California, New York and Other States Seek to Regulate Crypto

Hello and welcome to Protocol Fintech. This Wednesday: Monitoring state crypto regulations, opening PayPal’s wallet, and secrets from a fintech CEO.

out of the chain

The fall in the crypto market does not seem to deter Citadel Securities from diving deeper into crypto. CoinDesk reports that it is building crypto trading systems with Virtu Financial with “deep reserves of liquidity”. The irony here is that this would likely be off-blockchain commerce, as blockchain transactions are expensive. Web3 promises a frictionless financial future, but at least in the short term, smart money seems to be piggybacking centralization on it.

—Owen Thomas (E-mail | Twitter)

Change states

The big federal crypto bill the industry has been waiting for has finally arrived — but that won’t slow the action at the Statehouse. On the contrary, it could spur stricter regulation of digital assets at the state level. The same day as the senses. Cynthia Lummis and Kirsten Gillibrand Outlined the Most Comprehensive Federal Crypto Legislation Yet, a California Lawmaker Proposed a New State Licensing Process for Firms “Engaging in Commercial Asset Activities” Digital Financiers,” joining a long list of active industry-focused state efforts.

In the absence of clear federal policy, states have taken a stand for over a decade on US cryptocurrency regulation. Along the way, they’ve created a patchwork of rules ranging from the aggressive approach in New York to the red carpet rolled out in Wyoming.

  • The Responsible Financial Innovation Act, introduced by Wyoming Republican Lummis and New York Democrat Gillibrand on Tuesday, hopes to clarify federal policies and includes a provision to make state regulations more uniform. The bill faces a long road to becoming law that will almost certainly stretch into 2023.
  • In the meantime, the California proposal will join more than 160 crypto-related bills being considered in state houses across the United States, according to a list maintained by the National Conference of State Legislatures. .

State crypto laws are all over the map. This reflects the different priorities of state legislators, which range from consumer protection to economic development to environmental concerns.

  • New York lawmakers recently approved a moratorium on permits for new fossil fuel-powered cryptocurrency mining facilities.
  • Wyoming and Arizona, meanwhile, are considering whether to allow residents to make tax payments in crypto.
  • In New Jersey, lawmakers advanced a pair of bills last week creating a state licensing system for companies that facilitate digital asset transactions. California’s new bill would do much the same thing.
  • Through a separate effort launched last week, the California Department of Financial Protection and Innovation is gathering input on how it should regulate blockchain companies, based on an executive order from Governor Gavin Newsom to create “a comprehensive and harmonized framework for responsible web3 technology”. ”

Lummis-Gillibrand bill gently pushes to normalize things. It includes a provision that would require states to adopt “substantially uniform standards” for how digital assets are treated under money transmission laws.

  • Most states, as well as the federal government, require a money transfer license for cryptocurrency exchanges and other businesses that facilitate transactions. A common industry complaint is the lack of clarity and consistency in this process.
  • For states that have not adopted a uniform money transfer standard, the Consumer Financial Protection Bureau would be authorized to step in and enforce licensing rules based on standards adopted in other states, according to the wording of the bill.

Many in the industry are still evaluating its potential impact. “Certainly anything that makes things easier and creates more uniform regulation is generally positive,” said Kristin Smith, executive director of the Blockchain Association, which has thrown her weight behind the bill as a whole. In the meantime, the industry will remain busy. It is not enough to monitor Washington: they will also have to monitor state houses from Albany to Sacramento.

—Ryan Defenbaugh (E-mail | Twitter)


96% of respondents said there was work to be done in digitizing their AR departments, but 60% agreed that their AR departments had not been prioritized as much as other departments for digitization. At a time when securing cash flow is more important than ever, many companies don’t give it enough importance.

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on the money

On protocol: PayPal users can now transfer their crypto to and from PayPal and other wallets and exchanges, a new feature that might make its existing crypto wallet a bit more useful. Although there are no transfer fees, network or gas charges may apply. has started accepting stablecoins as a form of payment. Through a partnership with digital asset security firm Fireblocks, the payment company will enable merchants to accept payments in USDC.

BlockFi is said to be lifting a round down. The Block says the company is close to finalizing an investment at a fraction of its previous $1 billion valuation. A BlockFi spokesperson called the report “market rumours.”

Shopify CEO Tobi Lütke got special voting rights. The company’s shareholders voted to allow Lutke to have at least 40% of the company’s voting rights, dubbed the “founder’s share”, under certain conditions.

Circle announced its support for Polygon USDC for its payment and treasury products. Circle CEO Jeremy Allaire said the move is “another step towards USDC interoperability on more leading blockchains” and will make it easier for businesses to accept USDC payments with fees. often inferior to Polygon.


A16z partner Sriram Krishnan thinks crypto reviewers should keep their day jobs, saying one “An interesting mood-shifter is the rise of the ‘anti-crypto media personality’.” OK, but if a16z doesn’t like what the media is saying, couldn’t he fund an audio streaming network, or a newsletter startup, or his own explicitly pro-tech news site?

David McDonoughfounder of Ordinary actionsjust exposed the harsh reality of a day in the life of a CEO. “Figma is down so I can’t do my job. Devastating. (99% of my job as CEO is to ask the designers of the Figma file to “make a few little tweaks”)”, he tweeted.

Binance CEO Changpeng Zhao was unhappy with a Reuters report that said the crypto exchange was serving as a conduit for money laundering schemes and came to the defense. “It’s over 50 pages of email records between our (ex-law enforcement) cybersecurity team and reporters who are cherry-picking, cheating and wasting time,” he tweeted.

Just a question to Sergey Nazarov, co-founder of Chainlink

Sergey Nazarov is a seasoned technology investor and entrepreneur who has been rumored to be Satoshi Nakamotoa claim it is denied.

Which fintech trend are you most concerned about?

Large, consumer-focused brands aggregate massive amounts of retail consumer transaction volume or asset management, while giving them no guarantees that those assets or business relationships will actually be available when it matters. more.


96% of respondents said there was work to be done in digitizing their AR departments, but 60% agreed that their AR departments had not been prioritized as much as other departments for digitization. At a time when securing cash flow is more important than ever, many companies don’t give it enough importance.

Learn more

Thanks for reading – see you tomorrow!

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