House Financial Services Committee national security subcommittee chairman Rep. Blaine Luetkemeyer (R-MO) introduced a bill, H.R. 804, on February 2 that would bar financial institutions and payments businesses from using the digital yuan, China’s central bank digital currency. In announcing the bill, he said, “The Chinese Communist Party uses the digital yuan to track in real time every transaction made with the currency…We must establish clear barriers to prevent the CCP from monitoring the transactions and collecting the financial data of American consumers and businesses. This bill is a necessary step in building those barriers.”

On January 23 New York’s Department of Financial Services issued guidance warning cryptocurrency custody providers not to commingle customer assets with their own assets or use those assets for anything other than safekeeping.

The Bank for International Settlements published a paper titled “Addressing the risks in crypto: laying out the options,” which states that central banks should develop plans to contain, regulate, or ban cryptocurrency activity in order to prevent cryptocurrency contagion.

According to an annual report from Chainalysis on January 12, the total cryptocurrency value received by illicit addresses reached $20.1 billion in 2022, a record high. This is up about 10% from 2021.

On January 11 five major U.K. associations announced that they have formed an alliance, the U.K. Forum for Digital Currencies, which will seek to help establish better policies within the crypto space. The members of the group include the City of London Corporation, Digital Pound Foundation, The Payments Association, and lobbying groups TheCityUK and UK Finance.

On January 10 Nikhil Wahi, the brother of a former Coinbase Global Inc. employee, was sentenced in New York federal court to 10 months in prison for his role in what prosecutors say is the first cryptocurrency insider trading scheme. He admitted last year to profiting from confidential information that his brother obtained about assets that would be listed on the exchange, and prosecutors say this knowledge allowed him to gain almost $900,000 in profits.

Sens. Elizabeth Warren (D-MA) and Ron Wyden (D-OR) sent a letter on January 25 calling for the Public Company Accounting Oversight Broad to utilize its authority to crack down on reviews of lightly regulated digital asset businesses that might give consumers false confidence. The letter says, “When PCAOB-registered auditors perform sham audits — even for firms that may lay outside of the PCAOB’s jurisdiction — they tarnish the credibility of the PCAOB and undermine confidence in the PCAOB-registered auditors that investors and the public rely on when making investment decisions.”

On January 9 Sens. John Hickenlooper (D-CO), Thom Tillis (R-NC), Elizabeth Warren (D-MA), and Cynthia Lummis (R-WY) sent a letter to U.S. Bankruptcy Court Judge John Dorsey calling for an independent examiner in the FTX bankruptcy case. They cited a potential conflict with the law firm Sullivan & Cromwell leading the exchange’s investigation after it had previously advised the company. The letter calls for a “strong, objective, and disinterested examiner” because the collapse of FTX is “simply too large and too important to be left to an internal investigation.” Update: January 11 -- The judge in the FTX bankruptcy case said that the bipartisan letter sent by four U.S. senators this week calling for an independent examiner is “inappropriate ex parte communication.” He stated that “I will make my decisions on the matters referred to in the letter based only upon admissible evidence and the arguments of parties and interest presented in open court” and that the letter “will have no impact whatsoever on my decisions in this case which will only be based upon the facts and law presented by the parties." The judge also ruled on January 11 that a list of creditors for FTX will remain sealed for at least another three months.

National Economic Council chief Brian Deese, White House Office of Science and Technology Policy director Arati Prabhakar, Council of Economic Advisors chair Celicia Rouse, and National Security Advisor Jake Sullivan released a statement on January 27 announcing that the Biden administration will unveil priorities for digital assets research and development in the coming months. They stated that agencies should continue to ramp up enforcement and issue new guidance for cryptocurrencies, and called for Congress to expand regulators’ authority to prevent misuse of customer assets. The announcement also says that the administration is planning to fund the research and development of digital asset technology and is seeking public input on how to do so. The public has until March 3 to provide input.