Treasury Secretary Steven Mnuchin speaks during a coronavirus task force briefing in April.
Jabin Botsford/The Washington Post via Getty Images
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Jabin Botsford/The Washington Post via Getty Images
Treasury Secretary Steven Mnuchin speaks during a coronavirus task force briefing in April.
Jabin Botsford/The Washington Post via Getty Images
Treasury Secretary Steven Mnuchin and Jerome Powell, chair of the Federal Reserve Board of Governors, will remotely address the Senate Banking Committee on Tuesday regarding the disbursement of hundreds of billions of dollars in coronavirus relief aid.
In written testimony released on Monday (below), Powell described the pandemic as having caused “a level of pain that is hard to capture in words.”
He added: “As a society, we should do everything we can to provide relief to those who are suffering for the public good.”
Powell has called on Congress to do more to meet the Fed on its historic lending, and to expand relief funding to Americans. So far, Congress has passed an unprecedented $3 trillion in aid to temper the economic blow from the crisis.
The Democratic-led U.S. House last week approved $3 trillion in additional relief, including nearly $1 trillion for state, local and tribal governments, and hazard pay for essential workers and families. Republicans have called the measure a Democratic wish list, and the White House has issued a veto threat.
The testimony comes a day after a congressional oversight panel released its first report outlining its supervision of lending programs. The report found that the Treasury has not yet paid out any of the $46 billion earmarked for businesses of national security and the U.S. airline industry, which has faced particular devastation during the pandemic.
The Pandemic Has Shown That We Need A Public Option For Banking Services2020-05-182020-05-18https://popularresistance-uploads.s3.amazonaws.com/uploads/2017/12/popres-shorter.pngPopularResistance.Orghttps://popularresistance-uploads.s3.amazonaws.com/uploads/2020/04/publicbank-e1589818416424.jpg200px200px
As marginalized families without bank accounts struggle to get stimulus checks, it’s time to fix the rusty pipes of our inequitable financial system.
The COVID-19 pandemic response has shown that the very foundations of our economy are shaky, fragile, and — for some of us — downright dangerous. We’re once again watching working people, especially working people of color, bear the brunt of the fallout. Meanwhile, big companies traded on the stock market took two-thirds of the money meant to bail out small businesses.
But in getting relief out, it’s also become clear that we have a plumbing problem. We are forced to rely on the banks as middlemen to deliver government assistance. Some of them are seizing our stimulus payments to pay themselves. And as big banks have exited the business of serving poor people, 1 in 4 U.S. households are now underbanked or unbanked. This has predictably led to marginalized communities and households waiting in distress for life-sustaining stimulus, simply because they lack access to a bank account.
The good news is that there’s another way. The pandemic has shown that we need a public option for basic banking services. Legal scholars Morgan Ricks, John Crawford, and Lev Menand have called for the Federal Reserve System to directly offer accounts to all U.S. citizens, residents, and small businesses. Today, only privileged banks and governmental entities are allowed to have these high-interest, low-fee accounts. But the Fed could easily offer the same option to everyone and provide better consumer safeguards than Wall Street, as well ashigher interest, faster payments, and complete deposit protection. As a recent New York Times editorial endorsing FedAccounts for getting out stimulus payments put it: “Stop Dawdling. People Need Money.”
The Fed could also work with USPS to broaden its reach — strengthening our postal system at a time when it is facing continued attacks from predators. As our friends at the Roosevelt Institute have put it, Fed Accounts For All could make sending money as easy as transferring funds through Venmo or Paypal — but with Fed Accounts For All, everyone could do it, without relying on Wall Street (or Silicon Valley).
Even after the pandemic, Fed Accounts For All could make it easier to prioritize assistance through more direct fiscal policy, avoiding ongoing issues with delayed funds, debt collection, and frozen bank accounts. A public option for basic banking services, and an improved, publicly accountable payments system, are necessary parts of a recovery infrastructure that works for everyone.
House Financial Services Chair Maxine Waters introduced legislation to create FedAccounts, and the Ranking Member on the Senate Banking Committee, Sherrod Brown, also introduced a bill to use FedAccounts. Their proposals would ensure that no one needs to use an expensive check casher to access their stimulus payment because the Fed in partnership with the U.S. Postal Service could deliver the payments to every household.
These bills were incorporated into the House version of the CARES Act in March. Unfortunately, the Senate stripped this provision out of the bill that passed. But it’s not too late for them to get it right in the next stimulus bill. Our unbanked and underbanked neighbors are depending on it.
Raúl Carrillo is a Fellow at the Americans for Financial Reform Education Fund. Follow him @RaulACarrillo.
Things are settling in on the third day of Blockchain Week.
Tuesday saw Nym’s Harry Halpin give an in-depth demonstration on how to shield your transactions, while Vitalik Buterin walked back a comment he made the previous day.
Here’s what my colleague Nikhilesh De watching for throughout the day:
Good morning folks, and welcome to day three of CoinDesk’s Consensus: Distributed. There’s a lot to look forward to today, but in the interests of keeping this newsletter opening relatively short I’m going to focus on two themes I’m personally interested in: financial inclusion and the Travel Rule.
Financial inclusion is an issue that’s pretty important to me. It’s a great goal for fintech and crypto startups to target, but there are underlying issues I’ve seen few companies address, including the infrastructure concern. Even if a project is easy to use and works at scale, how are individuals with limited internet access going to use them? What are the financial and technological on- and off-ramps for these individuals? I’ve had no part in planning today’s workshop, but these are some of the questions I hope are brought up – even if a solution isn’t immediately apparent, the conversation itself is one that desperately needs to happen.
The other workshop I’m looking at today concerns the Financial Action Task Force’s Travel Rule Recommendation. A quick recap: Last year FATF, an intergovernmental standards body for financial institutions, recommended nations enforce the so-called Travel Rule on virtual asset service providers (VASPs), meaning exchanges and some wallet providers will be required to know information of recipients of fund transfers even if those recipients aren’t their own customers. Various entities have been trying to develop standards for the industry in the year since. (Check out my colleague Ian Allison’s excellent coverage in this area.) With the implementation deadline coming up next month, it’s an issue that should remain on people’s minds. (Full disclosure: I’ll be moderating one of the panels during this workshop.)
– Nikhilesh De
What To Watch
9:00 – 10:00 a.m. ET Oxford: From Cyber Security to Cyber Future – Workshop David Shrier, Oxford futurist, breaks down the interconnections between cyber-worlds, data privacy and crypto.
10:00 – 1:00 p.m. Is Crypto Ready for the Travel Rule? A star-studded panel discusses the FATF’s Travel Rule, a financial regulation that could reshape the direction of the crypto industry. Amy Davine Kim of the Chamber of Digital Commerce, Noah Perlman of Gemini and Jeff Horowitz of Coinbase, among others, are scheduled to make an appearance.
11:30 – 1:00 p.m. First Principles for a Decentralized Future Hosted by World Economic Forum, this program featuring Clovyr’s Amber Baldet, Hyperledger’s Brian Behlendorf and the inimitable Meltem Demirors, and many more, will examine how the cryptographic tools being built today can preserve their underlying values.
1:00 – 2:00 p.m. Financial Exclusion: Does Crypto Fix This? One of the chief use cases of crypto is to provide financial infrastructure for emerging markets and those excluded from the banking system. Carlos Acevedo, Karen Bhatia, Susan Oh and Tyrone Ross – all currently testing blockchain for social solutions in New York City – will ask and answer the question: Can crypto bank the unbanked?
2:00 – 4:30 p.m. DeFi Risk and Regulation Workshop Crypto lawyers, builders and founders dive into the regulatory schemes that may affect the nascent DeFi industry.
5:00 – 5:55 p.m. Don’t Bank on the Banks: Borrowing and Saving With Crypto Greg DiPrisco, head of business development at the Maker Foundation, will demonstrate how the interconnected world of DeFi can replace and improve upon traditional banking.
6:00 – 7:00 p.m. Research Hub: Crypto Research Happy Hour Join CoinDesk Research’s happy hour to close out the third full day of Consensus: Distributed.
The CoinDesk 50
The CoinDesk 50 are the most innovative and influential organizations in the crypto and blockchain industry.
The CoinDesk 50 is an annual list celebrating the movers and shakers of the crypto industry. We’ve already highlighted Binance, Cosmos, Brave, Bitmain, MakerDAO, Besu and the People’s Bank of China, and will continue to announce five new names a day until the end of Blockchain Week. Today we look at why Bitcoin is still king. You can read the full list here.
Bitcoin Is King With so many cryptocurrencies and “blockchain solutions” it’s remarkable, yet unavoidably clear, that Bitcoin is still the most exciting project to watch in this space. This cryptocurrency project isn’t run by a group of youthful researchers publishing their homework in the hopes of stress-testing models with other people’s money. Bitcoin isn’t a lifestyle brand, even if some zealots congregate around it. It is just money, already today. It is a tool and not a promise. It’s value doesn’t rely on any single company. And that’s why, while startup dreams come and go like fashion trends, bitcoin remains resilient. Read the full story.
CoinDesk: COVID Response
CoinDesk Charity, Blockchain Week, COVID
#NYBWGives CoinDesk has joined Gitcoin, The Giving Block and Ethereal Summit to support charities helping communities in difficult times. We’re raising $100,000 and giving you a voice through the quadratic funding model. Learn how it works and how to donate.
New York-based interpretive artist Mr. Star City created an original piece of artwork at Consensus: Distributed for auction to support COVID-19 relief.
In addition, New York-based abstract artist Mr. Star City created an original piece of artwork, shown above, as a part of Consensus: Distributed. The art, inspired by love, unity and technology, will be up for auction this week. Follow @coindesk on Twitter to find out how to bid — the proceeds will go to the same cause.
R3 Corda Partners With Kaleido After Ethereum Startup Spins Out of ConsenSys R3, the company behind distributed ledger technology (DLT) platform Corda, is edging ever closer to Ethereum, with news of a partnership with blockchain-in-the-cloud startup Kaleido. The announcement comes following Kaleido’s emergence as a standalone company last month.
Telegram Abandons TON Blockchain Project After Court Fight With SEC TON is officially dead. Telegram founder Pavel Durov wrote in his public channel Tuesday that the Telegram Open Network project would be discontinued due to the company’s ongoing legal fight with the U.S. Securities and Exchange Commission.
Stablecoin Supply Breaks $10B as Traders Demand Dollars Over Bitcoin The value of assets for all stablecoins surpassed $10 billion Tuesday, having surged by over 70% in just two months, according to Coin Metrics. Stablecoin supply growth comes as more cryptocurrency traders choose to trade alternative cryptocurrencies (or altcoins) using dollar-backed digital tokens instead of bitcoin.
17,000 People Have Filed Claims for Refunds From QuadrigaCX, Auditor EY Says These individual claims have been filed for the remaining assets of defunct crypto exchange QuadrigaCX, totaling anywhere from $167 million to more than $300 million depending on how the assets are valued.
The Morning After: Crypto Funds Happy Hour
Last nights happy hour
Last night, the CoinDesk Research team spoke with crypto fund experts and managers about sector shifts and opportunities. CoinDesk’s Brad Keoun counted “four whiskey drinks, three beers” on the panel.
How to Use Brella
To access all of the deeper cuts available through Consensus: Distributed, you’ll need to login through Brella , our virtual conferencing platform. You can create an account through Gmail, LinkedIn, Facebook or set one up manually on Brella. Your profile will be the way you match and network with others. As soon as you’re set up, you’ll be directed to a dashboard showing other registrants.
Brella is easy to use and has a number of features to help you through this virtual experience. There are multiple tracks of simultaneous programming happening inside Brella. You’ll also be able to browse the entire agenda, bookmark sessions and build your own schedule.
Brella is a great networking tool as well, be sure to check out some of the social features available in-page, and reach out to the people and organizations that pique your interest. Celo, for one, is hiring.
Audio Lounge
Audio Lounge
The Problem With Money Listen to former Treasury Secretary Lawrence Summers discuss why the problem with the current monetary system is “too much privacy.“
Consensus Magazine
Generation Crypto Freelance journalist Jess Klein writes about an emerging psychographic of people who see the world through the lens of decentralization. Unset by the traditional bounds of age, country or class, Generation C is bound together by a willingness to question mainstream narratives and an unceasing desire to topple undeserving authorities. The eight-fold series of profiles of leading crypto figures -including Preston Byrne, Ameen Soleimani and Tamara Frankel – will publish at 8:00 a.m. ET.
Who Won #CryptoTwitter?
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The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
A key bank regulator in the U.S. may be open to allowing crypto companies to be licensed as financial institutions on a national, rather than state-by-state, level.
Brian Brooks, chief operating officer of the U.S. Office of the Comptroller of the Currency (OCC), the nation’s national bank overseer, said Monday he believes crypto companies could fall under a federal licensing regime – if they provide what can be described as payment services.
Speaking at CoinDesk’s Consensus: Distributed virtual conference, the former Coinbase chief legal officer said many crypto companies are payments companies, and it therefore might make sense to treat these startups – and other fintech firms like Stripe – the same way as banks are treated federally.
“Crypto is one of those areas where we have to ask ourselves, does it make more sense to think of crypto projects as local projects or global projects. If they’re global, then the rational for a single national license makes more sense,” he said. “Increasingly, it looks a lot like crypto is banking for the 21st century.”
This would give these startups an alternative to the state-level money transmitter licenses when building operations.
He pointed to stablecoins, some tokens and remittances as examples of where crypto startups might look more like banking services.
The charter is different from the OCC’s fintech charter in that it doesn’t just apply to lending.
The fintech charter is based on the idea that banks took deposits, made loans and were involved in payments, but some institutions might provide only one or two of these services. These institutions can still be treated as banks under the OCC’s fintech charter.
“I come back to the idea of things that are inherently borderless, like crypto, probably makes sense as a licensed structure,” he said.
Too big to bank?
Brooks also addressed the issues some crypto startups have tapping banking services, saying any company that is compliant with applicable laws should be able to tap these services.
“As crypto matures, there are increasingly many companies that have perfectly robust risk management systems and do have an ability to comply with those laws, and they shouldn’t have trouble finding bank relationships,” he said. “Again, one of my messages in my new role is going to be to remind my colleagues at the OCC that banks not only have the ability, they have an obligation to serve all lawful businesses. They shouldn’t be discriminating because something’s a new technology.”
More provocatively, he suggested that crypto startups can potentially even replace the existing banking infrastructure, though he stopped short of saying that outright.
“There are technologies that exist that can decentralize and reduce the single points of failure that our economy is mostly built on,” he said. “If you think back to the lessons of the financial crisis, it’s that there are a small number of financial crisis, it’s that there are a small number of institutions in our society that are really so big and so connected with so many people’s lives that in the words of 2008, they were thought to be ‘too big to fail.'”
Decentralizing the risk could, if not outright replace this issue, at least help provide some solutions, he said. Banks would have to learn from crypto startups as they continue operations.
“I think that crypto is going to feed the banking system and change our view of what the bank charter is about,” he said.
The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.
