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Presented by HANDS OFF MY REWARDS: Delivered daily by 8 a.m., Morning Money examines the latest news in finance politics and policy. | | | | |  | | By Sam Sutton | Presented by HANDS OFF MY REWARDS | This just in: The White House is starting to solidify its stance on crypto. Six months after President Joe Biden signed an executive order demanding a whole-of-government assessment of U.S. digital asset policies, the Treasury Department and other federal agencies released a series of reports this morning that — among other things — encourage the Securities and Exchange Commission and Commodity Futures Trading Commission to “aggressively pursue” investigations and enforcement actions against crypto scams, frauds and other illegal activity in the digital assets space. “We recommend that agencies continue to rigorously pursue their enforcement efforts focused on the crypto assets sector,” Treasury Secretary Janet Yellen said during a briefing Thursday. “Agencies should use existing authorities to issue additional supervisory guidance and new rules to address current and emerging risks.” (Emphasis mine.) Market regulators have so far avoided new rulemaking for digital asset businesses in the aftermath of a crypto market collapse that wiped out more than $2 trillion of crypto’s market value. While administration officials said that turmoil was top of mind, they stopped short of offering recommendations for specific regulations or legislation that might address their concerns. Officials said a separate report from the Financial Stability Oversight Council would address some of those risks in the coming weeks. (This is already a focus for members of Congress, particularly in the Senate Agriculture Committee, but more on that in a bit). There are “real challenges and risks of digital assets used for financial services,” Yellen said. “At the same time, if these risks are mitigated, digital assets and other emerging technologies could offer significant opportunities.” For now, crypto’s potential is most apparent in institutional clearing and settlement systems that are beyond the reach of Main Street consumers who have largely relied on digital assets for trading and lending and borrowing, administration officials say. The reports also focus on the potential development of a crypto-friendly digital dollar — otherwise known as a central bank digital currency. Treasury is recommending that U.S. policymakers encourage the use of instant payment systems — which will soon include a Federal Reserve system known as FedNow — as it leads an interagency working group to support the project. “These reports underscore and advance our understanding of the policy implications and technical choices surrounding a potential U.S. central bank digital currency should one be deemed to be in the national interest,” National Economic Council Director Brian Deese told reporters. IT’S FRIDAY — And it’s a beautiful day to take a train. Please send tips, story ideas and feedback to ssutton@politico.com.
| | | | A message from HANDS OFF MY REWARDS: Despite record profits, mega-retailers and merchant groups are trying to trick Congress into passing harmful credit card routing mandates that will end popular rewards programs like cash back and travel points. Learn more at HandsOffMyRewards.com | | | | | | University of Michigan consumer sentiment data out at 10 a.m. SPEAKING OF CRYPTO — It was a big day in the Senate Agriculture Committee as Congress held its first hearing on a proposed rulebook for crypto markets that collapsed under the weight of their own hype earlier this year. From me: “The bill, S. 4760, sponsored by Committee Chair Debbie Stabenow (D-Mich.) and Sen.John Boozman (R-Ark.), marks Congress' clearest effort to set rules for a crypto marketplace that crashed amid a series of scandals and bankruptcies earlier this year. The measure would task the CFTC as the industry’s top regulator even as SEC Chair Gary Gensler angles to bring high-profile digital exchanges under his agency's jurisdiction … ‘This is not about us at the CFTC. It's not about the SEC. It's about the regulatory framework. It's about financial markets. It's about protecting customers,’ CFTC Chair Rostin Behnam told senators Thursday.” TRAIN STRIKE AVERTED — POLITICO’s Ben White and Eleanor Mueller: “President Joe Biden narrowly avoided an economic and political debacle on Thursday as senior administration officials helped salvage a tentative, last-minute deal to avert a devastating railroad strike. And it almost didn’t happen . Steering clear of disaster required some 20 straight hours of talks beginning Wednesday that taxed Labor Department coffee supplies, kept West Wing office lights burning through the early hours and left everyone involved bleary-eyed and largely sleepless.” MAJOR SHIFT ON CFIUS — POLITICO’s Doug Palmer: “Administration officials said the first-ever presidential directive for the nearly 50-year-old interagency Committee on Foreign Investment in the U.S., or CFIUS, complements other work the administration is doing to strengthen supply chains, enhance U.S. technological leadership and address risks related to the handling of sensitive data.” BATTLE OVER FINTECH REGS HEATS UP — POLITICO’s Katy O’Donnell: “Banks and consumer lending advocates are teaming up to try to get the Consumer Financial Protection Bureau to clamp down on financial technology firms that extend credit to consumers. The Center for Responsible Lending and the Consumer Bankers Association are jointly petitioning the CFPB to develop a rule that would expand federal oversight to include the new breed of non-depository lenders, according to a letter the two groups sent CFPB Director Rohit Chopra on Thursday.”
| | | | Join POLITICO Live on Tuesday, Sept. 20 to dive into how federal regulators, members of Congress, and the White House are seeking to write the rules on digital currencies, including stablecoins. The panel will also cover the tax implications of crypto, which could be an impediment to broader adoption and the geopolitical factors that the U.S. is considering as it begins to draw regulatory frameworks for crypto. REGISTER HERE. | | | | | | | | GOLDMAN’S GUESS — With the market pricing in a 75-basis-point rate hike next week, economists at Goldman Sachs Research have updated their projections for the Fed’s December meeting from 25 basis points to 50 basis points, citing wage strength and persistent increases in housing, health care and education. “We think the Fed is going to guide the market to a period – maybe a very long period – of holding the federal funds rate steady at an above-neutral rate” following Tuesday's CPI report, said Goldman’s Josh Schiffrin, co-head of U.S. interest rate products and global interest rate products. NO ONE KNOWS WHAT IT MEANS, BUT IT’S PROVOCATIVE — Bloomberg’s Vince Golle and Reade Pickert: “[Thursday’s economic] data illustrate the many economic crosscurrents the Federal Reserve is navigating as it attempts a soft landing for the economy while pressing harder on the monetary policy brakes to stamp out the fastest inflation in a generation.”
| | | | A message from HANDS OFF MY REWARDS:   | | | | | | HOUSING DOWNTURN — Also from Katy: “Mortgage rates have surpassed 6 percent for the first time since 2008, Freddie Mac reported Thursday, as the Federal Reserve struggles to get a hold of inflation. Mortgage rates have more than doubled over the past year as the Fed has ratcheted up borrowing costs in a bid to tamp down spiking prices.” GOP BLASTS ESG — POLITICO’s Declan Harty: “GOP lawmakers called on SEC Chair Gary Gensler to justify his agency’s draft rule to require publicly traded firms to release more standardized information about the climate risks their businesses present, warning that the proposal is unlikely to stand up to court challenges once finalized.” ALANIS MORISSETTE SAYS YOU AUDIT KNOW — Also from Declan: “SEC Chair Gary Gensler called for accelerating the timeline for kicking Chinese and Hong Kong companies off American stock exchanges if the firms fail to allow U.S. inspectors to review their financial audits as promised.” A LITTLE BUMP FOR FLAGGING I-BANK REVENUE — WSJ’s Cara Lombardo and Dana Cimilluca: “Adobe Inc. agreed to buy collaboration-software company Figma for around $20 billion, in the technology giant’s largest acquisition.” SIGNS OF A SLOWDOWN — WSJ’s Esther Fung: “FedEx Corp. said its quarterly revenue fell below its expectations and it was closing offices and parking aircraft to offset declining volumes of packages moving around the world.”
| | | | DON’T MISS - MILKEN INSTITUTE ASIA SUMMIT : Go inside the 9th annual Milken Institute Asia Summit, taking place from September 28-30, with a special edition of POLITICO’s Global Insider newsletter, featuring exclusive coverage and insights from this important gathering. Stay up to speed with daily updates from the summit, which brings together more than 1,200 of the world’s most influential leaders from business, government, finance, technology, and academia. Don’t miss out, subscribe today. | | | | | | | | FIRST IN MM — In advance of Treasury’s crypto reports, Sen. Elizabeth Warren (D-Mass.) sent a lengthy letter to Yellen warning that the “crypto ecosystem has the capacity to undermine our national security, worsen the climate crisis, harm consumers and retail investors, and threaten overall economic stability – all while lining billionaires’ pockets.” DOG BITES MAN/FTX BUYS DISTRESSED CRYPTO ASSETS — Coindesk’s Ian Allison and Tracy Wang: “Exchange giant FTX is in the lead to buy the assets of Voyager Digital , the cryptocurrency lender whose bankruptcy filing deepened this year’s industry crisis, but higher offers could still come in in the days ahead, according to a person familiar with the matter.” POST-MERGE HANGOVER — Bloomberg’s Yueqi Yang and Muyao Shen: “Ether led digital assets lower after the groundbreaking software upgrade of the token’s underlying network turned into what some market observers labeled a ‘sell-the-news’ event.”
| | | | A message from HANDS OFF MY REWARDS: Merchant coalitions representing big-box and grocery retailers are lobbying Congress to enact harmful new credit card routing mandates. Their legislation, inaccurately titled, the Credit Card Competition Act, would allow big-box retailers–like Wal-Mart and Kroger–to rework the entire U.S. payments system solely on what is cheapest for them without regard to the value that consumers and small businesses derive from rewards programs and many other benefits. This bill would end popular credit card rewards programs like cash back and miles while adding billions of dollars to the bottom lines of mega-retailers. Learn more at HandsOffMyRewards.com | | | | | | | Follow us on Twitter | | | | Follow us | | | | |  |
