Cryptocurrency

Fidelity Prepares To Launch Stablecoin As Crypto Regulations Shift

Here are some of the major developments in the world of crypto over the past few days

Fidelity Prepares To Launch Stablecoin As Crypto Regulations Shift
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Fidelity Investments seems to be reaching the final stages of testing a stablecoin that is attached to the US dollar, which would be their latest venture into the digital asset space. As cited by Cointelegraph, The Financial Times reported on March 25 that the $5.8 trillion asset management intends to launch the stablecoin through Fidelity Digital Assets.

This move is part of Fidelity’s broader crypto expansion, which also includes launching an Ethereum-based “OnChain” share class for its US dollar money market fund. The firm’s March 21 filing with the SEC stated that this OnChain share class would track transactions of the Fidelity Treasury Digital Fund (FYHXX), an $80 million fund composed mainly of US Treasury bills. The filing is awaiting regulatory approval and is expected to take effect by May 30.

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The crypto industry is witnessing increased adoption following Donald Trump’s pro-crypto stance, with Custodia and Vantage Bank launching the first US bank-issued stablecoin. Meanwhile, Fidelity’s Solana ETF filing is seen as a regulatory test for broader crypto investment products.

As the US awaits stablecoin legislation, the GENIUS Act could set collateralization guidelines and ensure compliance with AML laws, potentially reaching the President’s desk within two months.

Trump to Sign Resolution Overturning IRS DeFi Broker Rule

U.S. President Donald Trump is expected to sign a resolution repealing the IRS DeFi broker rule, which required decentralized finance (DeFi) platforms to report transaction details to tax authorities. The Senate passed the resolution on March 26 with a 70-28 vote, following the House’s approval on March 11, as reported by cointelegraph.

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The rule, introduced under the Biden administration, sought to expand IRS reporting requirements to DeFi platforms, requiring them to report gross proceeds from crypto sales and transaction details. Critics argued that the rule was unworkable and would stifle innovation. Blockchain Association CEO Kristin Smith welcomed the Senate’s decision, calling it a step toward removing harmful regulations.

While those opposing like Democratic Representative Lloyd Doggett claimed that killing the rule could create loophole which can result in tax evasion, money laundering, and illicit activities. Despite opposition, the resolution now heads to Trump’s desk for final approval. The White House’s AI and crypto czar, David Sacks, has stated that Trump supports killing the rule.

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Crypto Firms Urge Congress to Oppose DOJ’s Broad Interpretation of Money Transmitting Laws

A coalition of 34 crypto firms and advocacy groups, including Kraken and Coinbase, has urged Congress to push the Department of Justice (DOJ) to amend its broad interpretation of money-transmitting laws used against Tornado Cash developers.

In a March 26 letter, the group argued that the DOJ’s stance, debuted in August 2023 when it charged Tornado Cash developers Roman Storm and Roman Semenov, threatens all blockchain developers by implying they could be prosecuted as criminals. The letter points out that FinCEN’s 2019 guidance clarified that software developers not controlling user funds are not money transmitters, contradicting the DOJ’s approach, as reported by Cointelegraph.

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The DOJ’s conflicting Interpretation of FinCEN’s rules creates legal uncertainty, potentially stifling crypto innovation in the US. The group warns that this could drive developers away and end blockchain software development in the country.

Crypto advocate Michael Lewellen has sued Attorney General Merrick Garland, arguing that the DOJ’s prosecution of non-custodial software developers violates constitutional limits.

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