Elizabeth Warren and Sherrod Brown did not miss an opportunity to attack the crypto industry after the bank failures.
Last week, another major earthquake rocked the crypto markets. Silvergate Bank – a network of cryptocurrency gateways for financial institutions and a major onramp for cryptocurrencies in the United States – closed its operations due to liquidity problems.
A couple of days later, another institution insured by the Federal Deposit Insurance Corporation, Silicon Valley Bank (SVB), was shut down by California’s financial watchdog. The bank provided financial services to several cryptocurrency-focused venture capital firms, including Andreessen Horowitz and Sequoia Capital, and USD Coin (USDC) issuer Circle had around 20% of its reserves at the bank.. Following the news, USDC plunged, losing more than 10% of its value in 24 hours.
Some lawmakers, well known for their hostility towards cryptocurrencies, were quick to attack the sector. Senator Elizabeth Warren called Silvergate’s failure “disappointing, but predictable,” calling on regulators to “step up against crypto risk.” Senator Sherrod Brown shared his concern that banks involved with crypto were putting the financial system at risk and reaffirmed his desire to “establish strong safeguards for our financial system from crypto risks.”
The most important comment, however, came on Sunday, when the US Secretary of the Treasury, Janet Yellen, revealed that authorities were not considering a major bailout of Silicon Valley Bank. According to Yellen, the Federal Deposit Insurance Corporation is considering “a wide range of available options,” including acquisitions of foreign banks.
Biden’s budget proposes a 30% tax on electricity use in cryptocurrency mining
Cryptocurrency miners in the US could be subject to a 30% tax on electricity costs under a budget proposal by US President Joe Biden to “reduce mining activity”. According to an explanatory document for the Treasury Department’s supplemental budget, any company that uses resources -own or rented- would be subject to a special tax equivalent to 30% of the electricity costs used in the mining of digital assets. The tax would be applied after December 31 and would be introduced progressively over three years, at a rate of 10% per year, until reaching the maximum rate of 30% in the third year.
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The stablecoins and Ether “will be commodities”, reaffirms the president of the CFTC
Stablecoins and Ether are commodities that should fall under the purview of the US Commodity Futures Trading Commission (CFTC), according to commission chairman Rostin Behnam.
In a recent appearance, Senators asked Behnam about differences of opinion between the CFTC and the Securities and Exchange Commission (SEC) following the CFTC’s 2021 settlement with stablecoin issuer Tether. Behnam said: “It was clear to our enforcement team and the commission that Tether, a stablecoin, was a commodity.” Behnam’s most recent comments run counter to a view held by SEC Chairman Gary Gensler who asserted that anything other than Bitcoin (BTC) is a security, a claim multiple crypto lawyers have rejected.
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China announces plans for a new national financial regulator
The Chinese government is reportedly planning to carry out regulatory reform, which includes the introduction of a new national financial regulator. The reforms would involve abolishing its current banking and insurance watchdog, the China Banking and Insurance Regulatory Commission.. The responsibilities of this commission will be transferred to a completely new administration, as will certain functions of the central bank and the securities regulator.
This announcement comes after President Xi Jinping called for the reform of party and state institutions in China. These reforms will also include an office for sharing and developing data resources, which will partly replace the functions of the current Office of the Central Commission for Cyberspace Affairs.
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