US Congressman expresses importance of crypto wallet privacy

Cynthia Lummis and Warren Davidson speak on Bitcoin’s importance and personal privacy during an interview at Bitcoin 2021 in Miami.

At the bustling Bitcoin 2021 conference in Miami, Congressman Warren Davidson, alongside United States Senator Cynthia Lummis, sat down to field interview questions. The interview took a turn toward privacy, with Davidson responding with comments on crypto wallets. 

“At the end of the year, if you think about it, Secretary Mnuchin was talking about banning private wallets,” Davidson said, responding to a question about the possibility of over-regulation in crypto. “That’s a horrible approach,” he added. “If we don’t protect private wallets, someone is going to try to ban them.”

As Davidson mentioned, December 2020 saw the U.S. Treasury suggest strict overwatch on self-custodied digital asset wallets, with certain specifics, such as calling for more information from users transacting with wallets held away from crypto exchanges.

“I wish the country would take the threat to privacy as seriously as they take the threat to the second amendment,” he said. The second amendment of the U.S. Constitution gives citizens gun ownership rights.

Taking her turn at a response, Lummis noted the importance of teaching U.S. government folks on Bitcoin. “We’re trying to create a financial innovation caucus so we can use it to educate members of the U.S. Senate and their staffs about Bitcoin, its advantages, and why it is just such a fabulous asset to dovetail with the U.S. dollar,” she said. “It can be the underlying network, worldwide, to keep the dollar the global reserve currency, but still allow people to transact in a very freedom-loving way,” she said, adding:

“Whether you’re in Venezuela, where the inflation is outrageous and you’re trying to get your wealth out of the country, you can get it out through Bitcoin. And, the United States, if we get to the point where we’re experiencing the kind of inflation we’ve begun to see this year, we may want that alternative as well.”

In recent years, Venezuela has seen soaring levels of inflation amid a broad economic decline that was partially tied to the oil-price collapse of 2014.

The Bitcoin 2021 conference in Miami thus far has hosted significant action in terms of speakers and discussions. The event will continue for a second day on Saturday. 

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Blockchain and crypto will challenge current finance, Nigeria VP says

Yemi Osinbajo sees potential for crypto and blockchain.

Nigeria’s vice president, Yemi Osinbajo, delivered a speech at an economic summit on Friday in which he spoke positively of crypto and blockchain. 

“There is no question that blockchain technology generally, and cryptocurrencies in particular, will in the coming years, challenge traditional banking, including reserve banking, in ways that we cannot yet imagine,” Osinbajo said on Friday during the Central Bank of Nigeria, or CBN, Bankers’ Committee Economic Summit. “We need to be prepared for that seismic shift, and it may come sooner than later,” he said.

The Nigerian vice president also noted the broadness of the crypto industry, mentioning decentralized finance, or DeFi, in the mix. “Decentralized finance, using smart contracts to create financial instruments, in place of central financial intermediaries, such as banks or brokerages, is set to challenge traditional finance,” he said. 

Osinbajo’s speech, which included a number of other points, is posted on his YouTube channel. The Nigerian vice president also tweeted out a video clip highlighting of some of his crypto comments from his talk.

“The point I’m making, is that some of the exciting developments we see call for prudence and care in adopting them and these have been very well-articulated by our regulatory authorities,” he said, adding:

“But we must act with knowledge and not with fear. We must ensure that we are in a position to benefit and in a position to prevent any of the adverse side effects, or any of the possible, even criminal, acts that may arise in consequence of adopting or taking any of these options.”

The comments come in contrast to recent developments in Nigeria. Earlier in February, Nigeria forbade banking interactions with crypto exchanges, as per a ruling from its central bank. The CBN’s governor also called crypto assets illegitimate. Bitcoin recently traded at a significant premium in the region.

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Congress is blaming Robinhood, not Reddit

We didn’t learn much new in today’s hearing, but the spotlight was definitely on the gamified trading app, rather than the traders on r/WallStreetBets.

Vlad Tenev, Robinhood’s CEO, very much occupied the hot seat in today’s hearing before the House Financial Services Committee over January’s market volatility. 

None of the representatives seemed particularly interested in putting the screws to Reddit CEO Steve Huffman, and many seemed to give Keith Gill the same props the rest of us did.

These aren’t the market manipulators you are looking for

Gill, in all fairness, was the most likeable character involved, introducing his remarks by saying “A few things I am not: I am not a cat and I am not an accredited investor.” Gill, who really started this chain of events by posting about his investment into GameStop in June 2019, even doubled down on his opinion that GME remains a good buy today, at current prices. This is despite the fact that wild GME trading has attracted criminal investigation.

That lack of scrutiny towards Gill and Huffman does much to quell widespread fear that the events surrounding explosive trading in GameStop (GME) shares at the end of January would kick off probes into social media platforms’ role in potential market manipulation.

This is even as the House Antitrust Subcommittee announced today more hearings to scrutinize the biggest players in social media. Reddit, for now, seems to have flown under the radar.

Congressman Warren Davidson, who sits on the committee, noted this rare area of consensus, telling Cointelegraph: “I was hopeful right out of the gate because early on in the news cycle AOC was sticking up for the Reddit users, saying these people should have a right to trade. And then Ted Cruz, on the other end of the political spectrum said, ‘well, we agree.’”

Tenev’s business model

Though broadly, Republicans were more lenient than Democrats in addressing Robinhood’s activity, and especially the firm’s controversial shut-off of buying but not selling of GME and other high-volatility stocks, everybody wanted answers from Tenev.

The nature of Robinhood’s revenue model, which is based on the sale of order flow, while advertising itself as commission-free, fell under mass scrutiny, as did it’s dependence on a $3 billion injection of capital to meet collateral requirements.

“I believe a vulnerability was clearly exposed in your business model,” said Congressman Anthony Gonzales while questioning Tenev. “We just can’t live in a world where my constituents can have their shares liquidated if you can’t make a capital call.”

Many called out Robinhood’s claims to be busy democratizing finance. Tenev consistently pushed the figure of $35 billion as Robinhood users’ total gains, which Rep. Jim Himes said “you and anybody else schooled in finance know is meaningless without a rate-of-return.”

But while today’s hearing revealed a lot of hostility towards Tenev, it wasn’t all that educational.

Despite Chairwoman Maxine Waters’ admonition that “This is not political theater at all,” there didn’t seem to be any concerted sense of solutions to the epic trading that fueled GameStop’s (GME) meteoric rise at the end of January.

Real-time solution?

Some proposals, including from Tenev himself, as well as Davidson, were that the situation would not have developed at all if the U.S. had trading that settled the day of, rather than two days later — termed T-0 rather than T-2. Tenev noted “The existing 2-day period to settle trades exposes investors and the system to risk.”

Kenneth Griffin, CEO of Citadel, which he described as “the largest market maker in the world,” disputed the likelihood of a real-time system for securities trading in the next several years, saying: “The issue is everything has to work perfectly.” Real-time trading, he said, “requires that every bit of the workflow is perfectly synchronized across the parties.” Davidson disagreed, saying “Clearly in your business the technology exists for trading firms that are engaged in high-frequency trading.”

Davidson noted the potential role of blockchain. The potential of security tokens to solve issues with intermediaries and brokers has been one of the long-promised benefits of blockchain, though that is changing.

Today’s hearing was just the beginning, Chairwoman Waters affirmed. She said the committee aimed to hold two more with different witnesses.

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Ecuadorian Presidential Candidate Proposes a National Cryptocurrency but It Won’t Replace the Dollar

Ecuadorian Presidential Candidate Proposes a National Cryptocurrency but It Won't Replace the DollarAn Ecuadorian presidential candidate hinted at creating a cryptocurrency in the country as part of its government agenda. Giovanny Andrade said that the national crypto aims to “facilitate” transactions across the country. Crypto Could Be Backed by Gold During an interview with Primicias, Andrade, representing the Union Ecuatoriana party, believes its cryptocurrency idea is a […]
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OCC greenlights national banks to run nodes and stablecoin networks

The latest from the Treasury’s most crypto-forward office says that national banks don’t have to fear stablecoin nodes.

Monday evening, the Treasury’s Office of the Comptroller of the Currency told national banks that they are allowed to run independent nodes for distributed ledger networks.

Referring to of independent node verification networks, the OCC’s interpretive letter says that banks “may use new technologies, including INVNs and related stablecoins, to perform bank-permissible functions, such as payment activities.”

Coming amid a great deal of uncertainty as to the future of stablecoins, the OCC’s announcement is big news. The office, nonetheless, cautions that there are cyber risks inherent to using such technology:

“Banks must also be aware of potential risks when conducting INVN-related activities, including operational risks, compliance risk, and fraud. New technologies require enough technological expertise to ensure banks can manage these risks in a safe and sound manner.”

Brian Brooks, who formerly led Coinbase’s legal team, has been the Acting Comptroller of the Currency since May. During his tenure, the office has put out a host of guidance authorizing banks to be more active in crypto and, more recently, barring them from cutting off services to legal industries

Major lobbyist group the Blockchain Association noted that “The letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH, and FedWire.” Such flagships mechanisms of international payments have had to up their games in response to competition from blockchain-backed payments in recent years. 

Major lobbyist group the Blockchain Association noted of today’s announcement that “The letter states that blockchains have the same status as other global financial networks, such as SWIFT, ACH, and FedWire.” Such flagships mechanisms of international payments have had to up their games in response to competition from blockchain-backed payments in recent years. 

The new guidance follows up on a separate group of regulators laying out new guidance for stablecoin operators immediately before Christmas. 

The subject of stablecoin legal status in the U.S. has taken on an outsized role over the past month, especially after Congresswoman Rashida Tlaib introduced a bill that seemed to outlaw any operation of a stablecoin network, including private persons running,  for example, Ethereum nodes that process DAI transactions. 

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