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.
FACEBOOK WON’T IMMEDIATELY PROFIT FROM LIBRA: In prepared testimony for the Senate Banking Committee, David Marcus, who oversees Facebook's (FB) blockchain efforts, said the company is not planning to launch Libra until regulatory concerns are "fully addressed," Reuters' Pete Schroeder reported Monday. Marcus also said, "The Libra Association, which will manage the Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena.” Additionally in the prepared testimony, Marcus said the company will not immediately profit from Libra. "Our first goal is to create utility and adoption, enabling people around the world -- especially the unbanked and underbanked -- to take part in the financial ecosystem," Marcus said. He added Facebook won't make money in the early phases of Calibra and will ensure that "customers' account and financial information will not be shared with Facebook and as a result cannot be used for ad targeting."
LAWMAKERS SAY FACEBOOK NOT TO BE TRUSTED: Democratic and Republican lawmakers said that Facebook's track record of what they viewed as untrustworthiness should bar it from rolling out a cryptocurrency at a Senate hearing, Reuters' Pete Schroeder and Katie Paul reported Tuesday. "Facebook has demonstrated through scandal after scandal that it doesn't deserve our trust," Democratic senator Sherrod Brown said. "We'd be crazy to give them a chance to let them experiment with people's bank accounts." Brown added during questioning that he believed it was "delusional" to think anyone would trust the social media giant with their money. "I don't trust you guys," said Republican Senator Martha McSally, "Instead of cleaning up your house you are launching into a new business model."
MNUNCHIN SAYS ‘SERIOUS CONCERNS’ ABOUT LIBRA: Treasury Secretary Steven Mnuchin, in a Monday press conference, said the Treasury department has "serious concerns" that Libra could be misused. The department has told Facebook and bitcoin companies that they must enact safeguards against illicit use and money laundering. Asked about President Trump's previous criticisms about Facebook, Mnuchin said the president has "legitimate" concerns about Libra and other cryptocurrencies but the president would not target any specific provider and providers will be treated fairly and equally.
FDPIC HASN’T HEARD FROM FACEBOOK: David Marcus said in the U.S. Senate hearing that authorities in Switzerland will oversee data and privacy protections for its new cryptocurrency. However, a spokesperson for the Federal Data Protection and Information Commissioner said it has not yet been contacted by Facebook, CNBC's Elizabeth Schulze reported Tuesday. Hugo Wyler, head of communication at the FDPIC, said in a statement to CNBC, "We have taken note of the statements made by David Marcus, Chief of Calibra, on our potential role as data protection supervisory authority in the Libra context. Until today we have not been contacted by the promoters of Libra." He added, "We expect Facebook or its promoters to provide us with concrete information when the time comes. Only then will we be able to examine the extent to which our legal advisory and supervisory competence is given. In any case, we are following the development of the project in the public debate."
OVERSTOCK SAYS WILL SELL RETAIL ‘IF IT MAKES SENSE’: Overstock.com (OSTK) released a letter to shareholders from Chief Executive Officer Patrick Byrne on Monday, which read in part: "Recent announcements have been substantial. Rather than wait until our earnings release is published to discuss these events, I write now to give shareholders an explanation of the significance of these events within the context of a general SITREP on certain aspects of Overstock.com…I have made many mistakes over the years, most recently, trying to go toe-to-toe on growth with a copycat firm which by the end of 2019 will have lost $3B, in its corporate history and shows no sign of slowing) Yet I got this one right. Years ago, we saw that security tokens were potentially the killer application of the blockchain space, and we moved heaven and earth to build what was needed. We bought the right foundational companies, SpeedRoute and PRO Securities. When it came time, we carved an army of technologists out of Overstock to build everything that tZERO needed, spent tens of millions of dollars on lawyers and regulatory work, and are now open for business. Trading will be infinitesimal to begin with, but I think that in the race to seize a share of that $900B value, or whatever value security token exchanges turn out to have, tZERO has the pole position… The core earning power of our retail business has snapped back more quickly than I expected…We will sell the Retail business if it makes sense and we get a good offer for a good home for it. Otherwise we will operate the retail business as though we are going to hold it forever. We will run it with a goal to maximize profit, which will fund our world-changing blockchain innovations, while we leverage its significant traffic to introduce our consumer-facing blockchain products to the world.” On Tuesday, Maxim analyst Allen Klee resumed coverage of Overstock.com with a Buy rating, saying he expects the company's Retail e-commerce segment to shift to EBITDA profitability and for its blockchain tZero assets to gain "multiple product approvals" this year. The analyst notes that his price target of $34 is reduced from $75 under prior coverage and reflects expectations of a slower pick-up for tZERO as well as greater Medici projected losses, but believes that the blockchain investment has the potential to be a significant earnings contributor in the longer term.
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, 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 dropped roughly 11% this week to $10,336 in U.S. dollars, according to TradeBlock.
Bitcoin
+ (+0.00%)
Bitcoin
+ (+0.00%)
Ticker changed to META
+0.56 (+0.28%)
OSTK
+
AMD
+0.03 (+0.09%)
Nvidia
+1.1 (+0.65%)
Ault Global Holdings
-0.0068 (-3.45%)
Eastman Kodak
-0.01 (-0.41%)
Ideanomics
-0.01 (-0.61%)
Riot Platforms
-0.01 (-0.49%)
Pareteum
+0.005 (+0.17%)
Srax
+ (+0.00%)