Blockchain Week in Review – November 2019 #3 | Perkins Coie

U.S. Developments

The Fed Chairman Comments on Potential for a US-backed Digital Currency

Jerome Powell, Chairman of the Federal Reserve, wrote to Congress this week discussing the merits of implementing a central bank digital currency (CBDC) in the U.S. The letter responds to a number of questions posed by lawmakers regarding the value that a digital currency would provide and implementation challenges that would need to be overcome. Two Congressmen had expressed concern that the U.S. is being left behind in the wake of technological advances.

Chairman Powell indicates that the U.S. is not currently developing a CBDC, but the Fed is monitoring development elsewhere. Chairman Powell noted that some of the motivating factors for  a digital currency in foreign countries do not necessarily exist in the U.S. Specifically, the demand for cash in the U.S. “remains robust” and there are fast and reliable digital payment services available that are not available in certain other countries.

Chairman Powell enumerated several challenges posed by a CBDC, including unanswered legal questions pertaining to rights of associated parties and privacy of transactions, policy issues relating to stability, and technical issues relating to information security. Moreover, Powell expressed skepticism for a CBDC in stating, “[i]t is not yet clear what additional value a general purpose CBDC could provide in the U.S.”

The SEC is Revisiting its Rejection of Bitwise Fund Proposal

In October, the SEC rejected the latest proposal by Bitwise Asset Management to create a cryptocurrency-based exchange traded-fund (ETF). The SEC is now reviewing that rejection.

The review came by the SEC’s own volition and without involvement from Bitwise. Under SEC rules, the SEC commissioners may grant review at their own discretion. At this stage it is unclear what triggered the review or how long the review process will take. The general public is invited to comment on the initial…

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