EU puts forth plan to regulate crypto as Gemini exchange expands to the UK
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 PLANS TO REGULATE CRYPTO: The European Commission put forth a plan on Thursday to regulate cryptocurrency, adopting a new Digital Finance Package, including digital finance and retail payments strategies and legislative proposals on crypto-assets and digital resilience. The Commission said, “Today's strategy aims to bring safe, fast and reliable payment services to European citizens and businesses. It will make it easier for consumers to pay in shops and make e-commerce transactions safely and conveniently. It seeks to achieve a fully integrated retail payments system in the EU, including instant cross-border payment solutions…The Commission has today proposed for the first time new legislation on crypto-assets. The ‘Regulation on Markets in Crypto Assets' will boost innovation while preserving financial stability and protecting investors from risks. This will provide legal clarity and certainty for crypto-asset issuers and providers. The new rules will allow operators authorised in one Member State to provide their services across the EU. Safeguards include capital requirements, custody of assets, a mandatory complaint holder procedure available to investors, and rights of the investor against the issuer. Issuers of significant asset-backed crypto-assets would be subject to more stringent requirements… The Commission is also proposing today a pilot regime for market infrastructures that wish to try to trade and settle transactions in financial instruments in crypto-asset form...Today's proposed ‘Digital Operational Resilience Act' aims to ensure that all participants in the financial system have the necessary safeguards in place to mitigate cyber-attacks and other risks. The proposed legislation will require all firms to ensure that they can withstand all types of Information and Communication Technology - related disruptions and threats.”
GEMINI EXCHANGE EXPANDS TO UK: Gemini, the crypto exchange founded by the Winklevoss twins, announced Thursday it is expanding its full services in the United Kingdom. The exchange said, “Users in the UK can now use our simple, reliable, and secure products, including our Mobile App, to buy, sell, and store crypto. We now also support the pound sterling to provide a more local experience for our UK users. You can purchase crypto with GBP using a debit card or make a GBP deposit from your bank via Faster Payments, CHAPS, or SWIFT wire. Our UK launch follows the recent approval of our Electronic Money Institution license by the Financial Conduct Authority, which reflects our ethos of working proactively with regulators and asking for permission, rather than forgiveness. As a licensed and compliant platform, we abide by the high regulatory standards established to safeguard your money, securely store your crypto, protect your privacy, and keep bad actors off our platform. Ultimately, this fosters a better and safer experience for you and the larger crypto ecosystem as a whole.”
MICROSTRATEGY SEES BITCOIN AS ‘LESS RISKY’: MicroStrategy (MSTR) Chief Executive Officer Michael Saylor said the Federal Reserve’s recent easing of its inflation policy helped him to decide to put the company’s remaining cash into bitcoin, Bloomberg’s Olga Kharif reported Tuesday. “We feel pretty confident that bitcoin is less risky than holding cash, less risky than holding gold,” Saylor said. Prior to the coronavirus pandemic, the enterprise-software maker had roughly $500M mostly invested in short-term U.S. government securities but as yields started to fall, Saylor questioned the strategy. “Once the real yield on our treasury got to more than negative 10%, we realized that everything we are doing on P&L is irrelevant,” he said. “We really felt we were on a $500M melting ice cube.” The company invested some money in share buyback and mulled real-estate investments, but Saylor said much of the commercial market has been destroyed by the outbreak. He added gold is still be mine, reducing future returns unlike the finite amount of bitcoin to be issued.
LIBRA COFOUNDER DEPARTS: Morgan Beller, one of the co-founders of Facebook’s (FB) Libra digital currency and Novi wallet has departed the project before the release of either technology, CNBC’s Salvador Rodriguez reported Tuesday. Beller, who serves as Novi’s head of strategy, leaves to become a partner at venture capital firm NFX which focuses on seed investments. Beller said she will continue as an advisor got both Libra and Novi to ensure they come to market. “I love Libra, I’m a fan girl of Libra,” Beller said. “I’m not going away. I’ll continue to be a friend, follow very closely and be involved at some capacity. It was just that when the NFX folks came knocking — this was obvious.”
‘CRYPTO-MINING’ DEMAND BACK:On Monday, RBC Capital analyst Mitch Steves kept his Outperform rating and $610 price target on Nvidia (NVDA). The analyst cited "numerous articles" suggesting that demand for 3080 cards is increasing with a portion of that trend related to cryptocurrency mining. Steves added that following the ramp-up of decentralized finance applications, profitability for Ethereum mining has increased.
CRYPTO STOCK PLAYS: Cryptocurrency revenues have been pointed to as reasons to be bullish on Advanced Micro Devices (AMD) and Nvidia in select research. Overstock (OSTK), 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 2.9% this week at $10,630 in U.S. dollars, according to TradeBlock.