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The biggest regulatory story of the week, if not the year, has been the United States Security and Exchange Commission’s lack of opposition to the launch of the first-ever Bitcoin (BTC) exchange-traded funds, which took eight long years to materialize. While the first ETFs are tracking CME-traded Bitcoin futures rather than the asset’s spot price, the crypto space is already anticipating a pure-Bitcoin ETF as a logical next step. This bar might prove to be immensely difficult to clear, however, as SEC Chair Gary Gensler seems far less convinced of the stringency of investor protections that such products offer.
Below is the concise version of the latest “Law Decoded” newsletter. For the full breakdown of policy developments over the last week, register for the full newsletter below.
Crypto and the national security game
The U.S. Treasury Department revealed last week that the increasing use of digital assets poses a growing threat to the nation’s sanctions program. Adversaries can now use these alternative financial rails to mitigate the effects of U.S.-imposed sanctions within the dollar-denominated realm. Just a few days later, a high-ranking Treasury official reiterated the department’s heightened focus on targeting crypto infrastructure used by bad actors. The official also made it clear that there is an understanding within the department that most crypto transactions serve perfectly legitimate purposes.
It took mere hours for a group of Senate Democrats to get extremely nervous about Facebook’s limited pilot of its digital wallet, Novi, run in partnership with Coinbase and Paxos. The test saw a remittances corridor opening between the U.S. and Guatemala for a small number of users, whereby they could send and receive Pax Dollar (USDP), a dollar-backed stablecoin.
A group of five senators, including vocal crypto critic Elizabeth Warren and Banking Committee Chairman Sherrod Brown, responded with a letter condemning Facebook’s “revived effort to launch a cryptocurrency and digital wallet,” citing numerous scandals surrounding the company as a justification for why it cannot be trusted to come anywhere near launching private money.
The thunder from down under
Big news from Australia captured the crypto crowd’s attention as an Australian Senate committee tasked with devising measures to make the nation a leading technology and financial center rolled out a far-reaching report on the state and prospects of crypto regulation. The report, which was met favorably by the industry, could lay the groundwork for Australia to join the ranks of the world’s more crypto-friendly jurisdictions.