Daily Digest - 27th April 2023

Headlines

▌The U.S. House of Representatives will hold a hearing on the regulation of the digital asset spot market

The Subcommittee on Commodity Markets, Digital Assets, and Rural Development of the U.S. House of Representatives will hold a meeting entitled "The Future of Digital Assets: Identifying Gap in Spot Market Regulation” hearing.

Witnesses will include Timothy Massad, former Chairman of the Commodity Futures Trading Commission (CFTC), Purvi Maniar, General Counsel at FalconX, an institutional cryptocurrency trading platform, and Global Policy Leader at Hedera, a decentralized proof-of-stake ledger Nilmini Rubin et al.

The panel also included Daniel Davis, partner at law firm Katten Muchin Rosenman LLP, and Joseph Hall, partner at law firm Davis Polk & Wardwell LLP. The hearing is scheduled to begin at 2 p.m. ET on Thursday.

Policies

▌Bittrex Global CEO: The company will defend against the charges of the US SEC

Bittrex Global CEO Oliver Lynch said in an interview that it was "wrong" for the U.S. Securities and Exchange Commission (SEC) to accuse cryptocurrency exchange Bittrex Global GmbH of violating local securities laws.

Linch said Bittrex Global did not know it was the subject of the SEC's investigation until it was notified that the SEC had "reached a preliminary conclusion."

He added that the regulator did not give Bittrex Global the opportunity to "explain the facts." Additionally, Linch claims that the company "never claimed to provide services in the US" and will "vigorously" defend its position that it does not have any customers in the US.

In addition, he also stated that the closure of Bittrex does not affect the global operations of Bittrex Global, "Bittrex is a completely independent legal entity that only provides services in the United States and only provides services to American customers.

Global continues to provide services to customers in other parts of the world as before,” previously reported that the US SEC issued a wells notice to Bittrex in March this year, alleging that Bittrex violated the law by operating as an exchange, broker-dealer and clearinghouse without registering with regulators, the latter will shut down its U.S. operations on April 30.

▌The European Parliament research report believes that there should be no limit on the holdings of digital euro

A paper being drawn up for the European Parliament says a digital euro system should not limit how much users can hold, arguing that the risk to financial stability of people ditching traditional banks is overstated.

The paper upends the traditional view of central bank officials that individuals should not be allowed to own central bank digital currency (CBDC) worth more than a few thousand euros, preventing them from using it as a savings vehicle.

Central bankers such as Panetta have warned that a mass exodus from commercial banks could hamper lending to the economy and damage financial stability.

The European Central Bank will decide later this year whether to go ahead with its digital euro project, while the Bank of England has said its digital pound holdings could also be limited to 10,000 pounds ($12,480).

Cryptocurrency

▌First Republic Bank may be restricted from using the discount window and the Fed’s emergency lending facility

U.S. bank regulators are considering the possibility of downgrading First Republic Bank's credit score, a move that could limit the bank's access to funding through the Federal Reserve's credit facility.

The Federal Deposit Insurance Corporation (FDIC) has given the bank time to strike financial-strengthening deals with the private sector, sources said.

But as the weeks passed and the deal was still missing, senior officials increasingly leaned toward downgrading First Republic, including the so-called CAMEL rating, which could limit the bank's use of the Fed's discount window and an emergency lending facility launched last month.

▌Blockchain Association CEO: The outlook for U.S. cryptocurrency policy is "bright"

Kristin Smith, CEO of the Blockchain Association, said in an interview that "the United States will introduce comprehensive encryption regulation this year or in the next few years" and said that the encryption industry may need to wait 18-22 months to see real changes.

However, it is still a time of great opportunity for continuing education and laying the groundwork for a strong regulatory future.

In addition, it also stated that the Blockchain Association is currently investigating the de-banking of cryptocurrencies and asked industry players to provide clues.