Law Decoded: Infrastructure woes and benevolent punishments, Sept. 27–Oct. 3

Market Analysis

This week, United States lawmakers and regulators have stolen much of the spotlight once more. The cryptocurrency-related provisions of the infrastructure bill, a tiny grain of sand in the grand scheme of the omnibus legislation, had all laser eyes glued to the fateful House of Representatives vote — which never happened. There is a sense, however, that the bill will become law sooner rather than later. 

We have also learned from Federal Reserve Chair Jerome Powell testifying to Congress that the Fed sees no use in a China-style blanket ban on cryptocurrency, eyeing tighter regulation of stablecoins instead. The latter narrative has been thick in the air for some time, and now it appears that President Joe Biden and his administration have made up their minds on how to go about reining stablecoins in.

Below is the concise version of this newsletter. For the full breakdown of policy developments over the last week, register for the full newsletter below.

Infrastructure bill stalled

The politics around the Infrastructure Investment and Jobs Act of 2021 is delaying the vote on this massive package of spending and tax-gap-closing measures, the crypto-relevant provisions belonging to the latter category.

Progressives refuse to back the legislation unless the moderates pledge enough funding for social programs in the concurrent budget reconciliation bill, but President Biden is sure to put the maximum squeeze on pressing the initiative home. Otherwise, he risks concluding his inaugural year in office without a sufficient record of legislative victories.

The vote can be expected any day now, and if Democrats manage to agree internally, Republicans will have no means of getting in the way.

CFTC slaps Kraken’s wrist

The Commodity Futures Trading Commission’s $1.25-million penalty handed to Kraken for offering margined retail commodity transactions without proper registration had already felt like an amiable finger wag. Then, Commissioner Dawn Stump added to this sentiment by issuing a concurring statement where she admitted that the existing CFTC guidance falls short on offering clarity to firms that facilitate digital asset retail commodity trading.

Central bank currencies loom large

Nigeria is still on track to roll out its digital currency, the eNaira, any day now after the nation’s Federal High Court approved the initiative. Meanwhile, global financial institutions, such as the Bank for International Settlements, continue their efforts to flesh out the design and common operational principles for the world’s central bank digital currencies. A BIS report, for one, focuses on the issues of interoperability between the future digitized monetary systems and their traditional counterparts.

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