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.
INITIAL LIBRA COLLECTION INCLUDES USD, EURO, YEN: Facebook (FB) told U.S. senators that the initial collection of currencies that will support its Libra cyrptocurrency will likely include the U.S. dollar, euro, yen, U.K. pound and Singapore dollar, Bloomberg's Joe Light reported Monday. The list responds to concerns from U.S. Senator from Virginia Mark Warner that China may push the Libra Association to include the yuan in the new digital currency, which Facebook and over two dozen partners are currently working on. The company said that the Libra Association would ultimately determine whether or not to include the yuan in the Libra basket, rather than Facebook alone. Additionally, The Libra Association announced on Wednesday it will pursue a license as a payment system with lead supervisory authority under the Swiss Financial Market Supervisory Authority. The Association has submitted a request for a ruling to clarify the regulatory status of the Libra Association and the Libra coin and intends to file an application for a license as a payment system. Meanwhile on Wednesday, Switzerland’s FINMA said Libra could face strict rules that usually apply to banks on top of anti-money laundering laws. “The Libra Association asked FINMA for an assessment of how the supervisory authority would classify the planned Libra project including the issuance of a ‘stable coin’ under Swiss supervisory law,” the agency said, adding, “The highest international anti-money laundering standards would need to be ensured throughout the entire ecosystem of the project…Under the FMIA, all additional services that increase the risks of a payment system must be subject to corresponding additional requirements…The additional requirements would be based on recognized standards for similar activities in the financial markets and would need to reflect the dimension of the project. For bank-like risks, for example, bank-like regulatory requirements would apply. A Swiss payment system license would thereby permit a combination of the strengths of banking and infrastructure regulation.”
LIBRA FACES MORE SCRUTINY: France has warned it will block development of Libra in Europe because it would put the sovereignty of governments at risk, CNBC's Elizabeth Schulze reported Thursday. "All these concerns around Libra are serious. So I want to say this with a lot of clarity: In these conditions, we cannot authorize the development of Libra on European soil," French Finance Minister Bruno Le Maire said. Le Maire also said the EU should create a common set of rules for cryptocurrencies to counter risks posed by Libra, Reuters Francesco Guarascio reported Friday. Libra could cause risks to consumers, financial stability and even “the sovereignty of European states," Le Maire said, repeating his push to block Libra in Europe. Meanwhile, European Central Bank board member Benoit Coeure said EU regulators will establish a high bar on regulatory approvals for cryptocurrencies in Europe and a common set of rules are necessary for regulation amid financial stability concerns, Reuters’ Guarascio reported Friday. Additionally, U.S. Under Secretary of Terrorism and Financial Intelligence Sigal Mandelker said Libra must meet the highest standards to combat money laundering and terrorism funding from the get-go, Reuters’ Brenna Hughes Neghaiwi reported Tuesday. The Financial Action Task Force, the global anti-money laundering watchdog, also is closely monitoring developments on Libra, Reuters' Tom Wilson reported Tuesday. "We want to make sure that if there are significant risks, they need to be addressed," said FATF president Xiangmin Liu.
DORSEY SAYS BITCOIN ‘NOT FUNCTIONAL’: Twitter (TWTR) and Square (SQ) CEO Jack Dorsey, a bitcoin advocate, said the cryptocurrency is “not functional as a currency” as of right now, CNBC’s Catherine Clifford reported Monday. “The peaks and troughs are like an investment asset and are equivalent to gold,” Dorsey said, adding, "What we need to do is make it more usable and accessible as a currency, but it's not there yet." The remarks come as Square looks to hire five engineers to focus on making the crypto ecosystem better. Additionally, Square which lets users trade Bitcoin on its Cash app, will soon accommodate stock trading, Bloomberg’s Julie Verhage reported Thursday. While the exact date of its launch is unknown, employees began testing the new feature in recent weeks.
IDEANOMICS APPOINTS CFO: Ideanomics (IDEX) announced Tuesday the appointment of Conor McCarthy as CFO effective immediately. McCarthy will oversee Ideanomics global financial operations, including financial management, treasury, tax, budgeting, financial planning, reporting, and compliance. Most recently, McCarthy was CFO for OS33, a private equity backed FinTech SaaS platform.
DPW ACQUIRES RIGHTS TO SPONSOR LICENSE TO ETF INDEX: DPW Holdings (DPW) announced Wednesday that is has acquired the rights to be the sponsor of the license to the index to an exchange-traded fund. The ETF Index holds a basket of global equities that are placed into one of four categories based on how they relate to the theme of blockchain technology. The four categories that make up the Indices underlying holdings are cryptocurrency as payment, mining enablers, solutions providers and adopters. DPW CEO Darren Magot said, “We are very excited to be the sponsor of this pioneering AI-backed ETF Index focused on blockchain investments. We have been telling our shareholders over the past 6 months that we would be building out our Financial Services sector. This is the first in a series of transactions that are planned for DPW Financial Group.”
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, 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 dropped roughly 4.7% this week to $10,330 in U.S. dollars, according to TradeBlock.
