The GENIUS Act stablecoin legislation has become the first crypto bill to pass the Senate’s required 60-vote supermajority needed to overcome Senate filibuster rules. Next stop is the House, where the President has encouraged quick passage but where the bill may be slowed down by overarching market structure regulation issues. In other news, DeFi lending is at an all-time high, and various lawsuits in the space had litigation updates worth monitoring.
Here’s everything that happened last week in Web3 legal:
Stablecoin Bill Passes in Senate on 68-30 Bipartisan Vote
As expected after clearing cloture 2 weeks ago, the GENIUS Act (as amended) has passed the Senate and now moves on to the House for its consideration. The bill requires most stablecoin issuers to be approved and overseen by federal financial regulators such as the FDIC, OCC, and Federal Reserve, while allowing states to approve issuance under $10 billion as long as the entities are regulated at the state level under similar frameworks. The bill was amended to win over pro-crypto Democrats seeking stricter rules for nonfinancial and foreign stablecoin issuers. The scope of payment stablecoins is limited to centralized tokens with real world 1:1 backing, such as those centralized stablecoins backed by treasury instruments or the U.S. dollar. This is the first crypto bill to pass the Senate’s 60-vote majority needed to overcome Senate filibuster rules (the Senate passed disapproval resolution for the SEC’s Staff Accounting Bulletin, but that only required a simple majority under the Congressional Review Act and that was vetoed by President Biden).
Tl;dr– There are currently enough votes in the House to get this passed and onto the President’s desk, where he has said he would sign the bill into law in its current form. However, there are current talks in the House to try to link the GENIUS Act passage with the CLARITY Act market structure legislation, which has a much tougher hurdle to overcome. Hopefully this doesn’t get tripped up right before the finish line by trying to do too much. Market structure as a whole would be great, but there is a “bird in hand” element to just getting something actually signed into law rather than messing around and being left with nothing.
OTHER STORIES
JPMorgan Trademarking Crypto Offerings: JPMorgan, the CEO of which famously wanted to “close down” bitcoin and testified to Congress that Crypto is only useful for crime (which resulted in this banger), is trademarking “JPMD” for branding a potential JPMorgan blockchain-based digital asset. “Then you win,” am I right?
Crypto Risk Survey: A recent Kraken survey found that 48% of respondents viewed themselves as the biggest security risk of theft of their assets/fraud. Which just means about 50% of respondents vastly overestimate their operational security.
Paradigm Advocates for Tornado: I thought that amicus in the Tornado Cash criminal case were denied (looked it up after typing and realized the Samurai case is where amicus were denied; hard to keep track of all the attempts to make code illegal), but it looks like Paradigm was able to get one approved which is a good thing. Their brief focuses on jury instructions, and while it is upsetting Roman Storm may need to reach jury deliberations at all, it is a great contribution to his defense.
Gemini Gets Vindictive: Gemini has lodged a complaint with the Inspector General of the CFTC regarding the actions of certain CFTC Department of Enforcement staff in investigating and prosecuting Gemini (in a case Gemini ended up settling) over what Gemini claims to be the lies of a disgruntled employee. Wild move to go after staff of one of your primary regulators.
Payments Article: This is a great reference on how stablecoin payments can be implemented by businesses (full protocol described here) which is compliant with existing payment processing laws (including smart-contract enabled escrow for chargebacks) while saving companies boatloads in fees. Great stuff.
DeFi Lending at ATH: The total value locked in lending protocols has reached an all-time high of over $55.6 billion. When you can get 4.5-8% yield on stablecoins more people should be having their cash sit in these lending protocols rather than a checking account giving you effectively zilch. Here is an intro to Morpho for people interested. Now if only the token underlying these protocols would boom, I would be set. DeFi mullet is coming. Can’t wait.
DAO Governance Study: Worth putting here this recent study on governance centralization in decentralized autonomous organizations (DAOs) and its drivers and economic implications. “Our findings suggest that DAOs thus far fall short of delivering the promise of decentralized governance.”
Kraken Moves to Wyoming: Kraken has announced it is moving its headquarters from San Francisco to Cheyenne, Wyoming. Not shocking, after its founder has publicly beefed with San Fransico municipal and local authorities.
OKX Public: OKX has just re-launched in the U.S. and is already in talks to have its U.S. exchange arm go public? It’s one of the biggest exchanges in the world, so not crazy for it to consider getting in on U.S. public markets funding while the market is frothy for public crypto companies.
CONCLUSION
If you have any questions or would like me to write about anything else, let me know on Twitter (X?) or Farcaster. As always, I am an attorney, I am not your attorney. For legal advice, you should always consult (and pay for) an attorney.
Outro/Disclaimer: Since late 2022, I’ve prepared weekly updates for attorneys at my firm to stay abreast of the latest Web3 legal developments. The biggest stories are included in Bi-Weekly posts on the firm’s BitBlog, where we provide tl;dr overviews and insights into the biggest stories from the past two weeks. I post the weekly updates on my personal blog every Tuesday, where I also provide links to more obscure legal developments and otherwise discuss industry trends and stories. Please note, the views and opinions I express, both on BitBlog and my personal blog, are solely my own. They do not reflect the official stance or endorsement of my firm.
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