The Breakdown First Five - Thursday May 18, 2023

5. Another Day, another dollar stablecoin hearing

In their second hearing on Stablecoins, the Digital Assets subcommittee has pitted two competing partisan bills against one another. The Democrat bill looks to place stablecoins under the purview of the Fed, while the Republicans want to maintain the power of state regulators. No consensus but at least a recognition of the issue’s importance.

4. Pakistan Bans Crypto as currency collapses

The former Prime Minister is barricaded inside his home for fear of arrest, but at least Pakistan has its priorities right in announcing a Crypto ban. The nation's currency has collapsed by a third over the last year but FATF are reportedly demanding a Crypto ban in exchange for removal from a terrorism financial list.

3. Debt Ceiling Looming

All sides in the debt ceiling debacle say that they’re close to an agreement, with House Speaker McCarthy and Senate Majority leader Schumer anticipating a vote to be called next week. Bond markets are still pricing in risk of default, while stocks shoot to 52-week highs. Record short positioning across stocks and bonds should prove a recipe for volatility once a deal is struck.

2. Ledger Scandal Continues

The Hardware wallet manufacturer points out that it was always possible for them to mess with the firmware and still private keys, as the PR disaster drags on. Crypto commentators have learned a lot about the trust assumptions inherent in using hardware wallets, with some unhappy with the tradeoff and others preferring to focus on realized security issues.

1. Securities Clarity Bill

In a burst of optimism, Congressmen Emmer and Soto have re-introduced their Securities Clarity Act bill. First introduced in 2020, the bill provides a separation between the fundraising efforts of Crypto token issuers and the tokens that are issued, allowing protocols to transition to a decentralized state and leave the domain of SEC enforcement. Maybe Congress can grant a small sliver of clarity this time around.

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Thanks for reading -NLW