Massive government spending accelerating crypto adoption: Sen. Cynthia Lummis

Senator Cynthia Lummis said that inflation and massive government spending is accelerating the adoption of digital assets.

Republican Senator and Bitcoin proponent Cynthia Lummis said that massive government spending is accelerating crypto adoption.

Lummis made the comments while sharing an interview she did with “Varney & Co” on the Fox Business cable network on July 29, in which she called for a crypto regulatory sandbox and support to attract Bitcoin miners to set up in US states.

On Twitter she stated that “big gov’t spenders are (accidentally) doing far more to accelerate the adoption of digital assets than I am,” and asserted that the debasement of the U.S. dollar is driving citizens to store value in digital assets such as Bitcoin. Not that this was necessarily a good thing:

“BUT spending America deeper into a hole is a stupid, inflationary & altogether undesirable way to drive ppl to digital assets.”

“I want USD to continue as the world’s reserve currency. We need to reign in spending & support financial innovation on US soil,” she added.

During the cable TV interview, Lummis gave her thoughts on the July 27 hearing held by the Senate Banking Committee regarding the risks of crypto and offered views on the regulatory landscape moving forward.

The Senator emphasized that the first step should be “good solid definitions” that are agreed upon in legislation and called for  “a regulatory sandbox where everyone understands the rules, but innovation can still occur unrestricted.”

Lummis stated that “we wanna make sure that Bitcoin can continue to serve as a good store of value,” and she appears view the asset primarily in that way. However, she did also note that if the U.S. were to follow El Salvador’s route and make BTC legal tender, it would need to be regulated under the bank secrecy act, anti-money laws and in a way that it can be “ferreted out” if it’s used illegitimately.

The Bitcoin proponent also said she wants to see the U.S. welcome and support crypto miners that are flocking to the country following the Chinese mining ban:

“We wanna make sure that these miners […] can come to places like Pennsylvania, Texas, Wyoming and elsewhere. Where they can get the energy to mine it and then once it’s produced that it can be on the blockchain in a way that enhances the non-fiat currency advantages that cryptocurrency has.”

Related: Law professor calls for crypto mining regulation during US Senate hearing

Lummis is a Bitcoin hodler who previously stated that she was excited to buy the dip in June, and has advocated for holding BTC as part of a retirement diversification strategy. However, her pro-crypto sentiments were not shared by Democrat senator Sherrod Brown and others during the Senate Banking Committee’s recent hearing.

“After a decade of experience with these technologies, it seems safe to say that the vast majority haven’t been good for anyone but their creators,” Brown said in his opening statement.

“They claim to enable ‘transparency.’ Their backers talk about the ‘democratization of banking.’ There’s nothing ‘democratic’ or ‘transparent’ about a shady, diffuse network of online funny money.”

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Strengthening our commitment to trust through compliance: Melissa Strait joins Coinbase as Chief…

Strengthening our commitment to trust through compliance: Melissa Strait joins Coinbase as Chief Compliance Officer

By Paul Grewal, Chief Legal Officer

Since our founding more than eight years ago, Coinbase has committed itself to being the most trusted and compliant venue for anyone to interact with the cryptoeconomy. We hold ourselves to the same exacting compliance standards as the world’s largest financial institutions and fintech companies. We believe that this commitment not only ensures the safest experience for our customers, but also helps drive the industry forward by encouraging the same levels of accountability, transparency and professionalism that customers expect from companies to which they entrust their money.

It’s with this commitment in mind that today we welcome our new Chief Compliance Officer, Melissa Strait. In her new role, Melissa will be responsible for our global compliance programs, including our know-your-customer (KYC) and anti-money-laundering (AML) initiatives, as well as managing our work with law enforcement agencies around the world.

Melissa joins us from leading fintech company Stripe, where she most recently served as its Global Head of Financial Crimes. She previously held the role of the company’s U.S. Compliance Officer. In both roles she built and led global teams responsible for the implementation and day-to-day sustainment of compliance programs that supported millions of the world’s top companies in more than 120 countries. Prior to joining Stripe, she oversaw daily compliance operations at Square, a global payments company.

“As Coinbase continues to be the bridge between the cryptoeconomy and the traditional financial system, implementing industry-leading compliance programs will be critical to earning and maintaining the trust of our retail and institutional customers. Melissa’s experience at the very cutting edge of fintech innovation makes her uniquely qualified to navigate the complex web of regulations to which we not only comply with, but are also helping to shape,” Paul Grewal, Chief Legal Officer, Coinbase

Melissa is no stranger to Coinbase. In her roles at Stripe and Square, she oversaw the compliance aspects of each company’s integration with our various products, introducing a range of new customers to the potential of cryptocurrency.

In her past roles, Melissa helped to build teams during the critical moments of growth and regulation within the traditional fintech industry. As we continue to move forward with the mainstream adoption of crypto, her experience will be vital in ensuring our innovative technology is aligned with global compliance standards. Her experience with traditional fintech and building teams from the ground up will be an outstanding addition to our rapidly growing legal and compliance functions, complimenting the recent additions of Paul Grewal as our Chief Legal Officer, and Milana Mccullagh and Katherine Minarik.

Welcome to Coinbase, Melissa. We look forward to doing great things together.

Strengthening our commitment to trust through compliance: Melissa Strait joins Coinbase as Chief… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

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Nigeria Crypto Ban: Stakeholder Body, Politicians Assail Central Bank’s Directive to Financial Institutions

Nigeria Crypto Ban: Stakeholder Body, Politicians Assail Central Bank's Directive to Financial InstitutionsA body representing cryptocurrency and blockchain stakeholders in Nigeria has joined other crypto industry players in assailing the recent Central Bank of Nigeria (CBN) directive to banks. The CBN order, which seeks snuff out crypto entities from the banking system, took effect on February 5, 2020. Not Just a Mere Reiteration In a statement, the […]
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Philippine Central Bank Widens Cryptocurrency Regulation — Sees ‘Accelerated Growth’ in Crypto Activity

Philippine Central Bank Widens Cryptocurrency Regulation — Sees 'Accelerated Growth' in Crypto ActivityThe Philippines’ central bank, the Bangko Sentral ng Pilipinas (BSP), has expanded the country’s cryptocurrency regulation after seeing “accelerated growth” in the use of crypto exchanges. The new regulatory framework is in line with the guidelines recommended by the Financial Action Task Force (FATF), according to the central bank. Philippine Central Bank Introduces New Rules […]
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Coinbase requests rulemaking pause from FinCEN following Biden White House guidance to agencies

This letter was shared with Kenneth Blanco, Director, FinCEN on Jan. 25th, 2021. It is available to download here.

January 25, 2021

Via email to [email protected] and [email protected]

Kenneth A. Blanco
Director, Financial Crimes Enforcement Network
United States Department of the Treasury
P.O. Box 39
Vienna, VA 22183

Re: Biden Administration Rulemaking Pause; Docket No. FINCEN-2020–0020, RIN №1506-AB47

Dear Director Blanco:

After the unprecedented number of public comments received on the Notice of Proposed Rulemaking “Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets” (Dec. 23, 2020), Coinbase greatly appreciates FinCEN’s January 14, 2021, decision to reopen the comment period for its proposed reporting and recordkeeping requirements for broad classes of cryptocurrency transactions. Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets, 86 Fed. Reg. 3897 (Jan. 15, 2021). Coinbase agrees with FinCEN that a regulation of this breadth can only benefit from more public participation in its development.

Days after FinCEN reopened the comment period, President Biden took office and instructed agencies to pause all pending rulemakings including this one. See Ronald A. Klain, Memo. For The Heads Of Executive Departments And Agencies, Regulator Freeze Pending Review (Jan. 20, 2021). Specifically, the memorandum instructs agencies to “immediately withdraw” rulemaking, including the notice of proposed rulemaking and open comment period here: “With respect to rules that have been sent to the OFR but not published in the Federal Register, immediately withdraw them from the OFR for review and approval” by “a department or agency head appointed or designated by” President Biden. The reference to “rules” expressly includes “any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including … notices of proposed rulemaking.” Id.

President Biden’s nominee for Secretary of the Department of Treasury, Janet Yellen, has also publicly confirmed to Congress that this specific rulemaking should and will undergo “a full and substantive review”: “I am aware of the rules proposed by FinCEN in December 2020 regarding how certain digital assets are treated under the Bank Secrecy Act. I agree on the need to ensure adequate consultation with and input from stakeholders[.] If confirmed, I intend to ensure a full and substantive review of the proposals, which will include an assessment of how to ensure proper input from stakeholders.” Finance Committee Questions for the Record, Hearing on the Nomination of Dr. Janet Yellen, at 88 (Jan. 21, 2021).

As of the date of this letter, the comment period remains open and states that there are just days remaining in the comment period. This is likely to create significant confusion about whether or not comments are in fact due, preventing the public engagement that FinCEN is rightly seeking in this new comment period. In fact, industry publications have already reported that the rulemaking has been “frozen” due to the Executive Order. See, e.g., “Proposed Crypto Wallet Rule Among Those Frozen by Biden Pending Review,” Coindesk, Jan. 20, 2021, pending-review.

Therefore, Coinbase writes to request that FinCEN formally close the open comment period and “withdraw” the notice of proposed rulemaking in accordance with the new administration’s instructions, and advise the public as soon as possible that no comments are currently due.

The White House-directed pause on the current rulemaking is also consistent with Congress’s recent instructions to Treasury in the Anti-Money Laundering Act of 2020 — the authority newly cited by Treasury as support for the proposed rulemaking when the comment period was extended. See AMLA § 6204–5. The Act took effect on January 1, 2021, and requires Treasury to review and report to Congress whether any aspects of the existing reporting requirements related to currency transaction reports (CTRs) and suspicious activity reports (SARs) should be changed to “reduce any unnecessarily burdensome regulatory requirements and ensure that the information provided fulfills the purpose” of being “highly useful.” Id.; 31 U.S.C. § 5311, as amended by AMLA §6101(a). These reports are central to the current proposed rulemaking and the extent of their usefulness was a topic of significant public concern in the first comment period. Any new CTR regulation on cryptocurrencies would benefit from the reasoned analysis and conclusions from this Congressionally-mandated review. The required regulatory pause gives FinCEN the opportunity to do that.

During this period of regulatory pause, Coinbase would welcome the opportunity to engage directly with FinCEN on these topics. Coinbase further offers to assist in coordinating industry or public engagement meetings with FinCEN as well. This could include informal feedback sessions with Treasury representatives, similar to what occurred when Treasury considered proposed rulemaking for customer due diligence. See Customer Due Diligence Requirements for Financial Institutions, 77 Fed. Reg. 13,046 (Mar. 5, 2012).

If FinCEN, however, does not intend to pause the existing comment period despite the White House’s instructions, Coinbase respectfully requests a formal public statement explaining that decision so the public knows that comments remain due. And at a minimum, the open 15-day comment period related to the CTR proposals should be merged into the longer planned 45-day comment period on counterparty and recordkeeping requirements. See Requirements for Certain Transactions Involving Convertible Virtual Currency or Digital Assets, 86 Fed. Reg. 3897 (Jan. 15, 2021). As it stands, the current 15-day comment period is again far too short to address the significant security, efficacy, cost, and implementation concerns. There is also no real way to divide the analysis needed between the two areas of proposed rulemaking without substantial duplication of work.

Thank you again for FinCEN’s willingness to further engage the public on these important topics. Coinbase agrees with Nominee Yellen that the United States needs “a regulatory framework that fosters innovation and promising new technologies while addressing legitimate concerns.” Finance Committee Questions for the Record, Hearing on the Nomination of Dr. Janet Yellen, at 87 (Jan. 21, 2021).


Paul Grewal
Chief Legal Officer

cc: Robert S. Fairweather, Acting Director of the Office of Management and Budget

Coinbase requests rulemaking pause from FinCEN following Biden White House guidance to agencies was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

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