As bitcoin, ethereum and other cryptocurrencies get increasing attention from investors, Wall Street and its traditional banks continue to adjust to the shift. Catch up on this week's top stories highlighting the intersection of these old guard and new school areas of finance with this recap compiled by The Fly.
TRUMP SAYS CRYPTO ISN’T MONEY: U.S. President Donald Trump tweeted on Thursday: "I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook (FB) Libra's ‘virtual currency’ will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!"
FED CHAIR VOICES CONCERNS OVER FACEBOOK’S LIBRA: In Wednesday testimony to the House's Committee on Financial Services, Federal Reserve Chair Jerome Powell told Committee Chair Maxine Waters that the central bank has set up a working group to look into Facebook's cryptocurrency, Libra. Powell stated, "We did actually have a meeting with representatives of Facebook a couple of months before the announcement...We do support responsible innovation in the financial services industry as long as the associated risks are appropriately identified and managed...Libra raises many serious concerns regarding privacy, money laundering, consumer protection and financial stability. These are concerns that should be thoroughly and publicly addressed before proceeding." On Thursday, Powell said the Fed does not have oversight over Facebook and over Libra and that a collection of regulators must come to together to discuss the company's plans in a thoughtful manner. Additionally the Fed Chair said it’s “too early to say” if Facebook is “too big” to build a digital currency as the central bank is “at the very beginning of assessing” the company’s plans.
BOE’S CARNEY SAYS LIBRA MUST BE ‘ROCK SOLID’: Bank of England Governor Mark Carney said Facebook’s Libra must be “rock solid” from the start, Bloomberg’s Alastair Marsh reported Thursday. “If it’s successful it becomes systemic because it would involve a very large number of users and if you’re a systemic payments system it’s ‘five-sigma,’’’ said Carney. “You have to be on all the time, you can’t have teething issues, you can’t have people losing money out of their wallets. The standards are in a different zip code, to use the American term, to the standards in other technologies.’’ Carney said Facebook’s plans pose a “very broad range of issues” and that the Group of Seven central bankers, including the BOE, were looking to understand the proposal and evaluate both the risks and opportunities. “This is not learn on the job stuff,’’ he said. “It’s got to be rock solid right from the start, or it’s not going to start.’’
JAPANESE CRYPTO EXCHANGE HACKED: Japanese cryptocurrency exchange Bitpoint halted all services following a hack in which roughly Y3.5B, or $32M, in Ripple and other digital currencies were stolen, Bloomberg’s Lily Nonomiya reported Friday. The Remixpoint-owned exchange announced that approximately Y2.5B of the lost funds belonged to customers while Bitpoint held the rest and the virtual currencies were stolen from a hot wallet that contained five cryptocurrencies including bitcoin and bitcoin cash. The hack comes after Japan’s Financial Services Agency ordered crypto operators, including Bitpoint, to improve internal controls following the 2018 hack of Coincheck.
BLOCKSTACK HOLDS FIRST SEC-QUALIFIED TOKEN OFFERING: Decentralized computing platform Blockstack announced Wednesday that Blockstack PBC’s token offering had been qualified by the Securities and Exchange Commission under Regulation A+, marking the first time a crypto token offering has received SEC qualification. On Thursday, the company officially opened the Stacks token offering, offering up to $28M of Stacks tokens in a cash sale. The general offering price was 30c per token, and the voucher program price was 12c per token. The company said, ”The token offering will fuel further growth of the Blockstack decentralized computing network, allowing the ecosystem to continue working toward a future where violations of user trust are impossible and where value accrues with the users and the value creators, and not just centralized corporations. By giving everyone, not just accredited investors, the opportunity to participate in the Blockstack network, we can accelerate the growth of an open, a user-controlled internet.”
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia (NVDA) in select research. Overstock (OSTK), DPW Holdings (DPW), Kodak (KODK), Ideanomics (IDEX), Riot Blockchain (RIOT), Pareteum (TEUM) and Social Reality (SRAX) are other stocks that have been touted, or promoted themselves, as a way to play the crypto theme.
PRICE ACTION: As of time of writing, bitcoin rose roughly 2.8% this week to $11,688 in U.S. dollars, according to TradeBlock.
