Category: Crypto

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – For venture capitalists, the scars of bitcoin’s disastrous 2022 run deep.

While breezy bitcoin has bounced back, leaping by about 55% this year, investments in crypto startups have dropped for the fifth straight quarter.

VC crypto bets totaled just under $2.3 billion in April-July this year, the lowest quarterly level for over three years, according to data firm PitchBook. In the first half of 2023, investments were down by almost three-quarters from a year ago to $5 billion.

“The lofty exuberant valuation days are gone,” said Tal Elyashiv, founder and managing partner of SPiCE VC, adding that valuations place on crypto companies had fallen closer in line with their actual performance.

Crypto investors remain haunted by the chaos that descended on the sector last year when the implosion of the FTX exchange and other major firms, including hedge fund Three Arrows Capital, sent shockwaves through the industry.

U.S. regulatory scrutiny has also tightened on the industry.

“The biggest change from the height of the market is more time to do deeper diligence,” said Cameron Peake, partner at Restive Ventures. “There’s not necessarily anything new that is happening, except that funds are actually doing diligence now. Deals are no longer closing in mere days.”

The number of deals that were sealed by the halfway mark of 2023 was 814, down by more than half of 1,862 from the same period in 2022, PitchBook data showed.

“Almost every company in the space tightened up in the aftermath of the carnage of 2022. Those that are raising capital now are probably doing it because they have to,” said Adam Reeds, CEO of Toronto-based crypto finance company Ledn.

“I wouldn’t be surprised if in the near term that changes from ‘have to have’ raises to ‘nice to have’ raises.”

If bitcoin prices are any indication, the investment slump may be short-lived.

VC crypto investments have correlated with crypto asset prices with a lag of roughly three to six months, according to PitchBook, and if current trends continue, VC investment would rise during the second half of 2023.

Bitcoin, which fell 65% last year, jumped over 90% in the first six months of 2023 bitcoin and is now up about 55% year-to-date, at $25,881. Still, it is trading at a third of its 2021 peak of $69,000.

METAVERSE? NFTs?

There has also been a shift in the type of VC investment targets, according to the PitchBook data.

A year ago, the focus was on companies tied to speculative non-fungible tokens, as well as metaverse and Web3 projects that sought to build a future – but still unrealized – iteration of the internet with crypto at its core.

Now, though, crypto bets have shifted towards firms that provide the platform or support the underlying technology of blockchain or cryptocurrencies.

Infrastructure firms such as crypto exchanges, wallets and other fintechs attracted the most investments in 2023 at $325 million, followed by blockchain networks at $220 million and Web3 companies at $274.6 million, according to PitchBook.

In the second quarter, the only two funding rounds over $100 million were scored by LayerZero, a platform that connects two blockchains, and digital identity platform WorldCoin.

“Institutional investors are looking for things that are more durable,” said Alyse Killeen, founder and managing partner of bitcoin-focused venture firm Stillmark.

“We’re seeing less appetite for risk and more appetite for sustaining technology.”

(Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Tom Wilson and Pravin Char)

By Hannah Lang

(Reuters) – The U.S. District of Columbia Court of Appeals will soon rule on whether the Securities and Exchange Commission (SEC) wrongly rejected an application from crypto asset manager Grayscale Investments to list an exchange-traded fund that tracks the price of bitcoin.

The case is being closely watched by the cryptocurrency and asset management industries, which have been trying for years to convince the SEC to approve a spot bitcoin ETF. They say it would allow investors to gain exposure to bitcoin, the world’s largest cryptocurrency, without having to own it. The SEC, though, worries spot bitcoin ETFs will be vulnerable to manipulation.

Here’s what you need to know:

WHAT WENT DOWN WITH GRAYSCALE?

The SEC last year denied Grayscale’s application to convert its spot Grayscale Bitcoin Trust into an ETF. While the agency has rejected spot bitcoin ETFs, it has approved bitcoin futures ETFs, which track agreements to buy or sell bitcoin at a pre-agreed price. Grayscale proposed using the same manipulation safeguards that were approved for those futures ETFs, but the SEC said that did not meet its bar.

Grayscale was just one of several asset managers, including Cathie Wood’s ARK, Fidelity and Invesco, whose spot bitcoin ETF applications the SEC rejected on investor protection grounds. Unlike those other firms, Grayscale sued the SEC. Because the defendant is a regulator, the case went straight to the appeals court.

WHAT IS GRAYSCALE’S ARGUMENT?

Grayscale argued that the bitcoin futures ETF surveillance arrangements should also be satisfactory for Grayscale’s spot ETF, since both products rely on bitcoin’s underlying price.

Bitcoin futures ETFs track bitcoin futures that trade on the Chicago Mercantile Exchange (CME), the chief venue for those products. The CME “surveils futures market conditions and price movements on a real time and ongoing basis in order to detect and prevent price distortions, including price distortions caused by manipulative efforts,” the SEC has said.

Grayscale’s lead counsel Donald Verrilli Jr told the court in March that a spot bitcoin ETF would “better protect investors” because it would give them the benefit of CME oversight of the market. Currently, Americans mostly invest in bitcoin via less well-established or unregulated exchanges.

The SEC, however, says Grayscale lacks data to determine whether the CME futures surveillance agreement could also detect potential manipulation in the spot markets.

WHAT HAPPENS ONCE THE COURT RULES?

Both parties have 45 days to appeal the ruling, in which case it would either go to the U.S. Supreme Court or an en banc panel review. Grayscale’s CEO has said he’s prepared to appeal if the court rules in the SEC’s favor. It is unclear if the SEC would do the same if the court sides with Grayscale.

If Grayscale ultimately prevails and the SEC does not appeal, the court would specify how its decision should be executed. That could include instructing the SEC to approve the application, or to revisit Grayscale’s application, in which case the SEC could still reject the proposal on other grounds.

If the SEC wins, Grayscale could re-file its application, but to succeed it would need to address the agency’s market manipulation concerns.

WHAT WOULD A GRAYSCALE VICTORY MEAN FOR OTHER APPLICATIONS?

Several firms have this year filed spot bitcoin ETFs for listing on Nasdaq or CBOE Global Markets, including BlackRock, the world’s largest asset manager, Fidelity, WisdomTree, VanEck, Bitwise and Invesco.

Many have proposed working with Coinbase, the largest U.S.-based crypto exchange, to police trading in the underlying bitcoin market. The SEC has formally acknowledged those applications, and can take as long as 240 days to decide.

It’s unclear what a win for Grayscale would mean for those applications, but it could factor into the SEC’s decisions on those proposals.

WHICH WAY IS THE COURT LEANING?

During oral arguments, a panel of judges pressed the SEC, at times appearing skeptical of the regulator’s decision to approve bitcoin futures ETFs but deny spot bitcoin ETFs. Judge Neomi Rao said the SEC had “not offered any explanation” as to why Grayscale was in the wrong.

However, some former SEC lawyers have cautioned against reading too much into such comments, noting that courts are traditionally reluctant to undermine federal agencies.

(Reporting by Hannah Lang in Washington; editing by Michelle Price and Nick Zieminski)

(Reuters) – Bankrupt crypto exchange FTX has hired U.S. crypto firm Galaxy as an advisor to help hedge and sell its crypto holdings, according to court filings made late on Wednesday.

Hedging of bitcoin and ether will provide a means to lessen FTX’s exposure to adverse price movements before their sale, the filing said.

Galaxy, owned by billionaire investor Mike Novogratz, will also help “stake” FTX’s crypto, a process where crypto is lent to validate blockchain transactions, earning interest in the process.

“Galaxy Asset Management has extensive experience in areas relevant to digital asset management and trading, including with respect to the types of transactions and investment objectives contemplated,” the filing said, referring to the investment advisory arm of Galaxy.

FTX filed for bankruptcy in November 2022 in the wake of claims that the company misused and lost billions of dollars worth of customers’ crypto deposits.

FTX attorney Brian Glueckstein said on Wednesday at a court hearing in Wilmington, Delaware, that FTX remains on track to conclude its bankruptcy in the second quarter of 2024, resisting a call for expedited mediation from the court-appointed committee that represents FTX creditors.

(Reporting by Shivani Tanna in Bengaluru; Editing by Janane Venkatraman)

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – America’s mom and pop bitcoin buffs have a shiny new derivatives playground that cryptocurrency analysts hope will fire up a moribund market.

Their new platform is cryptocurrency exchange Coinbase Global, which on Aug. 16 became the first crypto-focused firm to win approval to offer cryptocurrency futures to U.S. retail customers.

It’s early days. But crypto markets are excited by the possibility that the first regulated and listed crypto firm to offer futures trading to U.S. retail investors might revive a shrinking $2 trillion cryptocurrency derivatives market.

“Coinbase’s approval to offer U.S. futures has the potential to rekindle hope and momentum in the market,” said Lucas Kiely, chief investment officer of digital investment platform Yield App.

Hope and momentum are in short supply in a market that has seen bitcoin languish for months as hawkish global central banks and troubles at crypto exchanges such as FTX and Binance sapped interest in volatile crypto assets.

Coinbase’s announcement also comes at a time when derivatives’ trading volumes have shrunk significantly owing to economic uncertainty, continued regulatory hurdles and low volatility that left investors disinclined to make big bets.

Retail traders in the United States can trade bitcoin directly on licensed exchanges such as Bitstamp and Coinbase. They can trade options on the CME, but only through a broker. Or, they can invest in bitcoin exchange-traded funds (ETFs) issued by fund managers such as ProShares and VanEck.

That is why Coinbase’s new offering is creating a buzz. A rush of retail traders, famed for their manic meme-stock trading roused on social media sites such as Reddit, could change things in the crypto world.

Todd Groth, head of index research at CoinDesk Indices, says it is too early to gauge the impact of the launch. “It remains to be seen how Coinbase structures these products,” he said.

DROP IN DERIVATIVES

Derivatives such as options and futures have dominated cryptocurrency trading since such products appeared around 2014, as investors snapped up the opportunity to place bets on bitcoin’s price moves with minimal investment.

They are also heavily favored by institutional investors, whose interest has remained fairly steady this year, with the number of Large Open Interest Holders – those holding more than 25 contracts – in CME bitcoin futures up 5% since the second quarter, according to the exchange’s data.

The dominance of options trading is often cited as a reason for cryptocurrency’s trademark volatility, with investors taking on heavily leveraged bets that can reward them for both gains and losses.

Yet, trading volumes in derivatives decreased by nearly 13% in July to $1.85 trillion, the lowest monthly volume since December 2022 and second lowest derivatives trading volumes since 2021, research firm CCData reported.

Derivatives are big business in crypto markets. Derivatives made up 78.2% of the total cryptocurrency trading volume on centralized exchanges in July, CCData reported.

In the second quarter of 2023, derivatives volume was six times larger than spot volume even as overall volumes fell, according to Kaiko Research.

Spot cryptocurrency trading volumes also fell 10.5% to $515 billion in the same period, CCData showed.

“For now, the derivative market is dominated by offshore exchanges, mainly Binance,” said Dessislava Aubert, an analyst at Kaiko.

“But we have seen its dominance decline this year. This essentially means that there is potential for growth in derivatives trading. In particular, Coinbase could leverage its strong reputation and attract institutional clients.”

(Reporting by Lisa Mattackal, Medha Singh and Sumanta Sen in Bengaluru; Editing by Vidya Ranganathan and Mark Potter)

By Hannah Lang

WASHINGTON (Reuters) – PayPal’s stablecoin is likely to succeed where Facebook’s failed, thanks to the payment giant’s standing in Washington and policymakers’ greater understanding of the issues in the last three years.

PayPal this month said it was launching PayPal USD, a crypto token pegged to the U.S. dollar, making it the second major global company to launch a stablecoin after Facebook, now Meta Platforms, unveiled Libra in June 2019.

The move, which comes as PayPal transitions to a new CEO announced last week, seems risky after Facebook’s stablecoin was crushed by political opposition, and as regulators home in on the crypto sector following several meltdowns.

But PayPal is in a stronger position than Facebook, said former officials, executives and analysts. Policymakers are more familiar with stablecoins, crypto tokens typically pegged to a fiat currency, than they were in 2019. A push to create federal stablecoin regulations has also helped boost their legitimacy in the eyes of lawmakers.

“The world has changed dramatically since Facebook’s Libra project. There was no familiarity with stablecoins whatsoever,” said Christopher Giancarlo, former chair of the U.S. Commodity Futures Trading Commission.

“Since then the administration, Congress and the Federal Reserve have had time to get their minds around stablecoins and stablecoin regulation and there has been very extensive public relations by the industry, including a lot of lobbying.”

In contrast to Facebook, a social media giant that had been under sustained scrutiny over privacy issues and Russian election interference, PayPal is an established financial operator in Washington. It spent $1.13 million on federal lobbying last year, according to OpenSecrets, and has been lobbying on cryptocurrencies for several years, records show.

“From a policy perspective, there is a seismic difference between Facebook’s Libra and PayPal’s stablecoin,” said Isaac Boltansky, director of policy research for brokerage BTIG.

“There is still a wall between banking and commerce, so knowing that PayPal is very clearly on one side of that wall should assuage lawmakers.”

PayPal and Meta declined to comment.

PayPal USD will be issued by digital trust company Paxos Trust, backed by dollar deposits and U.S Treasuries, and subject to oversight by the New York State Department of Financial Services.

PayPal launched a stablecoin because it sees itself as a leader in payments innovation, said one person familiar with the plan, and CEO Dan Schulman has said he envisages it will eventually be used for payments. But PayPal expects the stablecoin will mostly be used by U.S. customers to buy and sell other crypto tokens on its platform, the source said.

Dan Dolev, a senior analyst at Mizuho, said PayPal USD is not a game-changer for PayPal investors. “It’s positive noise,” he added.

GRAND AMBITIONS

To be sure, some policymakers have concerns. Maxine Waters, the top Democrat on the House Financial Services committee, expressed alarm that PayPal is launching a stablecoin without federal oversight to protect consumers and financial stability. But mostly the reaction in Washington has been muted.

When Facebook unveiled Libra, a stablecoin whose operations were based in Switzerland and which was pegged to a basket of currencies, executives made no secret of their ambitions. They said they wanted to revolutionize the global financial system.

The project ran in to fierce opposition from policymakers alarmed that Libra could give Facebook too much control over the money system, and infringe on users’ privacy. Caught by surprise, regulators were confused about who should oversee stablecoins.

Facebook rebranded Libra, scaled it back and moved the project to the United States, in a bid to win U.S. regulatory approval.

According to one former official with direct knowledge of the matter, the decision on approving Libra coincided with the transition to President Joe Biden’s administration in January 2021. While the Fed had been working on the issue for some time, the decision ultimately fell to the new Treasury Secretary Janet Yellen. She wanted time to fully analyze the issues, this person said.

Tired of waiting, Facebook sold the venture in January 2022.

The White House and the Fed declined to comment. A Treasury spokesperson noted that Yellen has “repeatedly called on Congress to create a comprehensive regulatory framework for stablecoins.”

The Treasury has studied stablecoins over the past two years. After TerraUSD collapsed last year, Yellen said stablecoins did not pose systemic risks. Since then, fears that stablecoins could supplant traditional money have subsided, and the Treasury and Congress have broadly agreed that prudential regulators should oversee them.

“There’s been an awful lot of work done … to understand what the proportional risk of these things is,” said Jack Fletcher, head of policy and government relations at blockchain company R3.

The Fed this month outlined the process for state banks to transact in stablecoins, while the House Financial Services committee last month advanced a bill giving the Fed more power to oversee stablecoins while preserving state regulators’ authority.

The committee’s Republican chair, Patrick McHenry, said in a statement on PayPal USD that Congress should move fast to pass that bill, “enabling stablecoins to achieve their full potential.”

(Reporting by Hannah Lang in Washington; Additional reporting by Andrea Shalal and Pete Schroeder in Washington, and Niket Nishant in Bengaluru; Editing by Michelle Price and Matthew Lewis)

By Elizabeth Howcroft

LONDON (Reuters) -Top cryptocurrency bitcoin hit a fresh two-month low on Friday, breaking out of its recent tight range as a wave of risk averse sentiment swept through world markets.

On Thursday, bitcoin fell 7.2% in its biggest one-day drop since November 2022 when top exchange FTX collapsed.

It then slipped to a two-month low of $26,172 during Asian trading hours on Friday, its lowest since June 16. By 0835 GMT, it had partly recovered to $26,441, down 0.8% on the day.

Global markets have been hit by a wave of selling, with Wall Street’s main indexes closing lower on Thursday and Asian shares heading for a third week of losses over concerns about China’s economy and fears that U.S. interest rates would stay higher for longer given a resilient economy.

Ether, the second biggest cryptocurrency, was steady at $1,685.20, having also dropped sharply on Thursday.

Some analysts attributed crypto’s drop to a Wall Street Journal report that Elon Musk’s SpaceX sold its bitcoin holdings after writing the value down by $373 million. Musk is influential among crypto enthusiasts, and bitcoin prices have previously moved in response to his tweets.

The SpaceX report was the “immediate catalyst” for bitcoin’s sell-off, said Ben Laidler, global markets strategist at eToro.

“The broader driver is that crypto assets are not immune to the deepening risk-off selling pressure seen across all asset classes,” Laidler added.

Joseph Edwards, head of research at Enigma Securities, attributed the bitcoin price move to low volatility and a lack of enthusiasm from retail investors.

Bitcoin had been hovering close to $30,000 in recent months, having gradually recovered this year after dropping sharply in 2022 when various crypto firms collapsed, leaving investors with large losses.

Crypto markets were boosted in June by BlackRock applying to launch a spot bitcoin exchange-traded fund (ETF) in the United States. Some investors interpreted that move as an indication that the U.S. Securities and Exchange Commission would approve spot bitcoin ETF applications from various asset managers, including Grayscale.

“The big concern right now is that this might be a frontrun on the outcome of Grayscale’s lawsuit against the SEC; optimism on that front has been keeping markets inflated above whether they might otherwise be for much of the summer,” Edwards said.

(Reporting by Elizabeth Howcroft; editing by Dhara Ranasinghe, Elaine Hardcastle)

(Reuters) -Coinbase Global said on Wednesday it had secured approval to offer cryptocurrency futures to U.S. retail customers, scoring a major regulatory win even as the crypto exchange battles a lawsuit from the Securities and Exchange Commission (SEC).

Shares of the company climbed 5.5% to $83.52 in premarket trading. The approval was granted by the National Futures Association (NFA), a self-regulatory organization designated by the Commodity Futures Trading Commission (CFTC).

“This is a critical milestone that reaffirms our commitment to operate a regulated and compliant business,” Coinbase said.

The company has openly criticized the SEC, which in a June lawsuit accused Coinbase of operating illegally because it had failed to register as an exchange.

CEO Brian Armstrong has also said more U.S. crypto companies could move offshore due to a hostile regulatory environment and that SEC Chair Gary Gensler’s enforcement-first approach could stifle innovation in the industry.

The NFA approval, which came nearly two years after Coinbase filed its application, could allow the company to expand into a largely untapped market.

The global derivatives market represents almost 80% of the entire crypto market, with leveraged bets on futures and other derivatives often at the root of volatility in the wider market.

In July, crypto derivatives trading volumes globally totaled about $1.85 trillion, according to research firm CCData.

The latest offerings will be from Coinbase Financial Markets, a unit of Coinbase.

(Reporting by Niket Nishant in Bengaluru; Editing by Saumyadeb Chakrabarty)

(Reuters) -Crypto exchange Binance late on Monday filed for a protective court order against the U.S. Securities and Exchange Commission saying the regulator’s requests for information were “over broad” and “unduly burdensome”.

In a court filing in the US District Court of Columbia, BAM Trading, Binance U.S.’s operating company and BAM Management said the group had already provided sufficient information to the regulator.

The protective order seeks to limit the SEC, among other things, to four depositions from BAM employees, and to drop the deposition of BAM’s chief executive and of its chief financial officer, without naming anyone.

Binance and the SEC did not immediately respond to a request for comment.

In June, U.S. regulators sued Binance and CEO Changpeng Zhao for allegedly operating a “web of deception,” listing 13 charges including claims that the company artificially inflated its trading volumes, diverted customer funds, failed to restrict U.S. customers from its platform and misled investors about its market surveillance controls.

“…the SEC has still yet to identify any evidence suggesting that customer assets were misused or dissipated in any way,” the filing said.

The SEC has declined BAM’s proposals to meaningfully limit its requests and is opposed to the motion for a protective order, the filing said.

(Reporting by Lavanya Ahire in Bengaluru; Editing by Kim Coghill and Sharon Singleton)

(Reuters) – The U.S. Securities and Exchange Commission (SEC) had asked Coinbase to stop trading in all cryptocurrencies except bitcoin before suing the cryptocurrency platform in June, the Financial Times reported on Monday, citing CEO Brian Armstrong.

“We really didn’t have a choice at that point. Delisting every asset other than bitcoin, which by the way is not what the law says, would have essentially meant the end of the crypto industry in the US,” Armstrong told the FT.

“It kind of made it an easy choice …  let’s go to court and find out what the court says,” he added.

The SEC had accused Coinbase of operating illegally because it failed to register as an exchange. It also alleged that Coinbase traded at least 13 crypto assets that are securities that should have been registered, including tokens such as Solana, Cardano and Polygon.

The SEC told FT that its enforcement division did not make formal requests for “companies to delist crypto assets”.

“In the course of an investigation, the staff may share its own view as to what conduct may raise questions for the commission under the securities laws,” FT said, citing the SEC.

The regulator sued Binance in June, with both civil cases part of SEC Chair Gary Gensler’s push to assert jurisdiction over the crypto industry.

Gensler has labeled the crypto industry a “Wild West” that has undermined investor trust in the U.S. capital markets. Crypto companies say the SEC rules are unclear, and that the agency is overreaching by trying to regulate them.

The SEC and Coinbase did not immediately respond to a Reuters request for comment on the report.

(Reporting by Juby Babu in Bengaluru; Editing by Sonia Cheema and Savio D’Souza)

By Hannah Lang

WASHINGTON (Reuters) – A key congressional committee is set to vote this week on several bills that would develop a regulatory framework for cryptocurrencies, a milestone for Capitol Hill in its efforts to codify federal oversight for the digital asset industry.

The crypto industry has been in the regulatory crosshairs since investors were burned last year by sudden collapses of Celsius Network, Voyager Digital, FTX and other companies.

Among the legislation the House Financial Services Committee is scheduled to consider are a bill that would define when a cryptocurrency is a security or a commodity and another that would establish a regime to oversee stablecoins – digital tokens typically backed by traditional assets like the U.S. dollar.

The markups – where legislation is debated and brought to a vote, paving the way for a full vote by the House of Representatives – are the first time crypto regulatory bills will be put to a vote in Congress, a victory for crypto lobbyists that have pushed lawmakers to provide regulatory clarity for the industry.

“Obviously we’ve had some important decisions come from the courts in the past, but this is by far the most significant legislative moment that we’ve had,” said Kristin Smith, CEO of the Blockchain Association.

Still, it remains to be seen if the bills will garner any Democratic support, a factor seen by many as crucial to the bills’ ultimate chances of becoming law.

The measures also would likely face obstacles in the Democratic-led Senate, where the head of the Senate Banking Committee, Sherrod Brown, has said he is unsure if additional legislation to regulate crypto is necessary.

Representative Patrick McHenry, the Republican chair of the committee, has indicated that his priority is advancing a crypto market structure bill, which would expand the Commodity Futures Trading Commission’s (CFTC) oversight of the crypto industry, while clarifying the Securities and Exchange Commission’s jurisdiction, as many crypto advocates complain of the agency’s perceived overreach. His committee is expected to consider that bill during a markup on Wednesday, while the House Agriculture Committee will consider the same bill on Thursday.

The bill has galvanized many in the crypto industry, who say that with Democrats’ support, the bill could have a shot in the Senate.

“For anything to be sticky, it’s going to need some bipartisan backing,” said Miller Whitehouse-Levine, CEO of the DeFi Education Fund, a lobbying group focused on decentralized finance.

CLARITY ON TOKENS

Crypto companies started out in a regulatory gray area, but the SEC has steadily asserted its authority over the industry, arguing most cryptocurrencies are securities and subject to its investor protection rules. That effort escalated last month when the SEC sued crypto exchanges Coinbase and Binance for failing to register some crypto tokens. The pair deny the allegations.

Most crypto companies dispute the SEC’s jurisdiction, and have pushed Congress in recent months to write laws clarifying that cryptocurrencies are more akin to commodities than securities.

It is unclear if any Democrats will back the market structure bill, including Representative Maxine Waters, the top Democrat on the Financial Services committee. A spokesperson for Waters did not respond to a request for comment.

Lawmakers are also set to consider on Thursday a bill that would have the Federal Reserve write requirements for issuing stablecoins while preserving the authority of state regulators.

The bill was modified to address concerns from some Democrats, including Waters, that stablecoin issuers could evade stricter oversight by opting to be regulated under a state regime.

While McHenry told Politico in an interview this month he remained hopeful that he and Waters would reach an agreement on the bill, he also said a federal stablecoin regime is “not essential,” adding there are state frameworks already in place.

A spokesperson for McHenry did not respond to a request for comment.

(Reporting by Hannah Lang in Washington; Editing by Matthew Lewis)