Daily Digest - 20th April 2023

Headlines

▌New York regulator: Signature Bank's collapse was not due to crypto

New York state regulators have denied that they are punishing Signature Bank for its exposure to cryptocurrencies.

Former Rep. Barney Frank has criticized the New York Department of Financial Services, saying its actions against the bank's involvement in the digital asset industry were premature.

Director Adrienne Harris said linking Signature Bank's failure to cryptocurrencies is a misnomer.

Testifying before the House Financial Services Committee’s panel on digital assets, financial technology, and inclusion, Harris noted that about 20 percent of Signature’s deposits left the bank the night Silicon Valley Bank failed, but "only 20% of that 20%" are cryptocurrency-related deposits.

The rest are normal business customers with uninsured deposits, so we haven't seen a crash with crypto deposits and their instability.

Policies

▌The Democratic Party and the Republican Party have differences on the regulation of stablecoins, which may not be conducive to the rapid passage of legislation

Democrats and Republicans were divided during Wednesday's House Financial Services Committee hearing on stablecoins, which may not be conducive to a quick legislative agreement.

Republican Patrick McHenry, the committee’s chairman, said a draft stablecoin bill released this month lays the groundwork for a federal framework, but acknowledged more work needs to be done.

McHenry said the draft was the result of negotiations between him and the committee's Democratic leader, Maxine Waters.

However, Waters said on Wednesday that her and McHenry's negotiations were never completed and that the recent draft should be completely ignored, citing failures such as the FTX bankruptcy that they said occurred after their initial talks.

"Unfortunately, a lot has happened during this period. I think the negotiations should start from scratch," she said. She also said Republicans have indicated they plan to write their own separate bill. If that's the case, so will the Democrats, and the two sides will eventually need to get back together to resolve their differences.

Additionally, French Hill, chair of the Digital Assets, Financial Technology and Inclusion subcommittee that held the hearing, said it was critical for members to work together to pass legislation.

Stablecoin regulation became a hot topic of discussion last year following the TerraUSD debacle.

▌Russia plans to set up new institutions to mine cryptocurrencies and settle international payments

Russia's central bank is working on a bill that would introduce an "experimental legal regime" that would allow cryptocurrencies to be used exclusively for import and export transactions, the head of Russia's regulator, Elvira Naiullina, said on Monday.

Crypto transactions and payments within Russia will remain banned, Naiullina added. As part of the regulation, new tax laws will be introduced for miners.

The central bank's plans include creating dedicated organizations to mine cryptocurrencies and process payments for cross-border trade agreements.

According to local laws passed in 2020, digital assets issued within Russia can also be used for such cross-border transactions in the same way as globally decentralized cryptocurrencies.

Cryptocurrency

▌Union Bank of Nigeria was fined 200 million naira by the central bank for violating the country's cryptocurrency regulations

The Central Bank of Nigeria (CBN) has fined Union Bank of Nigeria (UBN) 200 million naira (about $433,000) for violating the country’s regulations on cryptocurrency transactions.

UBN disclosed the fine in its consolidated and separate financial statements for the year ended December 31, 2022, which it published on Wednesday.

The central bank has previously warned commercial banks against conducting cryptocurrency transactions by allowing accounts to receive and send funds related to digital currencies.

It is reported that the CBN led by Godwin Emefiele took an opposing stance on cryptocurrencies, and eventually Nigeria banned cryptocurrency transactions on February 5, 2021.

▌Belarus will make a decision on issuing CBDC before the end of the year

The National Bank of the Republic of Belarus has prepared a pilot program for a central bank digital currency (CBDC).

National Bank Governor Pavel Kallaur said the country will take a decision on issuing a digital Belarusian ruble before the end of the year, a decision that will be taken by the head of state.