Katherine Ross

Senator Sherrod Brown, D-OH, is concerned about the “troubling lack of customer-facing” disclosures in crypto.&nbsp;



The legislator wrote a letter addressed to Treasury Secretary Janet Yellen, Securities and Exchange Commission Chair Gary Gensler, and Commodity Futures Trading Commission Chair Rostin Behnam.&nbsp;



“I urge you to use existing tools to strengthen transparency and hold bad actors accountable,” he <a href="https://www.banking.senate.gov/imo/media/doc/brown_letter_-_crypto_disclosure_-_treasury_sec_cftc.pdf">wrote</a>.



Brown hopes that, by addressing the Treasury, CFTC and SEC, the US can “build on our existing disclosure guardrails to effectively target the deficiencies we have observed in digital asset tokens and digital asset platforms.” He’s also requested that the agencies work hand-in-hand with Congress as legislators push crypto-focused legislation forward.



“Some of my colleagues in Congress have proposed merely applying limited disclosure requirements to digital asset tokens. This would be a profound mistake. We cannot water down the high standards that have protected investors and supported businesses for decades,” Brown said.



Brown specifically pushes for “consistent, comprehensive, and accurate disclosures in crypto markets.”



He cites the failures of FTX and Celsius as specific failures, saying that despite the two collapses, “crypto firms have taken no meaningful steps to improve their transparency, leaving customers vulnerable.”



The letter from Brown comes as <a href="https://blockworks.co/news/congress-crypto-back-in-session">Congress heads back to Washington</a> to vote on multiple crypto bills. One such bill, <a href="https://blockworks.co/news/republicans-crypto-market-structure-bill">the Financial Innovation and Technology for the 21st Century Act</a>, has bipartisan support and seeks to establish joint rulemaking powers between the CFTC and the SEC.&nbsp;



As Blockworks previously reported, it would also clarify how digital assets are classified, specifically stating that an investment contract does not necessarily make a token a security, with the bill’s co-sponsors publishing a fact sheet that pushes for most tokens to be classified as tokens rather than securities.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Sen. Brown pushes for ‘consistent, comprehensive’ crypto disclosures in letter

Ben Strack

South Carolina Sen. Tim Scott has his eye on a bipartisan regulatory framework for crypto following the crash of FTX and other industry players in 2022.&nbsp;



To serve as ranking member of the US Senate Committee on Banking, Housing and Urban Affairs, Scott is set to work with US Sen. Sherrod Brown, D-Ohio, a crypto critic who chairs the unit. 



Scott, a Republican elected to the Senate in 2013, acknowledged “expansive growth” of the digital assets industry in <a href="https://www.politico.com/f/?id=00000186-0fe2-df27-abcf-8fefd8610000" target="_blank" rel="noreferrer noopener">a Thursday memo</a>, first <a href="https://www.politico.com/newsletters/morning-money/2023/02/02/the-debt-ceiling-is-not-powells-problem-00080804" target="_blank" rel="noreferrer noopener">reported</a> by Politico, adding that an increasing number of consumers are interacting with crypto.



“Several high-profile failures resulted in lost consumer assets, exposed regulatory gaps, and highlighted concerns with illicit finance,” the memo states. “Moving forward, the committee should work to facilitate a bipartisan regulatory framework.”



The senator could not immediately be reached.



Brown, who became chair of the Senate Banking, Housing, and Urban Affairs Committee in February 2021, has historically compared crypto to risky mortgage bonds and over-the-counter derivatives during the lead up to the financial crisis.&nbsp;



After the bankruptcy of crypto exchange FTX in December, Brown <a href="https://www.brown.senate.gov/newsroom/press/release/sherrod-brown-on-ftx-crypto-puts-consumers-and-our-national-security-at-risk" target="_blank" rel="noreferrer noopener">called for</a> a framework “that looks at crypto products for what they are, not what crypto executives want them to be.”



“The things that look and behave like securities, commodities, or banking products need to be regulated and supervised by the responsible agencies who serve consumers,” he added at the time. “Crypto doesn’t get a free pass because it’s bright and shiny. Or because venture capitalists think it might change the world.”



Brown also urged US Treasury Secretary Janet Yellen in <a href="https://www.brown.senate.gov/newsroom/press/release/sherrod-brown-to-treasury-we-need-to-work-together-on-crypto-legislation" target="_blank" rel="noreferrer noopener">a November letter</a> to work on legislation that would create authorities for regulators to supervise crypto players. He noted that single agencies “currently generally do not have a comprehensive view of crypto asset entities’ activities.”



Crypto firms are seemingly anticipating intensified regulatory scrutiny this year, as companies including Binance, Tether, and a16z have <a href="https://blockworks.co/news/mike-pence-nephew-binance-newest-lobbyist">added lobbyists in recent months</a> to boost their presences in Washington, DC.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Crypto Framework a Priority for Republican Senator Scott

Sebastian Sinclair

<div id="highlights-block_62e3359f241e1" class="highlights">
 <ul>
 <li>Google and Apple are being pressed on how they police crypto-related fraud in mobile applications hosted on their app stores</li>
 <li>Letters issued to the tech giants&#8217; CEOs are part of Sen. Brown&#8217;s wider probe into crypto scams</li>
 </ul>
 
</div>



The heads of Google and Apple are staring down requests for&nbsp;information from the US government about how the tech giants implement safeguards and monitor for crypto fraud in&nbsp;mobile applications hosted on their app stores. 



Chairman&nbsp;of the Senate Committee on Banking, Housing and Urban Affairs, Sen. Sherrod Brown (D-OH), sent <a href="https://www.banking.senate.gov/imo/media/doc/letter_to_alphabet_sundar_pichai_07272022.pdf" target="_blank" rel="noreferrer noopener">two</a> near-identical <a href="https://www.banking.senate.gov/imo/media/doc/chairman_brown_letter_to_apple_tim_cook_07272022.pdf" target="_blank" rel="noreferrer noopener">letters</a> Thursday to Google&#8217;s Sundar Pichai and Apple&#8217;s Tim Cook.



Brown, the committee&#8217;s chair since February, is requesting the companies describe their review processes for apps that make it onto their stores, as well as how they go about policing certain apps that circumvent their store policies.



The requests come as the senator ratchets up efforts to understand the scope of crypto-related scams. Also on Thursday, Brown chaired a <a href="https://www.banking.senate.gov/hearings/protecting-investors-and-savers-understanding-scams-and-risks-in-crypto-and-securities-markets" target="_blank" rel="noreferrer noopener">hearing</a> on “Protecting Investors and Savers: Understanding Scams and Risks in Crypto and Securities Markets.”



In it, the committee heard about how bad actors use marketing as a means to promote scams including through the use of apps hosted on Google&#8217;s and Apple&#8217;s stores.



Melanie Senter Lubin, president of the North American Securities Administrators Association and Gerri Walsh, senior vice president of investor education at the Financial Industry Regulatory Authority, both offered their insights during the hearing.



In his letters, the senator has sought information on the systems and processes the companies have in place for people to report fraudulent, apps as well as actions taken to alert users to fraudulent crypto app activity.



&#8220;While firms that offer crypto investment and other related services should take the necessary steps to prevent fraudulent activity, including warning investors about the uptick in scams, it is likewise imperative that app stores have the proper safeguards in place to prevent against fraudulent mobile application activity,&#8221; the senator wrote.



Apple and Google are being urged to respond to the senator&#8217;s request for information by no later than August 10, 2022.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.

Google, Apple Asked to Review Protections Against Crypto App Fraud

<div id="highlights-block_620eb12cc8133" class="highlights">
 <ul>
 <li>Andrew Yang said Web3 technologies present “the most profound opportunity to fight poverty”</li>
 <li>Membership in the Lobby3 DAO costs 0.07 ETH, while becoming an “advocate” in the community is priced at one ETH</li>
 </ul>
 
</div>



Former presidential and NYC mayoral candidate Andrew Yang is aiming to launch a DAO to get lobbying dollars and the lawmakers they influence on board with Web3.



Yang announced the initiative, called Lobby3, <a href="https://twitter.com/AndrewYang/status/1494295220023971845" target="_blank" rel="noreferrer noopener">in a Twitter post</a> Thursday. After its lobbying infrastructure is built, a portion of the proceeds will fund a DAO (decentralized autonomous organization). The minting of Lobby3 tokens is set for Feb. 28.



It is a blockchain-driven pivot from Humanity Forward, a nonprofit launched by Yang in 2020 focused on anti-poverty measures, including the child tax credit.



“But now I’ve realized that the most profound opportunity to fight poverty lies in Web3 technologies,” he said in the Twitter video. “Unfortunately our leaders in DC don’t really get these technologies — they’re a little bit nervous about them, so that’s what we have to change.”



Lobby3 token holders can participate in community votes, roundtable discussions with policy leaders and exclusive events.



Baseline DAO membership costs 0.07 ether, while becoming an “advocate” — with additional access to certain virtual and in-person events — is priced at one ETH.



<a href="https://www.lobby3.io/#how-it-works" target="_blank" rel="noreferrer noopener">Lobby3</a> intends to fund advocacy organizations in DC to form relationships with lawmakers and educate them on Web3. It’s also looking to recruit governors and mayors to run Web3 pilots to show how blockchain technology can boost financial inclusion and reduce poverty.



Yang previously told <a href="https://cms.blockworks.co/andrew-yang-we-must-avoid-politicizing-crypto-web3/" target="_blank" rel="noreferrer noopener">Blockworks</a> that Web3 must become a vital source of money, media and votes.



“Let’s say that we were to do a cryptocurrency pilot in a Black neighborhood in Ohio, and then the Democratic senator, Sherrod Brown, was to see that some of his constituents are able to access financial services in a way that they weren’t able to before,” Yang said. “Then, when he gets asked about the technology, he has a completely different perspective and outlook on it.”



Brown called crypto “a shady, diffuse network of online funny money” in July.



The launch of Lobby3 comes as spending on crypto lobbying grew to nearly $5 million in 2021, according to a Crypto Head analysis of OpenSecrets data — a 116% increase from 2020.



Coinbase, the Blockchain Association, Ripple Labs and Robinhood have each spent more than $1 million for crypto lobbying over the past five years, the report found.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Don’t miss the next big story – join our <a href="https://blockworks.co/newsletter?source=end" target="_blank" rel="noreferrer noopener">free daily newsletter</a>.