This Week in Policy (2/21)

This Week in Policy (2/21)

Hi Folks,

Momentum appears to be building on some form of stablecoin regulation. Trucking convoys may have been a flashpoint for government intervention into financial services. And if you have ideas for new, updated, or repealed rules at the CFPB, now there’s a place for you to file your best ideas directly to the regulator. Read on:

  • Battle lines getting clearer on stablecoin regulation: House Financial Services Committee Member Rep. Josh Gottheimer (D-NJ) released his “Stablecoin Innovation and Protection Act,” which would define qualified stablecoins as those backed 1:1 to US Dollars, and have the FDIC develop a stablecoin-specific insurance. By embracing the innovative promise of crypto while setting high barriers to entry, Gottheimer’s proposal sets a new Congressional “middle of the road” between Sen. Cynthia Lummis’ (R-WY) embrace and Sen. Sherrod Brown’s (D-OH) skepticism. On the regulator side, Treasury official Nellie Liang said that only banks should be allowed to issue stablecoins. Internationally, in a report exploring the risks crypto might pose to the financial system, the Financial Stability Board called for swift action to regulate crypto at large.
  • UK BNPL crackdown: The Financial Conduct Authority ordered several buy now, pay later firms to refund consumers after studying their terms and finding some to be insufficiently clear. A survey from Barclays, a bank, found that a considerable proportion of BNPL users were unsure of their ability to pay - Barclays is using this survey to push for even more aggressive regulation of its nascent credit market competitors.
  • Canada’s emergency order targets crowdfunding & crypto: After weeks of trucker convoy disruptions in Ottawa and at the Michigan border, Canada’s Prime Minister issued an emergency order requiring financial institutions to freeze accounts suspected of supporting protestors. The emergency order specifically called out crowdfunding and cryptocurrency as tools being used to support protestors, and gave banks free reign to close accounts. More than 200 financial accounts were frozen, but the order raised concerns of government overreach.
  • Binance scrutiny on both sides of the pond: In the US, the SEC is looking into trading affiliates of the crypto exchange, while the UK’s Financial Conduct Authority voiced concern that Binance’s deal with US-based Paysafe will reestablish its access to payments systems after the regulator ordered it to stop offering services last year.
  • CFPB launches public petition portal: In an effort to broaden its engagement with the general public and level the playing field between consumers and lobbyists, the regulator announced changes that make it easier for consumers to file petitions for new rulemaking. So far the petition website has only three contributions from lobbyists and consumer advocates, but we should expect that number to grow over the coming years.