Facebook exec says Zuckerberg not giving up on Libra as study finds bitcoin price manipulation
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.
ZUCKERBERG NOT GIVING UP ON LIBRA: Kevin Weil, vice president of Facebook's (FB) currency venture Calibra, spoke at Web Summit in Lisbon and acknowledged that some people won't be "comfortable" using a financial product built by Facebook but said CEO Mark Zuckerberg isn't giving up, even if it takes decades, Business Insider's Julie Bort reported Tuesday. Zuckerberg remains committed to building new technology that would allow people to send money over Messenger and WhatsApp, Weil said, downplaying both the loss of partners and the grilling Zuckerberg endured at Congressional hearing on the topic last month. Additionally, The Australian reported Tuesday that Australian financial regulators have agreed to use their formal powers to press Facebook to reveal its plans for the cryptocurrency after failing to address watchdog concerns. In an email to other regulators, Office of the Australian Information Commissioner deputy commissioner Elizabeth Hampton said, “If we don’t get answers to these questions from the U.S.-based team we will then need to consider whether formal powers are exercised where available.” The move comes after international regulators expressed concerns Libra could disrupt the financial system, hurt Facebook users and aid in money laundering.
BITCOIN PLAYER MANIPULATED PRICE: According to a new study, an unknown "player" using a single account at cryptocurrency exchange Bitfinex between helped run up the price of bitcoin to a "peak of nearly $20,000 two years ago,” The Wall Street Journal’s Paul Vigna reported Monday. The study, which was accepted for publication by the Journal of Finance, was written by University of Texas finance professor John Griffin and Ohio State University finance professor Amin Shams and reviewed the period between March 2017 and March 2018. The manipulator used tether to increase demand for bitcoin causing the price to jump and the study suggests Bitfinex executives either knew of the scheme or were aiding it.
HONG KONG SFC PUBLISHES CRYPTO RULES: The Hong Kong Securities and Financial Commission issued a paper on the regulation of virtual asset trading platforms on Wednesday which would allow exchanges to receive an operating license. The rules are based on the standards the SFC expects for conventional securities brokers and exchanges do not need an SFC license to operate if they do not trade products defined as a security. The rules require an exchange that wants to be licensed to provide services to professional investors only, have an insurance policy on assets and use an external market surveillance mechanism. In a separate statement on Wednesday, the SFC cautioned investors about buying bitcoin futures in Hong Kong. On Thursday, OSL, a digital asset platform and member of BC Group, submitted the first application for a digital asset trading license under the SFC’s new digital asset licensing regime.
ECB WORKS ON DIGITAL CURRENCY: European Central Bank senior officials said progress on the feasibility of a virtual currency backed by the bank may be made in the coming months, but warned the project faces hurdles and is for the long term, Reuters’ Francesco Guarascio reported Friday. French Finance Minister Bruno Le Maire said, “The fact that it is for the long term does not prevent us from working and having results next year.” Additionally, an ECB official said the bank was already developing the technical aspects of a cryptocurrency and would present its finding to European Union governments soon.
NOVOGRATZ LOWERS EXPECTATION: Cryptocurrency investor Mike Novogratz has lowered his expectation after prices plummeted last year, but said he remains a long-term supporter of the space, Reuters’ Gertrude Chavez-Dreyfuss and Ross Kerber reported Tuesday. “I think ambitions have been tempered a little bit by reality,” said Novogratz, chief executive officer of Galaxy Digital. “I think the timing is going to take longer than people had hoped. But it’s going to happen.” Novogratz, who admitted he was probably “too greedy” as Galaxy Digital used hedging strategies that did not fully protect investors, said he expects digital currencies will play an increasing role citing Facebook’s libra and other efforts to integrate blockchain technology into financial services.
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 (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 4.1% this week to $8,732 in U.S. dollars, according to TradeBlock.