair for supervision position at the Fed has been vacant since governor Randal Quarles’ term ended in October 2021.

FTX US to launch stock trading against stablecoins

FTX Stocks will allow retail investors to fund their accounts with fiat-backed stablecoins like USD Coin via the FTX US crypto exchange.

Major cryptocurrency exchange FTX is moving into equity trading, with its United States-based subsidiary FTX US launching a stock trading platform.

West Realm Shires Services, the owner and operator of FTX US, announced on Thursday the upcoming launch of FTX Stocks, a stock trading service offered directly through the FTX US trading app.

The new stock trading platform will feature trading and investing in hundreds of U.S. exchange-listed shares, including common stocks and exchange-traded funds.

According to the announcement, FTX Stocks will be the first platform to ever allow retail investors to fund their accounts with fiat-backed stablecoins like USD Coin (USDC). The option is enabled via a partnership with the FTX US crypto exchange, providing an alternative option to default deposit methods in the U.S. dollar, including wire transfers, credit card deposits and others.

The FTX Stocks platform will be initially available in a private beta phase for select U.S. customers chosen from a waitlist. The service will also initially route all orders through Nasdaq to ensure transparent trade execution and fair pricing, the announcement notes.

“With the launch of FTX Stocks, we have created a single integrated platform for retail investors to easily trade crypto, NFTs and traditional stock offerings through a transparent and intuitive user interface,” FTX US president Brett Harrison said. He added that there is “clear market demand” for a new retail investment experience supporting “full order routing transparency” while not relying on payment for order flow.

Related: The Brazilian Stock Exchange will launch Bitcoin and Ethereum futures

The news comes shortly after FTX founder and CEO Sam Bankman-Fried criticized the efficiency of Bitcoin (BTC) as a payment network on Monday. He specifically expressed concerns over the Bitcoin network’s mining consensus, arguing that it’s not scalable enough to process millions of transactions.

The CEO has also been actively buying shares of major players in the industry, holding about $650 million in the stock of the crypto-friendly stock trading app Robinhood as of May 2022.

SEC chair uses crypto enforcement in justification for FY2023 budget

“We’re not trying to grow really significantly, but resources to grow at least six percent to grow our enforcement arm in this space,” said Gary Gensler.

Gary Gensler, Chair of the United States Securities and Exchange Commission, or SEC, has cited concerns about cryptocurrency enforcement in its budget request for the next fiscal year.

In written testimony for a Wednesday hearing of the U.S. House Committee on Appropriations, Gensler said he supported President Joe Biden’s request to budget more than $2.1 billion for the SEC in FY2023, allowing the regulatory body to increase its enforcement division by 50 people. The SEC chair cited concerns about the crypto space, referring to markets as “highly volatile and speculative,” as well as the need for “new tools and expertise” to address enforcement.

“The additional staff will provide the Division with more capacity to investigate misconduct and accelerate enforcement actions,” said Gensler. “It also will strengthen our litigation support, bolster the capabilities of the Crypto Assets and Cyber Unit, and investigate the tens of thousands of tips, complaints, and referrals we receive from the public.”

SEC Chair Gary Gensler addressing the U.S. House Committee on Appropriations on Wednesday

Addressing Michigan Representative Brenda Lawrence at the hearing, Gensler reiterated his view that “most” offerings from token projects fell under the SEC’s regulatory purview as securities and should be registered accordingly. According to the SEC chair, investors were currently “not well protected,” given the regulatory body’s limitations on enforcement: 

“We’ll use our enforcement tools to bring enforcement actions [against crypto trading platforms], but I prefer if they come in […] We’re not trying to grow really significantly, but resources to grow at least six percent to grow our enforcement arm in this space.”

Gensler later added he wanted more funding to dedicate to issues related to the growing crypto space, citing 85-90 enforcement actions the SEC had brought against digital asset firms in the last year. He also referred to the recent price volatility of a crypto asset “that went from $50 billion of value to near zero just in the last three weeks,” possibly referring to TerraUSD (UST).

Related: SEC doubles down on crypto regulation by expanding unit

The recent volatility among major cryptocurrencies, including Bitcoin (BTC) and Ether (ETH) and following the collapse of Terra (LUNA), has caught the attention of more than a few regulators and lawmakers in the United States. On May 12, Treasury Secretary Janet Yellen addressed the House Financial Services Committee, including in her testimony that TerraUSD (UST) and Tether (USDT) depegging from the U.S. dollar was not a “real threat to financial stability” given the scale of the stablecoin market.

China returns as 2nd top Bitcoin mining hub despite the crypto ban

China still hosts 21% of the total global Bitcoin hash rate after the local government banned all crypto operations in the country last year.

The Chinese government has not managed to take down cryptocurrency operations as part of its crypto ban last year as China has re-emerged as one of the world’s largest Bitcoin (BTC) mining hubs, according to a new report.

China became the second-largest Bitcoin hash rate provider as of January 2022, months after the local government banned all crypto operations in the country, according to the latest update from the Cambridge Bitcoin Electricity Consumption Index (CBECI) shared with Cointelegraph on Tuesday.

Bitcoin miners in China accounted for 21.1% of the total global BTC mining hash rate distribution as of early 2022, following only the United States, which produced 37.8% of the total hash rate as of January, according to the data.

China was once the world’s largest Bitcoin mining country, with the local BTC hash rate power accounting for more than 75% in 2019. The hash rate then plummeted to 0% in July and August 2021, following a series of crypto mining farm shutdowns in the country.  

Despite the crypto ban in September 2021, the hash rate share surged to 22.3% that month and did not drop below 18% over the analyzed period.

Evolution of country hash rate share. Source: CBECI

CBECI project lead Alexander Neumueller told Cointelegraph that the new data is enough to conclude that Bitcoin mining is still live in China, stating:

“Our data empirically confirms the claims of industry insiders that Bitcoin mining is still ongoing within the country. Although mining in China is far from its former heights, the country still seems to host about one-fifth of the total hash rate.”

Russia drops out of the top three largest miners

The latest CBECI update also signals a slight drop in the hash rate share in Kazakhstan, the world’s third-largest BTC mining hub. Kazakhstan’s BTC hash rate share dropped from 18% in August to 13.2% in January.

The CBECI data also shows that miners now mine as much as 9% of the global BTC hash rate in undefined locations. Canada and Russia are the following major mining hubs, accounting for 6.5% and 4.7%, respectively.

In addition to dropping out from the three biggest countries by BTC hash rate power, Russia also saw its actual hash rate declining from 13.6 EH/s in August to 8.6 EH/s in January.

Georgia, Texas and Kentucky lead BTC hash rate production in the US

The new CBECI update provides more specific insights about the largest Bitcoin mining market’s hashrate distribution at the state level.

Related: Bitcoin network hash rate hit a new record high amid price volatility

The data shows that Georgia, Texas and Kentucky make up the three largest states in terms of hash rate, accounting for 32%, 11.2% and 10.9%, respectively. All three states combined account for more than half of the overall hash rate in the United States.

Notable mining activity can also be found in the states like New York, California, North Carolina and Washington, the data suggests.

Methodology: CBECI uses data from four mining pools

The CBECI is released under the umbrella of the Cambridge Digital Assets Programme, a research initiative host Cambridge Centre for Alternative Finance.

The report is based on data obtained in collaboration with four major mining pools, BTC.com, Poolin, ViaBTC and Foundry. According to the CBECI website, the sample size for the analyzed mining pool data has varied between 32% and 38% of Bitcoin’s total hash rate since the release of the mining map in 2019.

“We are continually seeking ways in which to improve our data in order to increase the reliability of our estimates. The best way for us to do this is to welcome additional contributing mining pools, so we would encourage other mining pools to reach out and get involved,” the CBECI project lead said.

US federal judge approves of Justice Dept criminal complaint on using crypto to evade sanctions

An unnamed individual allegedly sent more than $10 million in Bitcoin to an exchange in a country for which the U.S. currently imposes sanctions.

The United States Department of Justice may move forward on a criminal prosecution case against a United States citizen who allegedly violated sanctions through cryptocurrency.

According to a Friday opinion filing in U.S. District Court for the District of Columbia, the unnamed individual, who is the subject of a criminal investigation by the Justice Department allegedly sent more than $10 million in Bitcoin (BTC) from a U.S.-based crypto exchange to an exchange in a country for which the U.S. currently imposes sanctions — suggesting Russia, Cuba, North Korea, Syria or Iran. The filing alleged the individual “conspired to violate the International Emergency Economic Powers Act” and conspired to defraud the United States.

The individual allegedly “proudly stated the Payments Platform could circumvent U.S. sanctions” using BTC and knew about sanctions on the country. According to the filing, the U.S.-based crypto exchange had the user’s information through Know Your Customer (KYC) compliance policies.

“The Department of Justice can and will criminally prosecute individuals and entities for failure to comply with [Office of Foreign Assets Control]’s regulations, including as to virtual currency,” said agistrate Judge Zia Faruqui in his opinion. “Prohibited financial services include any transfer of funds, directly or indirectly […] from the U.S. or by a U.S. person/entity, wherever located, to the sanctioned entity/country. And lest there be any doubt, financial service providers include virtual currency exchanges.”

Faruqui added:

“The question is no longer whether virtual currency is here to stay (i.e., FUD) but instead whether fiat currency regulations will keep pace with frictionless and transparent payments on the blockchain.”

Related: US Treasury Dept sanctions 3 Ethereum addresses allegedly linked to North Korea

The Treasury Department’s Office of Foreign Assets Control, or OFAC, is responsible for administering sanctions for the United States. Following Russia’s military invading Ukraine, the government office warned U.S. residents not to use digital assets to benefit certain Russia-based entities and individuals and added Russia-based darknet marketplace Hydra, crypto mining services provider BitRiver and digital currency exchange Garantex to its list of “Specially Designated Nationals,” a designation which generally prohibits Americans from doing business with them.

CFTC commissioner appoints senior policy adviser experienced in digital asset regulation

Keaghan Ames worked at Credit Suisse for more than two years as vice president and head of U.S. regulatory policy, which included advising executives on digital assets regulation.

Caroline Pham, currently serving as a commissioner at the United States Commodity Futures Trading Commission, or CFTC, has announced a former head of U.S. regulatory policy at investment banking firm Credit Suisse Securities will be joining her staff.

In a Friday announcement, Pham said Keaghan Ames will be her counselor and senior policy adviser at the CFTC starting May 23. Ames worked at Credit Suisse for more than two years as vice president and head of U.S. regulatory policy, which included advising executives on digital assets regulation. He will be joining the CFTC from the Institute of International Bankers, where he has been the director of government affairs since July 2021.

Sworn in as a commissioner in April, Pham is one of five heads serving at the CFTC under chair Rostin Behnam — all of whom were appointed by United States President Joe Biden. Pham is the latest commissioner to join the CFTC following the confirmation of Christy Goldsmith Romero, Summer Mersinger and Kristin Johnson.

During Ames’ time at Credit Suisse, the firm’s digital asset arm tested end-to-end fund transactions using blockchain technology, later piloting a settlement system between itself, Paxos and Instinet. In February, the company was the victim of a massive data leak concerning its account holders, reportedly including sanctioned individuals and heads of state.

Related: CFTC commissioner appoints crypto-experienced CME Group director as chief counsel

Together with the Federal Reserve, Securities and Exchange Commission, Department of the Treasury, and Financial Crimes Enforcement Network, the CFTC handles policy around digital asset regulation and enforcement in the United States. Cointelegraph reported in March that the government agency was seeking a $365 million budget for the next fiscal year based, in part, on the risks around digital asset custodians.

Cointelegraph reached out to Keaghan Ames, but did not receive a response at the time of publication.

US Senate confirms Jerome Powell for another four years as Fed chair

In a 80–19 vote in the Senate, U.S. lawmakers confirmed Jerome Powell as the next chair of the Federal Reserve System, where he will also serve as a board member until 2028.

The United States Senate has confirmed the nomination of Jerome Powell as the chair of the board of governors of the Federal Reserve System until 2026.

In an 80–19 landslide vote on the Senate floor on Thursday, U.S. lawmakers confirmed Powell as chair of the Federal Reserve, a position he held from February 2018 until February 2022, when he was named chair pro tempore until a confirmation vote could be secured. Powell was one of four Fed nominees awaiting a full Senate vote following weeks of delays due, in part, to partisan obstructionism — Republican lawmakers in the Senate Banking Committee boycotted a meeting in February that would have likely sent Powell’s nomination to the Senate for a vote earlier.

However, some of United States President Joe Biden’s nominations for the Fed have recently moved forward. In April, the Senate confirmed Lael Brainard as Fed vice chair in a 52–43 vote, and on Tuesday, Vice President Kamala Harris cast the tie-breaking vote to confirm economist Lisa Cook as a Fed governor for a term ending in 2024. Philip Jefferson had the largest bipartisan support in his 91–7 confirmation vote on Wednesday, which also granted the economist a seat on the Federal Reserve Board until 2036. 

Former Obama administration official Michael Barr, who was on the advisory board of Ripple Labs from 2015 to 2017, is awaiting approval from lawmakers following President Joe Biden announcing him as his pick for Fed vice chair for supervision in April. According to the White House, Barr was “a key architect” of the Dodd-Frank Act — legislation that continues to influence financial policy in the country.

During his first run as Fed chair, Powell was vocal on what he thought the role of digital assets should be in U.S. markets as the space grew. He said in September 2021 that he was unlikely to support a blanket ban on cryptocurrencies and has also lauded stablecoins as a “useful, efficient consumer-serving part of the financial system if they’re properly regulated.”

Related: Fed ‘will determine the fate of the market’ — 5 things to know in Bitcoin this week

In addition to the Securities and Exchange Commission and the Commodity Futures Trading Commission, the Federal Reserve is responsible for many regulations concerning digital assets in the United States. President Biden also signed an executive order in March directing government agencies to coordinate and consolidate policy on a national framework for crypto.