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Tuesday, November 2, 2021

Warning: the regulator is coming

There’s a lot going on in the fast-paced world of cryptocurrency these days, and two trends highlighted over the past few days highlight why regulators are trying to get ahead of industry developments – though some believe they are. they are already late.

While bitcoin absorbs the most oxygen in the crypto world, there are other digital coins that investors and policymakers are just starting to understand. Last week, as market players were mesmerized by the rise of Shiba Inu (SHIB), another memecoin based on the hugely popular Netflix series “Squid Game” came out of nowhere.

Within days, the squid room turned into a supernova – then crashed and burned as the developers pulled the rug out of aspiring crypto fortune hunters. To use a phrase from this Seinfeld chef, “no soup for you”.

The sudden increase in SHIB and the proportional drop in squid could not have come at a more auspicious time. On Monday, the U.S. government released a long-awaited set of recommendations on how regulators and lawmakers should treat stablecoins, a slice of the digital coin market where values ​​are tied to fiat currencies like the U.S. dollar or coins. shorter-dated securities.

Jennifer Schonberger of Yahoo Finance, who has been pursuing this story for weeks, noted that the interagency recommendations “aim to reduce the risk to the financial system” and that regulators ask Congress to require issuers “to become banks subject to surveillance “. by the Federal Reserve and the Comptroller of the Currency.

As you might expect, crypto players like the Digital Chamber of Commerce (which also spoke to Schonberger last week) are pushing back against the idea that an asset whose very existence is based on stability could present a systemic risk.

Other market players, like Jeremy Allaire, co-founder, CEO and president of Circle, see the writing on the wall and at least want to make sure they choose the ink.

“We fully support the call for Congress to act and establish federal banking supervision for the issuance of stablecoins,” Allaire said in a statement.

“The rapid scale-up and the strategic importance of this to the competitiveness of the dollar in the age of crypto and blockchains is essential. This is a huge step forward in the acceptance of stablecoins and paves the way for their adoption as a fundamental infrastructure for financial and economic activity over the next decade, ”he added. .

Considering everything that is going on in the world, crypto-believer “hodlers” can be forgiven for thinking this is just another government takeover. But the central question of regulation revolves around whether, for better or worse, cryptocurrency is becoming much more than just an asset class.

The proliferation of products such as exchange-traded funds, stablecoins and the like create an ecosystem in which people can trade digital coins, borrow and lend against them, and conduct transactions denominated in the crypto unit of their choice.

It creates momentum, which Acting Currency Comptroller Michael J. Hsu said on Monday as “both impressive and disturbing.” While the main risks may be mainly related to trading today, tomorrow the risks will be much broader than that and it is up to us as regulators to be strategic in how we approach this and anticipate ”, a he said in a press release.

“I fully support the recommendations of today’s document. Stablecoins need federal prudential oversight to grow and operate safely, ”Hsu added.

And in a universe where cryptocurrencies have mushroomed (a recent Morgan Stanley report put them at 10,000 and growing), it’s not hard to see why regulators want to appear proactive rather than reactive.

“Cryptocurrency companies are creating a new system of payments and transactions that rivals traditional finance,” Morgan Stanley analysts wrote last week in a lengthy report.

“As institutional investor interest intensifies, the crypto regime of leveraged price hikes is shifting to a regulatory regime,” the bank added.

The stablecoins market alone is worth around $ 135 billion in the $ 2.5 trillion crypto market. And with investors big and small cramming into crypto – and the wider market appearing more sparkling day by day – the federal government would probably rather look overzealous than fall asleep at the wheel when the inevitable. crime and / or collapse occurs.

Through Javier E. David, editor of Yahoo finance. Follow him on @Teflongeek

What to watch today

Economy

Earnings

Pre-marketing

  • 6:40 a.m. ET: Oil Marathon (MPC) expected to report adjusted earnings of 70 cents per share on revenue of $ 25.65 billion

  • 6:45 a.m. ET: Estee Lauder (EL) Expected to Report Adjusted Earnings of $ 1.69 per Share on Revenue of $ 4.25 Billion

  • 6:45 a.m. ET: Pfizer (PFE) Expected to Report Adjusted Earnings of $ 1.08 per Share on Revenue of $ 22.68 Billion

  • 6:55 a.m. ET: Under protection (UAA) Expected to Report Adjusted Earnings of 15 cents per Share on Revenue of $ 1.48 Billion

  • 6:55 a.m. ET: Groupon (GPN) Expected to Report Adjusted Earnings of $ 2.15 per Share on Revenue of $ 2.00 Billion

  • 7:00 am ET: Flourishing brands (BLMN) Expected to Report Adjusted Earnings of 54 cents a Share on Revenue of $ 1.04 Billion

  • 7:00 am ET: Global management of Apollo (APO) Expected to Report Adjusted Earnings of $ 1.10 per Share on Revenue of $ 1.05 Billion

  • 7:00 am ET: ConocoPhillips (COP) Expected to Report Adjusted Earnings of $ 1.52 per Share on Revenue of $ 10.82 Billion

  • 8:00 a.m.ET: Ralph Lauren (RL) Expected to Report Adjusted Earnings of $ 2.00 per Share on Revenue of $ 1.47 Billion

Post market

  • 4 p.m. ET: Akamai (AKAM) Expected to Report Adjusted Earnings of $ 1.39 per Share on Revenue of $ 852.27 Million

  • 4 p.m. ET: Chesapeake Energy (CHK) Expected to Report Adjusted Earnings of $ 1.68 per Share on Revenue of $ 945.75 Million

  • 4 p.m. ET: Amgen (AMGN) Expected to Report Adjusted Earnings of $ 4.27 per Share on Revenue of $ 6.69 Billion

  • 4 p.m. ET: Match group (MTCH) Expected to Report Adjusted Earnings of 57 cents per Share on Revenue of $ 802.31 Million

  • 4:05 p.m. ET: Mondelez (MDLZ) Expected to Report Adjusted Earnings of 70 cents per Share on Revenue of $ 7.06 Billion

  • 4:05 p.m. ET: T Mobile (TMUS) Expected to Report Adjusted Earnings of 51 cents a Share on Revenue of $ 20.13 Billion

  • 4:05 p.m. ET: Activision Blizzard (ATVI) Expected to Report Adjusted Earnings of 70 cents per Share on Revenue of $ 1.88 Billion

  • 4:05 p.m. ET: Zillow Group (ZG) Expected to Report Adjusted Earnings of 16 cents a Share on Revenue of $ 2.01 Billion

  • 4:05 p.m. ET: Lyft (LYFT) Expected to Report Adjusted Losses of 3 cents per Share on Revenue of $ 862.00 Million

  • 4:05 p.m. ET: Devon Energy (DVN) Expected to Report Adjusted Earnings of 93 cents a Share on Revenue of $ 2.97 Billion

  • 4:10 p.m. ET: Coursera (COURT) Expected to Report Adjusted Losses of 9 cents per Share on Revenue of $ 108.42 Million

Politics

  • He is Election day in New York, Virginia, New Jersey and elsewhere in the country. The most watched contest takes place in Virginia, where the governor’s race could hinge on the issue of education and the outcome could have national implications.

  • In Glasgow, President Biden is about to conclude its appearance at United Nations Climate Change Conference (COP26) today. Before returning to Washington DC, Biden scheduled further meetings and a press conference.

Top news

European markets mixed ahead of key Fed meeting [Yahoo Finance UK]

FOMC Snapshot: Can the Fed Avoid Scare Markets As It Prepares For A Cut? [Yahoo Finance]

Amazon-backed EV startup Rivian aims for more than $ 53 billion valuation when it IPO in the United States [Reuters]

Biden’s climate plan aims to cut methane emissions [AP]

Yahoo Finance Highlights

Walmart Hires On Average “Supply Chain Associates” For $ 20.37 An Hour

Former Barclays CEO Jes Staley is one of many business figures linked to Jeffrey Epstein

Airlines expect millions of passengers this holiday season

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