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’S LIBRA FACES SCRUTINY: European Central Bank board member Francois Villeroy de Galhau said stablecoins like Facebook’s (FB) Libra show gaps in regulation and the project will face a strict regulatory approach, Reuters’ Marc Jones and Huw Jones reported Tuesday. "‘Stable coins’ are quite different from speculative assets like Bitcoins. However, regulators will have to keep a very close eye at the global level, and believe me, we will do it,” Villeroy said. “If issuers of stable coins also want to offer banking services such as deposits, financial investments and loans, then they will have to obtain a banking license in all countries where they operate. Otherwise these activities would be illegal.”
Additionally, ECB board member Benoit Coeure told global central bank officials that stablecoins pose a serious risk, Reuters’ John Miller and Tom Wilson reported Monday. “Stablecoins are largely untested, especially on the scale required to run a global payment system,” said Coeure. “They give rise to a number of serious risks related to public policy priorities. The bar for regulatory approval will be high.” Couere’s comments came during a meeting at the Bank of International Settlements where the Libra Association and Calibra gave a presentation.
Meanwhile, Germany passed a comprehensive blockchain strategy vowing to combat any company efforts to establish a parallel currency like Libra, Reuters’ Michael Nienaber reported Wednesday. “We want to be at the forefront and further strengthen Germany as a leading technology location,” Finance Minister Olaf Scholz said. “At the same time, we must protect consumers and state sovereignty. A core element of state sovereignty is the issuing of a currency, we will not leave this task to private companies.” The move came after Scholz said policymakers could not accept parallel currencies like Libra, adding Berlin would reject any such plans, Reuters’ Nienaber and Christian Kraemer reported Tuesday.
CBOE WITHDRAWS BITCOIN ETF PROPOSAL: The U.S. Securities and Exchange Commission announced Tuesday that Cboe Global Markets’ (CBOE) BZX exchange withdrew a proposal to list and trade shares of a bitcoin investment vehicle. The agency said, “On January 30, Cboe BZX Exchange, filed with the Securities and Exchange Commission…a proposed rule change to list and trade SolidX Bitcoin Shares issued by the VanEck SolidX Bitcoin Trust. The proposed rule change was published for comment in the Federal Register on February 20… On March 29, the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change... The Commission designated May 21 as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change…On August 12, the Commission further extended the period for consideration of the proposed rule change to October 18…On September 13, BZX withdrew the proposed rule change.”
WELLS FARGO TO PILOT WELLS FARGO DIGITAL CASH: Wells Fargo (WFC) announced Tuesday plans to pilot an internal settlement service, Wells Fargo Digital Cash, which will run on Wells Fargo's first distributed ledger technology platform. Wells Fargo Digital Cash will allow Wells Fargo to complete internal book transfers of cross-border payments within its global network using digitized cash - and for those international locations to exchange that digitized cash among themselves. The internal DLT network will be a reusable enterprise utility for Wells Fargo to build and deploy multiple DLT-based applications. The pilot, planned for 2020, is expected to complete USD transfers initially, with a goal to expand to multicurrency transfers and the entire global Wells Fargo branch network.
OVERSTOCK FOUNDER SELLS STAKE: Overstock.com (OSTK) disclosed in a Wednesday Form 4 filing that its founder Patrick Byrne sold a stake of 4.7M shares of common stock on September 16th-18th. The total transaction size in the sale was about $90M. Additionally on Wednesday, the company announced it would distribute freely tradeable Series A-1 Preferred Stock in its upcoming dividend. "We have received a great deal of interest surrounding our Series A-1 dividend from shareholders, broker-dealers, regulators, and the general market,” said interim CEO Jonathan Johnson. "In view of the feedback we received from industry participants, investors, and regulators with respect to the Series A-1 stock dividend, and in order to provide greater liquidity, we are working with the appropriate regulatory authorities to structure the issuance of the dividend shares so they would be freely tradable by non-affiliates immediately upon distribution…We expect the result will be that, immediately upon distribution, such dividend shares will be freely tradable without the six-month holding period requirement under Rule 144. We are already working closely with regulators to register the shares and achieve that result. In light of this, we are postponing the previously-announced September 23, 2019 record date.”
Following the announcements, DA Davidson analyst Tom Forte kept his Buy rating and $48 price target on the name on Thursday, saying that he remains confident in its financial services market disruption potential despite the recent "setbacks." Forte said Byrne’s sale is a positive for the company as it minimizes his influence as Overstock's largest shareholder and also increases the likelihood of a sale of its retail business. The analyst added he still expects the company's current CEO Jonathan Johnson to unlock "meaningful value" from its legacy home e-commerce business and its blockchain technology portfolio.
CME GROUP TO LAUNCH BITCOIN OPTIONS: CME Group (CME) announced Friday that it will launch options on its bitcoin futures contracts in 1Q20, pending regulatory review. Since their launch in December 2017, market users have adopted CME Bitcoin futures for their hedging and trading needs. There have been 20 successful futures expiration settlements and more than 3,300 individual accounts have traded the product since inception. Year to date, nearly 7,000 CME Bitcoin futures contracts have traded on average each day.
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 1.3% this week to $10,168 in U.S. dollars, according to TradeBlock.
Bitcoin
+ (+0.00%)
Bitcoin
+ (+0.00%)
Ticker changed to META
+2.28 (+1.20%)
Cboe Global Markets
+1.09 (+0.94%)
Wells Fargo
+ (+0.00%)
OSTK
+
CME Group
+0.84 (+0.40%)
AMD
+0.12 (+0.40%)
Nvidia
-0.04 (-0.02%)
Ault Global Holdings
-0.02 (-0.72%)
Eastman Kodak
-0.02 (-0.76%)
Riot Platforms
-0.02 (-1.00%)
Ideanomics
+0.005 (+0.30%)
Pareteum
-0.23 (-12.50%)
Srax
+ (+0.00%)