Crypto news & regulatory update: February 9 – March 1, 2024

Editor’s note: Our Regulatory Updates series highlights the latest regulatory, legal, and policy happenings relevant to builders in web3 and crypto, as tracked and curated by the a16z crypto regulatory team. The roundups are based on recent news, guidance, legislation, and frameworks released by regulators, industry consortia, professional associations, banks, governments, and other entities as they impact the crypto industry (or applications) around the world. We also occasionally include select resources such as talks, posts, or other commentary — from us or from others — with the updates.

🧠 tl;dr

• A federal judge issued a temporary restraining order enjoining enforcement of the Energy Information Administration’s recent emergency information collection survey targeted at bitcoin miners.
• A federal judge signed off on Binance’s $4.3 billion plea deal with the U.S. Department of Justice (DOJ).
• The UK’s Financial Conduct Authority (FCA) released data on its crypto assets financial promotions regime for 2023, which reflected that the FCA has issued 450 consumer alerts against firms illegally promoting crypto assets. 

🦅 Congress

• The House Financial Services Committee voted to advance a resolution that would overturn SEC Staff Accounting Bulletin No. 121, which directed firms safeguarding consumer crypto to track the funds as liabilities on their balance sheets. The full House and Senate must vote on the resolution before it becomes effective.
• A group of House Representatives from the House Ways and Means Committee wrote to Treasury Secretary Janet Yellen to raise concerns regarding Treasury and the Internal Revenue Service’s recently proposed rules regarding tax reporting requirements for digital asset brokers.
• House Majority Whip Tom Emmer (R-Minn.) wrote to the Office of Management and Budget (OMB) to express his concern regarding the OMB’s usage of emergency authorities to expedite the Energy Information Administration’s request to subject the American bitcoin mining industry to a new, mandatory information collection regime.
• Senators Ted Cruz (R-Tex.), Bill Hagerty (R-Tenn.), Rick Scott (R-Fla.), Ted Budd (R-N.C.), and Mike Braun (R-Ind.) introduced “The CBDC Anti-Surveillance State Act” in a renewed effort to block efforts to introduce a U.S. central bank digital currency.

⚖️ Department of Justice

• As mentioned in “tl;dr,” a federal judge signed off on Binance’s $4.3 billion plea deal with the DOJ.

💵 Department of the Treasury

• Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a Financial Trend Analysis reflecting an increase in Bank Secrecy Act reporting associated with the use of convertible virtual currency and online child sexual exploitation and human trafficking.
• FinCEN Director Andrea Gacki testified about FinCEN’s enforcement action against Binance, which she called “historic” in part because it is the first crypto settlement that involves a five-year monitorship overseen by FinCEN.
• Treasury Undersecretary for Terrorism and Financial Intelligence Brian Nelson testified that terrorists prefer to use “traditional products and services,” and that he does not expect that Hamas’s use of crypto payments was “very high.”
• Treasury’s Office of Foreign Assets Control (OFAC) sanctioned a procurement network responsible for facilitating the illegal export of goods and technology from more than two dozen U.S. companies to end-users in Iran. One of the sanctioned entities, Iran-based Informatics Services Corporation, a subsidiary of the Central Bank of Iran (CBI), most recently developed the Central Bank Digital Currency platform for the CBI.
• OFAC sanctioned two individuals and 10 related bitcoin and ether addresses in connection with Russia-based ransomware group LockBit.

⚡Energy Information Administration

• As mentioned in “tl;dr,” a federal judge issued a temporary restraining order enjoining enforcement of the Energy Information Administration’s recent emergency information collection survey targeted at bitcoin miners.

💰 Federal Reserve

• In a speech about the international role of the U.S. dollar, Federal Reserve Board Governor Christopher J. Waller said that expansion of trading in decentralized finance (DeFi) could strengthen the dominant role of the U.S. dollar because most DeFi trading involves dollar-denominated stablecoins.

🪙 Office of the Comptroller of the Currency

• Acting Comptroller Michael J. Hsu discussed what he referred to as “multi-function crypto-asset intermediaries,” cross-border enforcement challenges, stablecoin implementation experiences, and interlinkages with traditional financial markets in remarks to the Financial Stability Board’s crypto working group.

📈 Securities and Exchange Commission

• Securities and Exchange Commission (SEC) Chair Gary Gensler wrote to House Republicans that the SEC is continuing to coordinate with law enforcement and assess the scope of the hack of its X (formerly known as Twitter) account.
• A North Carolina resident who lied to investors about his service in the U.S. Marines and falsely claimed that he had worked in the National Security Agency agreed to pay more than $2.2 million to the SEC to settle charges that he sold unregistered securities to crypto asset investors.
• SEC Chair Gary Gensler told Squawk Box that the SEC’s approval of the spot Bitcoin ETF did not signal broader approval of bitcoin.
• SEC Commissioner Hester Peirce spoke at ETHDenver about how the SEC should regulate crypto assets.

🌍 State

🗽 New York

• New York Attorney General Letitia James expanded New York state’s lawsuit against Digital Currency Group and tripled the estimated size of alleged fraud to more than $3 billion.

🌍 International

💰 Bank for International Settlements

• The Bank for International Settlements proposed high-level recommendations for regulating stablecoins that can be used across multiple jurisdictions and that could become systemically important.

🇪🇺 European Union

• The European Central Bank Director General and an advisor published a blog post arguing that bitcoin has not fulfilled its potential as a global, decentralized digital currency.

💰 Financial Stability Board

• Financial Stability Board Chair Klaas Knot said that crypto assets, tokenization, and artificial intelligence remain priorities for the board in a letter to finance ministers and central bank governors from G20 countries.

🇭🇰 Hong Kong

• Hong Kong’s central bank issued guidance for authorized institutions interested in digital asset-related activities, particularly offering custody services for digital assets to clients.

🇯🇵 Japan

• Japan’s Financial Services Agency encouraged financial institutions to strengthen their monitoring of unlawful transfers to crypto exchange providers.

🇳🇿 New Zealand

• Governor of the Reserve Bank of New Zealand Adrian Orr told a parliamentary committee that stablecoins are “oxymorons” and no substitute for fiat currencies.

🇬🇧 United Kingdom

• As mentioned in “tl;dr,” the UK’s FCA released data on its crypto assets financial promotions regime for 2023, which reflected that the FCA has issued 450 consumer alerts against firms illegally promoting crypto assets.

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