Author: Cody Carbone

The Chamber of Digital Commerce is pleased to see that H. Res 109, a Joint Resolution to Disapprove of the Securities and Exchange Commission’s (SEC) Staff Accounting Bulletin (SAB) 121 has successfully passed markup and is now progressing to the House floor.

This bipartisan initiative, led by Congressmen Mike Flood (R-NE) and Wiley Nickel (D-NC), nullifies SAB 121’s harm to consumer protection and represents a decisive action to ensure the SEC operates within its designated rulemaking authority. 

The Chamber has been focused on highlighting the issues presented by SAB 121 to Congress, advocating for a balanced and informed approach to digital asset regulation. We are optimistic about the resolution’s ultimate passage on the House floor and remain committed to facilitating a regulatory environment that supports innovation while protecting consumers.

Read our blog on the introduction of the Joint Resolution

Read our letter to the SEC’s Office of Chief Accountant on SAB 121 implementation

The Chamber of Digital Commerce has submitted a motion for leave to file an amicus curiae brief in the ongoing SEC v. Payward, Inc. (Kraken) case. This move underscores the Chamber’s commitment to advocating for clear and fair regulatory frameworks that support the growth and innovation of blockchain technology.

At the heart of this legal battle lies the SEC’s approach to digital assets, which the Chamber’s Brief argues is fundamentally flawed. The SEC’s efforts to classify all digital asset transactions as securities transactions not only misinterprets the law but also poses a grave threat to the future of blockchain technology. The Chamber firmly believes that digital assets, by their nature, are not inherently “investment contracts” and should not be blanketly regulated as such.

The implications of the SEC’s aggressive enforcement stance towards digital asset companies like Kraken are far-reaching. Should the SEC’s interpretation prevail, it could have a chilling effect on the trillion-dollar digital asset space, potentially stifling innovation and hindering the development of the U.S. economy in this critical sector.

Leading the charge on the amicus brief were Jaime Bartlett, Partner, Lilya Tessler, Partner and head of the FinTech and Blockchain Group, and David Goldenberg, Senior Managing Associate, all from Sidley Austin LLP. Their expertise and dedication have been instrumental in articulating the Chamber’s position and advocating for a more nuanced understanding of digital assets. The Chamber also extends its gratitude to the members of the Token Alliance who have contributed to this effort. Their insights and support have been invaluable in shaping the arguments presented in the brief.

As this case progresses, the Chamber of Digital Commerce remains steadfast in its mission to promote the adoption and advancement of blockchain technology. We believe that with the right regulatory environment, digital assets can continue to flourish, driving innovation and prosperity in the U.S. economy. For a history of the Chamber’s pushback against the SEC’s overreach of digital assets, read previous amicus briefs here:

• SEC v. Binance.US Amicus Brief
• SEC v. Coinbase Amicus Brief
• SEC v. Wahi Amicus Brief
• SEC v. Ripple Amicus Brief
• SEC v. Telegram Amicus Brief

SEC v. Kraken Timeline

• February 9, 2023: The U.S. Securities and Exchange Commission (SEC) announced charges against Payward Ventures, Inc. and Payward Trading Ltd. (collectively, Kraken) for failing “to register the offer and sale of their crypto asset staking-as-a-service program.” To settle the SEC’s charges, Kraken agreed to immediately cease offering or selling securities through crypto asset staking services or staking programs and pay $30 million in disgorgement, prejudgment interest, and civil penalties.
• November 20, 2023: The SEC charged Kraken with operating Kraken’s crypto trading platform as an unregistered securities exchange, broker, dealer, and clearing agency. The SEC’s complaint also alleged that Kraken commingles its customers’ money with its own, including paying operational expenses directly from accounts that hold customer cash and commingles its customers’ crypto assets with its own.
• February 22, 2024: Kraken filed a Motion to Dismiss the SEC’s suit. Kraken’s Motion stated that “the SEC does not allege fraud. The SEC does not allege consumer harm. The SEC’s sole claims are that Kraken has somehow operated in plain sight for almost a decade as an unregistered securities exchange, broker-dealer, and clearing agency, in violation of the Exchange Act.” Kraken also states the SEC did not “plausibly allege” any of the cryptocurrencies listed in its complaint are securities or investment contracts and the SEC did not meet the requirements set out by the Howey Test.

The Chamber of Digital Commerce is taking legal action to protect our members in the cryptocurrency mining community. In an effort to petition for injunctive and declaratory relief from the U.S. Energy Information Administration’s mandatory survey, the Chamber is joining the efforts of the Texas Blockchain Council and Riot Platforms. 

On January 26, 2024, the White House’s Office of Management and Budget (OMB) authorized the survey of commercial cryptocurrency miners as an emergency collection of data request. On behalf of our membership, the Chamber of Digital Commerce is seeking to stop the most recent unjustified and politically motivated attack on the digital asset industry.  

Perianne Boring, Founder and CEO of the Chamber of Digital Commerce, provided the following statement.   

“By participating in the challenge of Secretary Granholm’s and Administrator DeCarolis’s ‘emergency’ survey, the Chamber aims to prevent the unlawful collection of industry data. This survey represents a politically charged effort by the Biden administration to undermine a law-abiding sector that is significantly powered by renewable energy and contributes to the reduction of greenhouse gas emissions.” 

She added that “the approval of this emergency survey, devoid of justified rationale, coupled with the EIA’s refusal to engage in standard notice and comment rulemaking, showcases a disturbing trend of political bias against our industry. This is not merely about data collection; it is about the administration’s publicly stated objective ‘to limit or eliminate’ the cryptocurrency industry.  The Chamber remains committed to representing and defending the digital asset industry against regulatory overreach and will continue to monitor the situation closely, advocating for transparent and equitable treatment under the law.”  

For more information, please contact Press@digitalchamber.org  

Stop the crypto ban!

We’ve received concerning news from Capitol Hill: Senator Sherrod Brown, who serves as the Chairman of the Senate Banking Committee, is considering moving forward with S.2669, Senator Elizabeth Warren’s Digital Asset Anti-Money Laundering Act. This bill, if passed could lead to a ban on cryptocurrency within the United States. Advancing the bill for markup in the Committee is a significant action, as it represents a vital phase in the legislative process, edging the bill nearer to the possibility of being enacted into law.  

Today, we sent a letter to Chair Brown urging him against this move. You can view the full letter here. 

While Senator Warren’s bill purports to protect against money laundering, it is a wolf in sheep’s clothing—a back-door ban on cryptocurrency.  

What is at stake? 

The bill could be used as a gateway to restrict and hamper technological innovation and jeopardize the U.S. position in the global digital economy. Stifling regulations could drive the industry overseas, causing significant economic damage to millions of U.S. crypto holders and businesses. 

What is our position? 

S. 2669 is unworkable and is not worthy of consideration. Senator Warren has promoted the bill under false-pretenses and misled several senators about its implications using debunked data and incorrect narratives. Our team has met with all 19 co-sponsors of the bill, and many were surprised to learn about its far-reaching implications.  

Here’s a video of Senator Roger Marshall saying the bill is a “light touch.”  

We have been working WITH policymakers to create a common-sense regulatory framework for digital assets. We have endorsed several legislative proposals including The Financial Technology Protection Act, The CLARITY Act, The FIT for the 21st Century Act, and The Responsible Financial Innovation Act.  

We are creating a campaign named Stop the Crypto Ban and are fighting aggressively to kill this bill. 

What can you do? 

Sign the petition against the bill.  

Your support is crucial in preserving blockchain development and innovation in America. 

The Chamber of Digital Commerce is thrilled to acknowledge the remarkable progress made in the realm of crypto asset accounting standards, thanks to the diligent efforts of the team at the Financial Accounting Standards Board (FASB). The completion of the technical agenda project late last year on certain crypto assets represents a pivotal advancement in our industry.

The updated guidance serves as an essential tool for businesses and financial statement users navigating the complex landscape of digital asset accounting. It fosters greater transparency and consistency across the industry, showcasing US leadership in establishing sensible accounting standards.

Looking Forward: A Call for Continued Collaboration

The Chamber of Digital Commerce is eager to continue our collaboration with the FASB. We believe that through ongoing dialogue and partnership, we can address the evolving needs of the crypto asset market and establish comprehensive, resilient accounting practices that capture the true economic essence of crypto assets.

An Invitation to Dialogue

We are curious about the FASB’s vision for the next steps in refining crypto accounting standards and how organizations like ours can support these efforts. The potential for follow-up on wrapped crypto assets, stablecoins, or NFTs presents an exciting avenue for further exploration.

Read our ‘Thank You’ letter to FASB exploring further collaboration efforts.

In an industry where trust is paramount, Chamber of Digital Commerce member Bitwise has taken a groundbreaking step by becoming the first Bitcoin ETF provider to publicly display its bitcoin wallet address. This move not only sets a new standard for transparency in the ETF sector but also aligns perfectly with the foundational ethos of public blockchain technology: openness, transparency, and trust.

The Importance of Transparency

Transparency is the cornerstone of the blockchain. It allows for every transaction to be verified, traced, and audited by anyone, anywhere in the world. This level of openness is what attracted many to cryptocurrencies in the first place, promising a financial system where trust is built into the technology itself.

Bitwise’s decision to publicly display its Bitcoin wallet addresses for ETFs is a significant nod to this ethos. For investors, this means an unprecedented level of insight and reassurance. They can now see, in real-time, where their assets are held and monitor their investments with a level of detail that was previously unavailable in the traditional financial system.

A Call to Action for Other ETF Providers

While Bitwise’s initiative is commendable, it’s just the beginning. We believe that what Bitwise has done should not be the exception but the norm. We urge other ETF providers to follow suit and offer similar transparency to their investors. By doing so, they can significantly enhance investor confidence, reduce skepticism, and foster a more trustworthy investment environment.

The Benefits of Wallet Transparency

• Enhanced Investor Confidence: By allowing investors to see where their Bitcoin is held, ETF providers can build a stronger relationship based on trust and transparency.
• Reduced Risk of Fraud: Public wallet addresses make it harder for bad actors to mislead investors or mismanage funds, as all transactions are visible and can be audited by the public.
• Alignment with Blockchain Principles: Adopting practices that reflect the transparency and openness of blockchain technology demonstrates a commitment to these transformative ideals.

Moving Forward

As the financial world continues to evolve with the integration of blockchain technologies, it’s imperative that we uphold the principles that make these technologies so revolutionary. Transparency, openness, and trust should not just be buzzwords but guiding principles for all financial instruments, including ETFs.

Bitwise’s initiative is a commendable step in the right direction, but it’s just the start. We call on other ETF providers to embrace this level of transparency, thereby reinforcing the trust investors place in them and in the broader financial system.

The future of finance is transparent, decentralized, and open. Let’s work together to ensure that our investment practices reflect these ideals. By doing so, we not only enhance the integrity of our financial systems but also pave the way for a more inclusive and equitable global economy.

Conclusion

The public display of Bitcoin wallet addresses by Bitwise is a pioneering move that should inspire other ETF providers to embrace transparency. This is not just about following a trend; it’s about committing to the principles of the public blockchain and fostering a more secure, transparent, and trustworthy investment landscape.