TechREG Weekly US: Legislators and Regulators Differ


This week, US policymakers and regulators made their case on crypto assets and central bank digital currencies (CBDCs). While regulators tend to be very skeptical of cryptocurrencies, even claiming that digital assets depend on “hype,” the stance on CBDCs is more positive. Lawmakers, on the other hand, may have a less negative view of crypto assets, and two senators will introduce comprehensive crypto legislation in June. On financial consumer protection, the CFPB published several articles and blogs pressuring credit cards to change their data practices and announced the creation of a new office which, among other things, will strengthen the monitoring big tech companies. Lawmakers could introduce legislation prohibiting app stores from hosting apps that accept digital yuan payments.

Cryptocurrency and CBDC, two sides of a coin

Crypto Economics Depends On “Ad Battery,” Says OCC Comptroller

Acting Comptroller of the Office of the Comptroller of the Currency (OCC) Michael Hsu told an audience at a crypto event on Tuesday that recent events with TerraUSD and other stablecoins are clear evidence that the crypto economy depends on hype. Hsu blamed the high yield rewards offered by some crypto products and the hype created around them for the harm caused to consumers. Hype is essential for the crypto economy, Hsu explained. In a social media analogy, he said, “it seems like hype and yield are to crypto just like user engagement is to social media.”

Fed Vice Chairman Brainard makes the case for a US CBDC in Congress

Federal Reserve Vice Chair Lael Brainard testified May 26 before the U.S. House of Representatives Financial Services Committee, where she explained to House members the benefits and risks of a US central bank digital currency (CBDC). In her carefully crafted speech, Ms. Brainard appeared to make the case for an American CBDC. “The CBDC could coexist and be complementary to stablecoins and commercial bank money by providing secure central bank accountability in the digital financial ecosystem, just as cash currently coexists with commercial bank money.”

US senators set to unveil crypto bill

A big push to regulate crypto in the United States could come with a bill to define the roles of the two government watchdogs. Lawmakers pushing the bill are Sens. Kirsten Gillibrand, DN.Y., and Cynthia Lummis, R-Wyo. Both worked on it for “months” and said they want to make the bill public in June. The bill would make the Commodity Futures Trading Commission (CFTC) the primary regulator of spot and futures markets. The Securities and Exchange Commission (SEC) on the other hand would be the supervisor of crypto which can be represented by the Howey test, i.e. assets offered to “fund a company in the same way that stocks are offered. to finance businesses.

Circle tells the Federal Reserve that a CBDC “could destabilize” the banking sector

Circle responded to a Federal Reserve article on Wednesday (May 25) about the possibilities of a US central bank digital currency (CBDC), saying it could “destabilize” the banking industry. Stablecoin issuer USDC said CBDC, “in both interest-bearing and interest-free form, creates potential flight-to-quality or flight-to-safety issues that could destabilize the banking system at two levels.”

The CFPB steps up its advocacy efforts

CFPB Targets Credit Card ‘Deleted Data’ Practices

The Consumer Financial Protection Bureau (CFPB) announced in a Wednesday, May 25 blog post that it has sent letters to the nation’s largest credit card companies asking why they are not regularly providing data to credit card bureaus. credit on the actual monthly payments their borrowers make.

The CFPB gave companies 30 days to respond in writing. These letters are neither a formal inquiry nor a request for supervision – so answering these questions is not mandatory. However, the information provided, while confidential, will be used to support the agency’s ongoing market and policy planning.

CFPB: Credit refusals must have precise and precise explanations

The CFPB wishes to remind consumers that federal law requires companies to explain specific reasons for denial of credit applications, even when the creditor uses credit models using complex algorithms, according to a Thursday, May 26. Press release.

Citing the Equal Credit Opportunity Act (ECOA), the agency said the law applies whether or not a company uses a “black box model” to make decisions on applications. credit. “However, some creditors may make credit decisions based on the results of complex algorithms, sometimes called ‘black box’ models,” the bureau said. “With such models, adverse action notices that meet ECOA requirements may not be possible.”

Big tech

CFPB Takes First Steps for Open Banking and Big Tech Review

The CFPB announced on Tuesday 24 May the opening of the Competition and Innovation Office as part of a new approach to stimulate innovation in financial services by promoting competition and identifying barriers to new market entrants. While the new office may have a supporting role to the CFPB in promoting competition and innovation at large, the agency’s press release only mentions open banking and the role of Big Tech as the main reasons for create this office.

GOP bill would ban app stores from supporting apps that accept digital yuan

U.S. Republican lawmakers want to ban app stores from hosting apps that enable payments with China’s digital currency, Reuters reported Thursday, May 26, citing proposed legislation seen by the news site. The bill will state that companies owning or controlling app stores will not be allowed to “carry or support any app…in the United States that supports or enables e-CNY transactions.”

The report notes that opposition to the digital yuan is rooted in suspicion that the Chinese government could use it to gain “real-time visibility into all transactions on the network, which poses privacy and security concerns for Americans who join this network”.



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