1/ THIS IS WHERE WE ALWAYS THOUGHT the #stablecoin regulatory direction would go, which is why @AvantiBT chose to get a bank charter. Anything that touches the USD financial system was always going to fall w/in the Fed's purview, directly or indirectly, esp once it became big.
2/ Plus it makes sense policy-wise. Nonbank #stablecoin issuers gum up the #repo mkt by siloing T-bills & other Level 1 high-quality liquid assets (the repo mkt already finds these assets too scarce). If stablecoin issuers are banks, tho, dormant Fed reserves can be used instead.
3/ Details on the above point are here👇. The v high velocity of #stablecoins comes from their superior tech vs trad payment systems, not from leverage. Traditionally, monetary velocity came from leverage. But thanks to stablecoins it no longer needs to.💪
4/ Creating monetary velocity without leverage is inherently safer & more stable to the USD financial system than using leverage to create velocity, which again is how the banking system traditionally worked. Really, this policy is win-win from US financial system stability POV💪
5/ But achieving this requires the Fed to grant payment system access to #stablecoin issuers once they become banks (as @AvantiBT already is). Big banks' DC lobbyists are fighting all of us like mad--they want this mkt to themselves. (Funny tho--the NY bankers keep calling me!🤷‍♀️)
6/ What's interesting about DC news flow on #stablecoins is that DC seems to forget that the US has a dual banking system. ~80% of the banks in the US are state-chartered, not federally-chartered. State regulators matter & they're already ready to go (before DC is).
7/ States like #Wyoming have a ready-made bank charter for #stablecoin issuers that could be adopted by DC today. (Note @AvantiBT's application for Fed payment system access has been pending for 1 year & our biz plan includes issuing a #stablecoin-like bank deposit called #Avit.)
8/ So reg picture is playing out pretty much as we at @AvantiBT expected. The big question now is if the big banks will succeed in blocking out #crypto-native companies like us. As I've said b4, the knowledge frontier in #crypto isn't in big banks--it's where the developers are🤠

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More from @CaitlinLong_

2 Oct
1/JUST FINISHED the first of my series of speeches this month to mainstream audiences about #bitcoin/#crypto--this one was to @actl, annual meeting of American College of Trial Lawyers. Multiple Supreme Court justices usually in audience. Two key themes:
2/ First, I recommended swift clarification of legal status of #digitalassets so US courts aren't clogged w/ disputes in this $2trn industry due to murky laws (incl swift passage of draft UCC Article 12, or even early adopting it). It's on agenda for @uniformlaws mtg on Nov5-6.
3/ #Wyoming led charge to make #blockchain tech "backwards compatible w/ US legal system"--draft UCC Art. 12 (similar to WY law) was already early-adopted by AR, NE & TX. We're seeing increasing litigation due to murky laws--not only clogs courts but consumer fairness issues too.
Read 8 tweets
5 Sep
1/ @NYtimes story on #crypto/#banking deserves a thoughtful reply. Issue isn't black & white: anti-crypto forces try to paint us all w/ a broad brush. Bad actors deserve to be called out, but the article ignores fact that regulatory-compliant firms exist. nytimes.com/2021/09/05/us/…
2/ First--@ericliptonnyt/@el72champs you got a fact wrong & it deserves a correction. #Wyoming’s special bank charter doesn't allow “cryptocurrency deposits.” “Deposit” has a v specific meaning in banking: banks can only take deposits in fiat money (US$)--not in crypto. Pls fix.
3/ That’s a key distinction. Regulated banks can provide CUSTODY services for #crypto (like for securities) but CAN’T take deposits in ANYTHING except money. Article misses that critical point--it’s a firewall protecting Fed's payment system from exposure to anything other than $
Read 24 tweets
28 Aug
1/ TODAY @AvantiBT CONFIRMED A REPORT in today's @WSJ that it filed an application to become a Federal Reserve member bank. 💪 Here are links to Avanti's statement & the WSJ story:

2/ This means @AvantiBT formally submitted to what it had already informally accepted--namely, the very same regulatory capital, compliance and supervisory examination standards that apply to traditional banks.
3/ It also means @AvantiBT is seeking federal supervision directly by the Fed itself (in addition to Avanti's existing regulator, #Wyoming Division of Banking). Avanti's Fed membership application is distinct from its prior application for payment system access (filed Oct 2020).
Read 7 tweets
20 Jul
1/ ~FIVE YEARS AGO, I first said #bitcoin cld take down a GSIB (global systemically important bank)--NOT because of anything wrong w/ Bitcoin, but bc the banks just aren't set up to handle an asset that settles in minutes & is irreversible. @ChrisBrummerDr rollcall.com/podcasts/finte…
2/ If banks are going to start owning #bitcoin/#crypto on their books(ie, not just being custodians like w/ stocks), banks need special rules to deal w/ the huge differences in settlement terms. Banks use systems set up ~40yrs ago (esp in US),most of which reconcile only 1x/day😱
3/ Again-issue is w/ banks' IT & operational systems, not w/ #Bitcoin (which I consider the most significant financial technology invention of human history. Yep, really💪). In this @ChrisBrummerDr podcast w/ former Fed Governor Dan Tarullo, we discuss how bank capital rules work
Read 8 tweets
13 Jul
1/ THREAD ABT REGULATORY NEWS in #crypto, which I’ve been chronicling on twitter since April. Seems crackdown has begun. I dunno how it'll turn out but:
* it won't impact #BTC #ETH etc directly. Base layers will keep addin' blocks
* it'll impact intermediaries & US$ access points
2/ Today was a key event that few in #crypto were probably watching, but it REALLY matters: the comment period ended for the Fed’s proposed payment system access guidelines. See comment letters here (including @AvantiBT’s 18-page tome--awaiting upload): federalreserve.gov/apps/foia/View…
3/ Why does it matter? Fed guidelines are partly aimed at #crypto (despite not mentioning crypto even once). Given what’s happening w/ US$ #stablecoins, the guidelines are esp relevant (see WSJ story last wk-FSOC wants Fed to regulate stablecoins per “ppl familiar w/discussion”)
Read 24 tweets
29 Jun
1/ ANOTHER STABLECOIN SPEECH by ex-BOE/BOC head Mark Carney--he was surprisingly direct:
* #stablecoins shld have access to central bank's balance sheet;
* "existing bank-based payment rails are expensive, even if those costs aren't visible to consumers"
* "banks are a means to an end, not ends in themselves, & they'll have to adapt to a much more competitive environment" [WOW, SPICY]

* "any systemic pymt system must be overseen by a central bank & have final settlement option in public money"
* "regulatory model for #stablecoins must offer equivalent protections to commercial bank money" to include:
-legal claim paid in fiat upon demand
-capital rqmts
-liquidity rqmts
-central bank access terms
-backstop if failure
Read 5 tweets

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