Carta Policy: Weekly Brief for June 3 | Carta

Carta Policy: Weekly Brief for June 3

Author:

The Carta Policy Team

|

Read time:

8 minutes

Published date:

2 June 2022

Policymakers remain focused on economic conditions, rising inflation, and cryptocurrency.

Executive summary

Macro matters

White House & Fed focused on inflation

Policymakers remain focused on the downward economic trends and rising inflation. President Biden met with Federal Chair Jay Powell this week to discuss the economic outlook, though the president reiterated the Fed’s independence. The Fed’s Beige Book signaled modest economic growth in most districts, though four districts indicated a slowdown from the prior quarter. Employment levels rose in most districts, with worker shortages forcing many firms to operate below capacity. Some districts reported hiring freezes and wages leveling. On inflation, most districts noted robust price increases, though levels and expectations ranged across the country, with over half the districts noting customer pushback and product substitution easing price pressures. The Fed continues to signal that inflation is the priority: Fed Governor Christopher J. Waller announced he and his colleagues are committed to doing whatever it takes to bring inflation down. Expect the Federal Open Markets Committee to raise rates again in June.

Congressional update

Although on recess, Congressional policymakers continue to negotiate the Bipartisan Innovation Act (legislation to invest in U.S. competitiveness). Congressional stakeholders are resolving a range of issues, but the final text is more likely to look like the original Senate version. Majority Leader Chuck Schumer and Senator Joe Manchin are quietly negotiating a slimmed down Build Back Better, though the path forward remains unclear. The rumored package is estimated to spend between $800 billion – $1 trillion, including provisions on prescription drugs, climate change, and taxation, with half of the revenue raised from the package going towards the deficit. This means policymakers may still curtail qualified small business stock treatment to offset spending.

Capital markets

Warren’s SPAC Accountability Act would build on SEC guidelines

Sen. Elizabeth Warren plans to introduce The SPAC Accountability Act of 2022, intended to curb misaligned incentives and abuses related to special purpose acquisition company (SPAC) transactions. Building on the SEC’s recent proposal, the bill proposes to incorporate the SEC’s expanded definitions of SPAC underwriters and close loopholes that exempt forward-looking statements and projections from liability. The proposed legislation would also increase legal liability for stakeholders involved in SPAC deals, make investor disclosures more transparent, and lock in early backers of SPACs for a longer time period.

Crypto & digital assets

FDIC pauses interagency coordination on cryptocurrencies

The Federal Deposit Insurance Corporation has reportedly paused its engagement with fellow regulators on several cryptocurrency-related matters. Last November, federal banking regulators issued a joint statement outlining their plans to provide clarity on crypto-asset-related activities. Stepping back from this work could signal the FDIC does not agree with the approach other regulators are taking.

Basel Committee to finalize crypto standards this year

The Basel Committee on Banking Supervision plans to publish another consultation paper this month, with the goal of finalizing a global capital framework that accounts for developments in digital assets by the end of 2022.

U.K. considers stablecoin safeguards

Following the collapse of the algorithmic stablecoin TerraUSD, U.K. regulators have proposed amending existing regulations to incorporate safeguards against stablecoin volatility. The proposal highlights the need to create stablecoin regulations that mitigate risks to consumers, market integrity, and financial stability.

Senators plan to release comprehensive crypto bill next week; tech experts warn about crypto

Senators Cynthia Lummis and Kirsten Gillibrand prepare to release their highly anticipated crypto legislation next week. Meanwhile, a group of 26 computer scientists published a letter warning Congress about the risks and ambiguities of blockchain technology.

Investors look to courts to offer cryptocurrency guidance

Investors are suing to push the courts to determine how digital tokens should be treated. There were 11 class action law suits in 2021 and eight class actions suits filed thus far.

Taxation

CBO report provides insights on expiring tax incentives, SALT limit, and R&D

The Congressional Budget Office (CBO) report estimates the cost to extend provisions that expired in 2021 or that will expire in 2022 will be $37 billion over 10 years.

OECD releases new tax framework elements

The Organisation for Economic Co-operation and Development (OECD) released a public consultation with a tax framework designed to prevent double taxation.

Banking & financial products

CFPB holds firm on ECOA requirements

The CFPB’s latest Consumer Financial Protection Circular affirms that credit providers are required to explain to applicants reasons for denial of credit.

Antitrust, privacy, and technology

Federal privacy legislation

Sen. Maria Cantwell has privately circulated a new draft of privacy legislation. The draft would require opt-in for targeted advertising and prohibit targeted advertising for kids under 17.

Upcoming events

Notable SEC proposed rules and comment deadlines
SPAC reform 6/13/2022

Author: The Carta Policy Team

Carta’s Policy Team aims to connect the policymaking community and venture ecosystem to build an ownership economy and advance policies that support private companies, their employees, and their investors.