DeFi Weekly Roundup

July 10, 2022

Federal 

• A new advisory notice released by the US Office of Government Ethics bars government officials who privately own cryptocurrencies from working on regulations and policies that could affect the value of digital assets.
• A potential class-action lawsuit filed in a California federal court last week accuses key players in the Solana ecosystem of illegally profiting from SOL, the blockchain’s native token that, according to the suit, is an unregistered security.
• The Federal Deposit Insurance Corporation is looking into Voyager Digital marketing of deposit accounts for cryptocurrency purchases, an FDIC official said, confirming a report in the Wall Street Journal.
• One of the top officials at the Federal Reserve made it abundantly clear that the central bank – which is also a powerful financial watchdog – is paying careful attention to the flaws showing up as the crypto sector founders.
• The Treasury Department announced a new framework for international engagement on digital assets—as mandated by President Joe Biden’s executive order. The release describes Departments ongoing efforts to do things through multilateral institutions like promote development of central bank digital currencies, lower the costs of cross-border payments and crack down on money laundering.

State 

• Below is a summary of the latest legislative developments that have occurred this past week in state legislatures. Our master state legislative tracker working document can be found here. 
  • Arizona: HB 2204 – Would add virtual currency and NFT’s to tax deduction eligible assets. The bill passed both houses and was signed by the governor on 7/6.

• New Jersey: A.4355 – Requires public high school students to receive financial literacy instruction on higher education costs, student financial assistance, and cryptocurrencies.
• California: S.B.786 – Would allow county recorders to issue birth, death and marriage certificates by means of blockchain.
• Colorado and Utah are moving ahead with programs that will permit taxes to be paid in cryptocurrency, but the idea has been shelved in other states. 

International

• Despite China’s sweeping bans on cryptocurrencies, domestic web3 talent is quietly flourishing, with many venturing beyond the country’s border according to a report from TechCrunch. 
• The Monetary Authority of Singapore says it is considering more restrictive crypto regulations in a letter to the country’s parliament.
• Trading volumes have plummeted in India after a new 1% tax on all transactions began being enforced on 7/1. 
• Binance, operating as Moon Tech Spain has received registration with the Bank of Spain as a Virtual Asset Service Provider.
• Russia’s financial monitoring agency, Rosfinmonitoring, said on Friday it was using software to track cryptocurrency transactions and hopes to improve its capabilities, as Moscow ushers in regulation on what one lawmaker dubbed “cryptomania”.
• The Binance Head of Policy capped off a lightning round of lobbying in the EU last week ahead of legislators meeting next week to iron out policy divisions over MiCA.

Industry

• Three Arrows Capital, a crypto hedge fund, filed for Chapter 15 bankruptcy in the Southern District of New York federal court after weeks of speculation about the company’s solvency.
• Meta will shut down Novi, the social media company’s digital wallet payments pilot, on 9/1, all but ending the libra stablecoin experiment three years after the company then known as Facebook unveiled its ambitious but ultimately doomed crypto payments gamble.

DeFi Weekly Roundup

July 3, 2022

Federal 

• U.S. Securities and Exchange Commission Chair Gary Gensler stated that bitcoin is a commodity and other crypto currencies are not during an interview last week. “Some, like bitcoin, and that’s the only one, Jim, I’m going to say because I’m not going to talk about any one of these tokens [that] my predecessors and others have said [are] a commodity.”
• Grayscale Investments has initiated a lawsuit against the SEC challenging the decision by the Securities and Exchange Commission to deny conversion of Grayscale Bitcoin Trust to a spot Bitcoin ETF.
• During a hearing last week Rep. Bill Foster, D-Ill., promoted the idea of regulating cryptocurrency exchanges by implementing a digital passport, saying it’s the only way to make the industry less attractive to perpetrators of ransomware attacks and other transnational crime.
• The Federal Reserve Board has released its twice-yearly monetary policy report, noting that “recent strains experienced in markets for stablecoins … and other digital assets have highlighted the structural fragilities in that rapidly growing sector.”

State 

• Below is a summary of the latest legislative developments that have occurred this past week in state legislatures. Our master state legislative tracker working document can be found here. 
  • Arizona: HB 2204 – Would add virtual currency and NFT’s to tax deduction eligible assets. The bill passed both houses and proceeded to the Governor on 6/29.

• Michigan: SB 0888 – Would create a cryptocurrency commission, was referred to committee in the House on 6/28.
• The New York State Department of Environmental Conservation has denied bitcoin mining operation Greenidge Generation’s application to renew an air permit required to continue operating in New York. 

International

• Russian lawmakers have approved a draft law that would potentially exempt issuers of digital assets and cryptocurrencies from value-added tax. In February the regulator gave blockchain platform Atomyze Russia the first license to exchange digital assets.
• European Union lawmakers have agreed to a way forward on the traceability of crypto assets being traded in the bloc and wider market rules, to protect against market manipulation and set conditions for assets like stablecoins. Lawmakers struck a deal on next steps for the Markets in Crypto Assets (MiCA) framework. 
• Despite its skeptical approach to digital currencies, it looks like the Bank for International Settlements  intends to allow banks to hold up to 1% of reserves in cryptocurrencies such as Bitcoin.
• North Korean state-sponsored hackers were likely the perpetrators of a hack that led to the theft of around $100 million in cryptocurrency, according to analysis from blockchain researchers.

Industry

• The Supreme Court ruling that limits the EPA’s ability to regulate carbon emissions from power plants, will likely have an impact on Bitcoin and other cryptocurrency mining operations that source  power from fossil fuels.

DeFi Weekly Roundup

June 26, 2022

Federal 

• The House Appropriations Committee has released a report accompanying the Financial Services and General Government appropriations bill. There are several mentions of blockchain technology, highlights can be found here.
• At a Third Way event (Will China’s Authoritarianism Dominate the Digital World Order?), Carole House, Director of Cybersecurity and Secure Digital Innovation at the National Security Council, highlighted that the”White House is leading an assessment on the technology needs and capacity needs for a U.S. CBDC.” 
• Jerome Powell, told a Senate committee Wednesday that officials at the US central bank are watching the crypto market closely amid a period of heightened volatility.
• The Crypto Council for Innovation has pushed back against the Department of Labors guidance that precludes 401(k) administrators from including crypto investment options in their plans.
• The FBI has joined the investigation of hackers who stole $100 million in cryptocurrencies from a popular product on the Harmony network.
• On Thursday Michael Hsu, acting chief of the Office of the Comptroller of the Currency , said the recent fireworks in the crypto industry have further cemented his resistance to allowing lenders unfettered exposure to the digital assets markets.
•  Sen. Cynthia Lummis stated in an interview with Protocol “The cryptocurrencies with the largest market value,  bitcoin and ether  are definitely commodities that will be regulated by the CFTC…but there are a number of very small cryptocurrencies that are going to probably be at the SEC”. 

State 

• Below is a summary of the latest legislative developments that have occurred this past week in state legislatures. Our master state legislative tracker working document can be found here. 
  • Arizona: HB 2204 – Would add virtual currency and NFT’s to tax deduction eligible assets. The bill passed the both houses  on 6/24 and will likely proceed to the governor for signing.

• Michigan: SB 0888 – Would create a cryptocurrency commission, passed the Senate on the week of 6/23.
• Illinois: SB 3643 – Amends the Civil Administrative Code of Illinois to define cryptocurrency and cryptocurrency mining, it also modifies the definition of qualifying Illinois Data center and would promote the state as a mining hub. The bill lost a sponsor on 6/22, the bill has been held up in committee since 1/21. 

International

• Electricity to all 118 government-authorized mining operators in Iran has been cut off as of 6/22 ahead of seasonal spikes in power demand with no indication of return to action. 
• Crypto’s structural flaws make it an unsuitable basis for a monetary system, according to the Bank for International settlements. Instead, monetary systems could be built around CBDCs according to a report issued last week.
• The Ontario Securities Commission determined that Bybit and KuCoin exchanges were operating platforms that allowed Ontario residents to trade unregistered securities.
• Researchers at Russian bank VEB suggested that the country issue a gold-backed stablecoin for international payments to evade sanctions.

Industry

• eBay and KnownOrigin, one of the most innovative non-fungible token marketplaces, announced last week that eBay has acquired KnownOrigin.
• Uphold, a U.K. based exchange has announced it is shutting down its support for Venezuela due to “increasing complexity of complying with U.S. sanctions.”

DeFi Weekly Roundup

June 19, 2022

Federal 

• Five Republican senators, including Cynthia Lummis, have sent a letter to the SEC regarding its March bulletin, which established broad new requirements for crypto trading platforms.The lawmakers expressed concerns about lack of clarity and overreach of the SEC.
• The FBI and LinkedIn are working together to fight fraud. Linkedin has increasingly been used to lure investors into cryptocurrency schemes according to the report.
• Michelle Bond, the CEO of crypto trade organization the Association for Digital Asset Markets (ADAM) is running for U.S. Congress in New York.
• The SEC has begun an investigation into whether crypto exchanges have sufficient protections against insider trading according to a source inside the SEC.
• A bill intended to specify the rules and roles for crypto regulation could inadvertently “undermine” other market protections, SEC Chair Gary Gensler said Tuesday.

State 

• Below is a summary of the latest legislative developments that have occurred this past week in state legislatures. Our master state legislative tracker can be found here. 
  • Arizona: HB 2204 – Would add virtual currency and NFT’s to tax deduction eligible assets. The bill passed the House  on 6/14.

• Hawaii: S.B.2695 – Which establishes a cryptocurrency taskforce has been signed into law by the governor as of 6/17.
• Michigan: S.B.0888 – Would create a cryptocurrency commission, passed committee on the week of 6/17.
• Several U.S. states including Texas and Alabama are investigating Celsius Network’s decision to halt customer withdrawals.

International

• Panama President Laurentizo Cortizo partially vetoed on Wednesday a bill regulating the use of crypto as a means of payment for any transaction.
• A lobby group representing some of the largest financial services companies globally has warned the European Union that it needs to carefully consider the impact of issuing a digital euro. In a response to a European Commission consultation that closes Thursday, the Institute of International Finance  said there seemed to be an assumption that a CBDC is a good idea, even though the European Central Bank has yet to reach a decision. 

Industry

• Elon Musk, SpaceX and Tesla Inc.were sued for $258 billion over claims they are part of a racketeering scheme to back the cryptocurrency Dogecoin.

DeFi Weekly Roundup

June 11, 2022

Federal 

• Representatives Elissa Slotkin (D-MI) and Dusty Johnson (R-SD) have introduced a bill that would require members of Congress to disclose financial interests in crypto.
• The long awaited, wide-reaching, bipartisan crypto bill emerged Tuesday from Sens. Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.).
• US regulators are investigating whether Binance Holdings broke securities rules by selling digital tokens five years ago.
• Human rights advocates from around the world have sent a rebuttal  to the letter sent last week by prominent technologists to U.S. lawmakers. The rebuttal defends digital assets for the access they provide to people in countries where “local currencies are collapsing, broken, or cut off from the outside world.”
• Custodia filed suit against the U.S. Federal Reserve on Tuesday, saying the central bank was unlawfully delaying a decision on the crypto bank’s application for a master account.
• Crypto think tank Coin Center filed a lawsuit against the U.S. Treasury Department and Internal Revenue Service on Friday, claiming the crypto tax reporting requirement enshrined in last year’s infrastructure law is “unconstitutional.”

State 

• Below is a summary of the latest legislative developments that have occurred this past week in state legislatures. Our master state legislative tracker can be found here. 
• Colorado: SB 22-025 –  Would require the state treasurer to study the feasibility of using security token offerings for state capital financing. The bill was passed and signed by the governor on 6/7.
• Arizona: HB 2204 – Would add virtual currency and NFT’s to tax deduction eligible purchases. The bill was retained by committee on 6/6.
• Louisiana: HR 180 – Requests the Supervisory Committee on Campaign Finance Disclosure to study issues surrounding the acceptance of campaign contributions in the form of crypto-currency. Has been signed and was enacted on 6/8. 

International

• Lithuania is the latest member of the European Union creating its own crypto licensing regime, the development is motivated by concerns that EU laws might come too late to safeguard the sector’s reputation.
• Japan’s parliament passed a legal framework around stablecoins on Friday, providing a safety net for investors in the wake of last month’s terraUSD collapse that resulted in multibillion-dollar losses, according to a Bloomberg report.
• The Bank for International Settlements  said in a report Tuesday that the use of public blockchains results in fragmentation which means crypto could never be a suitable means of payment.
• South Korean crypto exchanges Upbit and Bithumb have announced  that they will delist Litecoin because of its newly activated privacy features.
• A leading lawmaker said France should recognize DAOs and NFTs in its legal system,  in a report published Wednesday.

Industry

• Crypto VC giant Paradigm has tapped Katie Biber as its new chief legal officer. Biber comes to the venture capital firm from financial technology company Brex and previously served as general counsel for Mitt Romney’s 2012 U.S. presidential campaign.

Bitcoin mining startup Bitzero, whose backers include Kevin O’Leary, has chosen North Dakota as the headquarters and hub for its North American operations.