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Tuesday, November 2, 2021
Caution: The controller is coming
A lot is happening in the fast-paced world of cryptocurrency today, and two trends that have been highlighted over the last few days underscore why regulators are trying to stay ahead of developments in the sector – although some believe they are already behind.
While bitcoin absorbs the most oxygen in the cryptocurrency world, there are other digital currencies that investors and policy makers have just begun to turn their heads on. Last week, with market participants gripped by the emergence of Shiba Inu (SHIB), another memecoin based on the hugely popular “Squid Game” Netflix series came from nowhere.
Within a few days, the squid coin went to the supernova – then crashed and burned as developers tore the rug out of hopeful crypto-fortune hunters. To creep a sentence from that chef from Seinfeld, “no soup for you.”
SHIB’s sudden rise and the corresponding drop in squid could not have come at a more favorable time. On Monday, the US government issued a long-awaited set of recommendations on how regulators and legislators should treat stablecoin, a part of the digital currency market where values are pegged to fiat currencies such as US dollars or shorter-term securities.
Yahoo Finance’s Jennifer Schonberger, who has been pursuing this story for several weeks, noted that the recommendations between agencies “are intended to limit risks to the financial system” and that regulators are urging Congress to mandate that issuers “be supervised by banks” by the Federal Reserve and the Currency Controller. “
As might be expected, crypto players like the Chamber of Digital Commerce (who also spoke with Schonberger last week) are pushing back against the idea that an asset whose existence is based on being stable could pose a systemic risk.
Other market participants such as Circle co-founder, CEO and chairman Jeremy Allaire see the writing on the wall and will at least make sure they are given the opportunity to choose the ink.
“We fully support the call for Congress to act and establish federal banking supervision for stablecoin issuance,” Allaire said in a statement.
“The rapid scaling and strategic significance of this for the competitiveness of the dollar in the age of cryptocurrencies and blockchains is critical. decade, “he added.
Given all that has happened in the world, true-believing crypto- “hodlers” can be forgiven for believing that this is just another state power grab. But the central question of regulation revolves around the fact that cryptocurrency, for better or worse, becomes much more than just an asset class.
The proliferation of products such as exchange traded funds, stack coins and the like creates an ecosystem where people can trade digital coins, borrow and lend against them and make transactions denominated in the cryptocurrency they choose.
It creates a dynamic that Acting Currency Controller Michael J. Hsu said on Monday was “equal measures awe-inspiring and disturbing. Although the emerging risks may be mostly trade-related today, the risks tomorrow will be much broader than that, and it adds us as regulators to be strategic in how we approach this and think ahead, “he said in a statement.
“I fully support the recommendations of today’s newspaper. Stablecoins need federal oversight to grow and develop safely,” Hsu added.
And in a universe where cryptocurrencies have emerged (a recent report by Morgan Stanley put them at 10,000 and growing), it’s not hard to see why regulators want to appear proactive instead of reactive.
“Cryptocurrency companies are creating a new system of payments and transactions that competes with traditional financing,” analysts at Morgan Stanley wrote last week in a lengthy report.
“As the interest of institutional investors intensifies, the cryptocurrency regime with leveraged price increases is moving towards a regulatory regime,” the bank added.
The Stablecoin market itself is worth an estimated $ 135 trillion of the $ 2.5 trillion cryptocurrency market. And with both large and small investors gathering in crypto – and the broader market that seems more frothy every day, the federal government would probably prefer to look overzealous than sleep at the wheel when the inevitable case of crime and / or meltdown occurs.
By Javier E. David, editor at Yahoo Finance. Follow him at @Teflongeek
What to see today
6:40 ET: Marathon Petroleum (MPC) is expected to report adjusted earnings of 70 cents per share with a turnover of 25.65 billion.
6:45 ET: Estee Lauder (THAT) is expected to report adjusted earnings of $ 1.69 per share with revenue of $ 4.25 billion
6:45 ET: Pfizer (PFE) is expected to report adjusted earnings of $ 1.08 per share with revenue of $ 22.68 billion
6:55 ET: Under armor (UAA) is expected to report adjusted earnings of 15 cents per share with revenue of $ 1.48 billion
6:55 ET: Groupon (GPN) is expected to report adjusted earnings of $ 2.15 per share. share with a turnover of $ 2.00 billion
7:00 AM ET: Bloomin ‘Brands (BLMN) is expected to report adjusted earnings of 54 cents per share with a turnover of 1.04 billion
7:00 AM ET: Apollo Global Management (APO) is expected to report adjusted earnings of $ 1.10 per share with revenue of $ 1.05 billion
7:00 AM ET: ConocoPhillips (COP) is expected to report adjusted earnings of $ 1.52 per share on revenue of $ 10.82 billion
8:00 AM ET: Ralph Lauren (RL) is expected to report adjusted earnings of $ 2.00 per share with revenue of $ 1.47 billion
16:00 ET: Akamai (MY BROTHER) is expected to report adjusted earnings of $ 1.39 per share. share with a turnover of $ 852.27 million.
16:00 ET: Chesapeake Energy (CHK) is expected to report adjusted earnings of $ 1.68 per share. share with a turnover of $ 945.75 million.
16:00 ET: Amgen (AMGN) is expected to report adjusted earnings of $ 4.27 per share on revenue of $ 6.69 billion
16:00 ET: Match group (MTCH) is expected to report an adjusted earnings of 57 cents per. share with a turnover of 802.31 mill. USD
16:05 ET: Mondelez (MDLZ) is expected to report adjusted earnings of 70 cents per share with revenue of DKK 7.06 billion
16:05 ET: T Mobile (TMUS) is expected to report adjusted earnings of 51 cents per share with revenue of DKK 20.13 billion.
16:05 ET: Activision Blizzard (THAT WE) is expected to report adjusted earnings of 70 cents per share with revenue of DKK 1.88 billion
16:05 ET: Zillow Group (ZG) is expected to report adjusted earnings of 16 cents per share with revenue of DKK 2.01 billion
16:05 ET: Lift (LIFT) is expected to report adjusted losses of 3 cents per share on revenue of $ 862.00 million.
16:05 ET: Devon Energy (DVN) is expected to report adjusted earnings of 93 cents per share with revenue of DKK 2.97 billion
16:10 ET: Coursera (RIGHT) is expected to report adjusted losses of 9 cents per share at a turnover of $ 108.42 million.
it is Election day in New York City, Virginia, New Jersey and elsewhere in the country. The most watched competition is in Virginia, where the governor’s race may depend on the issue of education, and the outcome may have national consequences.
over in Glasgow, President Biden is set to end its appearance on UN Climate Change Conference (COP26) Today. Before returning to Washington DC, Biden has scheduled several meetings and a press conference.
European markets mingled ahead of central Fed meeting [Yahoo Finance UK]
FOMC Preview: Can the Fed Avoid Scaring Markets When Preparing for a Downsizing? [Yahoo Finance]
Amazon-backed EV startup Rivian aims for a valuation of over $ 53 billion in US listing [Reuters]
Biden’s climate plan aims to reduce methane emissions [AP]
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