EU says no Libra-style crypto without rules as WisdomTree launches first bitcoin ETP
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.
EU MINISTERS SAY NO PRIVATE CRYPTO WITHOUT RULES: European Union finance ministers have agreed that private cryptocurrencies like Facebook’s (FB) Libra should not be allowed until risks they pose are clearly addressed. In a Thursday joint statement, the ministers said, “So-called ‘stablecoins’ may present opportunities in terms of cheap and fast payments, especially cross-border payments. At the same time, these arrangements pose multifaceted challenges and risks related for example to consumer protection, privacy, taxation, cyber security and operational resilience, money laundering, terrorism financing, market integrity, governance and legal certainty. When a ‘stablecoin’ initiative has the potential to reach a global scale, these concerns are likely to be amplified and new potential risks to monetary sovereignty, monetary policy, the safety and efficiency of payment systems, financial stability, and fair competition can arise. As underlined by the recent report of the G7 working group dedicated to these issues, global ‘stablecoin’ projects and arrangements should not come into operation until all of these risks and concerns are properly addressed. We reaffirm our willingness to appropriately tackle the challenges raised by these initiatives on the basis of an EU common understanding and coordinated approach. These initiatives should not undermine existing financial and monetary order as well as monetary sovereignty in the European Union.”
WISDOMTREE LAUNCHES FIRST BITCOIN ETP: WisdomTree (WETF) announced Tuesday the launch of its first cryptocurrency product, a physically backed Bitcoin exchange-traded product. The WisdomTree Bitcoin ETP listed on SIX, the Swiss Stock Exchange, with a total expense ratio of 0.95%. The company said, “The WisdomTree Bitcoin ETP provides investors with a simple, secure and cost-efficient way to gain exposure to Bitcoin while utilizing the best of traditional financial infrastructure and product structuring. As such, the ETP allows investors to access Bitcoin without the need to hold the cryptocurrency directly, store private access keys or interact with the blockchain or digital currency infrastructure in any way. Investors also get access to institutional grade storage solutions without needing to set it up with a custodian themselves.”
EX-MORGAN STANLEY DEVELOPERS LAUNCH CRYPTO DERIVATIVES EXCHANGE: Former software developers from Morgan Stanley (MS) launched Phemex, a cryptocurrency exchange that looks to execute trades in under a millisecond for both retail and institutional investors, Reuters’ Gertrude Chavez-Dreyfuss reported Wednesday, citing co-founder Jack Tao. Tao has formed a team of over 30 senior developers, including eight former executives from Morgan Stanley’s Benchmark Execution Strategies and enterprise application infrastructure teams. Tao said Phemex can handle 300,000 transactions per second and can deliver an order entry and response time of less than 1 millisecond. He added the exchange offers up to 100 times leverage to both retail and institutional investors in bitcoin, ethereum and XRP contracts.
ECB CAN ACCELERATE CRYPTO PLANS IF CASH USE DECLINES: A cryptocurrency backed by the European Central Bank may be necessary if payments in Europe continue to be too costly and potential adoption could be accelerated by signs of lower cash usage, Reuter’s Francesco Guarascio reported Wednesday, citing a confidential ECB document. “If industry efforts fall short of developing an innovative and efficient pan-European payment solution, the social need for it could potentially be met by issuing a central bank digital currency,” said the document, adding “signs of a future decline in cash usage could be a catalyst in accelerating central bank efforts in the area of central bank digital currency.” The paper also said a public digital currency would have “far-reaching implications” and the possible fallout needs to be “carefully assessed”.
NORDEA WINS CASE TO BAN BITCOIN TRADES: Nordea Bank (NRDBY) is allowed to ban its staff from investing in bitcoin and other digital currencies on their own time, Bloomberg’s Christian Wienberg reported Tuesday, citing the court ruling. The risks associated with the assets justify the restriction, according to the verdict. The move comes after a Denmark union filed a suit against Nordea after the bank implemented the ban telling staff in January that “the risks were too high” due to lack of regulation in the crypto market.
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 fell roughly 5.5% this week to $7,380 in U.S. dollars, according to TradeBlock.