Facebook pushes forward with Libra as global watchdog warns on stablecoins
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 STILL BACKS LIBRA: Facebook's (FB) Libra head David Marcus told a panel at the International Monetary Fund conference that he still expects to get 100 lenders and financial firms on board with the digital currency project once it addresses regulatory issues, Reuters' Michelle Price reported Wednesday. "It will take time for us to address all of the regulatory concerns that were raised and it's our duty and our responsibility to come with answers to all of these questions," Marcus said. "I think once we've done this then I think we'll see more banks and traditional financial services firms join the effort." The news comes after several high-profile partners abandoned the project, including Visa (V), MasterCard (MA), PayPal (PYPL), Booking (BKNG), and eBay (EBAY). Additionally, U.S. Federal Reserve Governor Lael Brainard said Libra must overcome a "core set of legal and regulatory challenges" before getting involved in a single payment, Reuters' Pete Schroeder reported Wednesday. Brainard said that central bank's efforts to conduct monetary policy could be "complicated" by broad adoption of an external currency like Libra, though she indicated that the Fed is not in any rush to issue its own digital currency. "It should be no surprise that Facebook's Libra is attracting a high level of scrutiny from lawmakers and authorities," she said. "Libra, and indeed any stablecoin project with global scale and scope, must address a core set of legal and regulatory challenges before it can facilitate a first payment." The Wall Street Journal's AnnaMaria Andriotis, Peter Rudegeair and Liz Hoffman also reported Wednesday that JPMorgan (JPM) and Goldman Sachs (GS) rejected any involvement in Libra because of fears it would be used by criminals. The investment banks declined Facebook's invitation to join Libra because of worries that cryptocurrency could be used to violate money laundering and sanctions laws.
WATCHDOG WARNS ON STABLECOINS: The Financial Action Task Force said stablecoins could cause mass adoption of cryptocurrencies and peer-to-peer transfers hindering efforts to uncover and crack down on money laundering and terror financing, Reuter’s Tom Wilson reported Friday.“If stablecoins were to become widespread, it could potentially lead to new risks regarding money laundering and terrorist financing,” FATF president Xiangmin Liu said. “It is our job to ensure the new risks in connection with stablecoins will be adequately addressed.” Additionally, a G7 working group said stablecoins could hurt the world’s monetary system and financial stability and should not be permitted to launch until the risks are addressed, Reuter’s Tom Wilson and Balazs Koranyi reported Thursday. “The G7 believes that no global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks” are addressed, the task force said, “Private sector entities that design stablecoin arrangements are expected to address a wide array of legal, regulatory and oversight challenges and risks.”
TELEGRAM CAUTIONS ON LOSSES: Telegram Group warned investors that helped fund the creation of its digital token Gram that they’ll only get 77% of their money returned unless they agree to delay the launch of the cryptocurrency for six months, Bloomberg’s Anna Baraulina and Ilya Khrennikov reported Thursday. The company raised $1.7B in 2018 for the creation of Gram and was planning to deliver the tokens to investors by October 31. However, the process was halted by the U.S. Securities and Exchange Commission which claimed Gram is a security that isn’t properly registered. In a letter to investors, Telegram’s Pavel Durov said if investors don’t approve the deadline extension to April 30, their agreements will be terminated and they will be repaid up to roughly $1.3B of the amount invested.
MLG, ST. KITTS AND NEVIS SIGN MOU: Overstock.com (OSTK) announced Monday that Medici Land Governance, its blockchain subsidiary focused on land administration, signed a Memorandum of Understanding with the Government of St. Kitts and Nevis to develop a cadaster system incorporating high-resolution aerial imagery of St. Kitts' parcels to be integrated into their current land administration system. For this project, MLG will capture and incorporate high-resolution aerial imagery into a cadaster system that St. Kitts can integrate with its land administration system.
SRAX PARTNERS WITH ZAPGROUP: SRAX (SRAX) announced Monday that it partnered with ZAPGroup, a point-of-sale retail loyalty program based in the Philippines. Through the co-marketing partnership, ZAP will encourage its users to download and join BIGtoken, and BIGtoken will prompt its existing user base to join ZAP. Users who join both platforms and agree to share their opt-in ZAP data with BIGtoken will receive additional points, redeemable for select products from a ZAP retail partner.
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 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 $7,937 in U.S. dollars, according to TradeBlock.