Interbank market news scan: As of 1:22 pm AST, Central banks, cryptocurrency, foreign exchange

Central banks across Asia are starting the year juggling policy reviews and political pressure to do more to support their economies. Asian Central Banks Start Year Juggling Politics, Policy Reviews (msn.com)

The ECB’s Governing Council, led by President Christine Lagarde, will now likely pause for the foreseeable future and use this week’s meeting to steer markets in a new direction, as well as discussing the strength of the euro. After unprecedented stimulus, the European Central Bank is set for a change of focus (msn.com)

The French central bank said on Monday it would exit from coal and limit exposure to gas and oil in its investment portfolio by 2024 as part of a shift towards more environmentally friendly assets. French central bank to exit coal, cap oil and gas investments | Reuters

Janet Yellen, who is expected to lead the Treasury Department for the incoming Biden Administration, described cryptocurrencies as a “particular concern” when it comes to terrorist financing. Biden Treasury pick Janet Yellen warns cryptocurrency poses terrorism risk (msn.com)

Even after setting a new record high of $1,439 on Monday, the rally for Ethereum’s ether cryptocurrency may have only just begun, according to Fundstrat Global Advisors strategist David Grider. Ether’s Rise to Record Highs May Propel Cryptocurrency to $10.5K: Fundstrat Global – CoinDesk

Lacalle believes that “numerous governments would be very very happy to implement strict regulations on cryptocurrencies,” noting that it is “fundamentally because, as we are seeing, cryptocurrencies are rising dramatically as a response to a very aggressive policy from central banks.” Economist Slams ECB Chief Lagarde’s Bitcoin Remarks as Dangerous for Cryptocurrency Regulation – Regulation Bitcoin News

Interbank market news scan, at 1:04 am AST: Latest news on central banks, cryptocurrency, foreign exchange …

The dollar slipped from close to its highest in nearly one month on Tuesday as caution set in before U.S. Treasury Secretary nominee Janet Yellen testifies later, with traders keeping a close eye on the policies of the incoming Joe Biden government. Dollar retreats from one-month high as traders eye Biden’s FX policy | Reuters

Among the many races the pandemic has accelerated, none is so pointless as the issuance of central-bank digital currencies. The Canadian government, which should know better, has jumped into the fray despite earlier opposition. Reversing comments made in February 2020, Bank of Canada deputy governor Timothy Lane now believes state involvement in cryptocurrencies is a pressing matter. Along with its G7 partners, Canada has been exploring central-bank digital currencies since 2017 but the race suddenly sped up in mid-October. Central banks should stay clear of cryptocurrencies – Canadian Investor

China’s Blockchain-based Service Network (BSN) – a permissioned blockchain network for building decentralized applications and tokens – plans on releasing a beta central bank digital currency (CBDC) as early as the second half of 2021. https://www.nasdaq.com/articles/chinas-blockchain-based-service-network-to-integrate-central-bank-digital-currency-2021-01

Frank Giustra, billionaire investor and mining financier, is warning that governments and central banks are going to do everything they can to stifle Bitcoin’s journey towards universal adoption. https://dailyhodl.com/2021/01/17/billionaire-investor-says-central-banks-will-stop-at-nothing-to-clamp-down-on-bitcoin/

A dollar in the cryptocurrency world is still worth zero …

If you brought a US dollar into the crypto world, there would be no demand for it. Not surprising since the digital asset, argues Nouriel Roubini, has yet to move into the realm of a true currency. With no political economy to overlay, bringing the dollar or dollar-denominated assets into “crypto-world” for sale means a trader in crypto-world laughing in your face. Does cryptocurrency want to enter the realm of real currency or would it prefer remain a speculative asset? And if so, how can an argument be sustained that cryptocurrency can be used to serve the under-banked or unbanked?

USD/BTC0.00000.0003
USD/ETH0.00090.0009
Source: OANDA

Opinion: Black Americans and Bitcoin. Playing it Wrong from the Beginning and How to Play it Right Now

A few years ago, I saw a number of Black Americans on Facebook touting bitcoin as the path to wealth. What bothered me that in all the hype being expressed that there was nary a discussion on what currency actual meant. No discussion as to the economics. No discussion as to the political-economic philosophy that undergirds a currency. 2017 saw the bitcoin bubble burst and the chit chat by those same Black Americans faded away like the unrealized gains they promoted.

Bitcoin and other cryptocurrencies have been touted by some proponents as the way to introduce underbanked or unbanked minorities into the credit system. Some Black Americans may have bought into this although the leading Black advocate organizations i.e. National Urban League, NAACP, Color of Change, Multicultural Media, Telecom, and Internet Council, to name a few, have been relatively silent on the benefits of crypto as a banking and payment system. No surprise their since when it comes to technology, Blacks have consistently taken a consumer position versus a producer position. And given that these legacy organizations are lead by the older generation, leadership’s inability to wrap its head around the true underlying economic benefits of cryptocurrency is a direct result of leadership being out of step with technology overall and how technology lies at the core of America’s economic exceptionalism.

In addition to consumerism, Black Americans still emphasize allegiance to the American political economy instead of a more skeptic, independent view of it. Again, its current leadership emphasizes inclusion and diversity as benefits without discussing its costs: that not everyone will benefit from such an approach. A truly inclusive approach to the political economy would be one where Black Americans view themselves not as a community, but as a nation within an American confederation. The advantage of that approach, a national approach, would require that Black Americans re-evaluate the meaning of economic value and the technology or mechanisms for capturing, storing, expressing, and transporting that economic value, particularly in a digital age. Cryptocurrency can be a vehicle for capturing, storing, expressing, and transporting Black economic value.

The upfront work will be the hardest, that being to identify and “mine” that value and quantifying it into a digital asset like cryptocurrency. But by doing so, by tying it to a Black economic engine, Black Americans can provide a blueprint for moving cryptocurrency from merely a speculative commodity to a true currency that can be used in the mainstream to buy and sell any and all goods. Unless crypto can demonstrate its utility in trade, then Nouriel Roubini’s description of cryptocurrency as shit coins will take hold as truly appropriate by most observers. Creating that value means taking a “nationhood” approach. It means connecting all productive assets within Black America to its current banking assets, identifying the economic value within Black America, issuing coin based on that value, ane getting members of its community to buy off on that value.

There are legal and regulatory hurdles, but the biggest hurdle will be cultural and societal. Black Americans will have to take a more courageous approach to Black economic viability and sustainability. The current political-economic structure has failed them and it will be up to Blacks on their own to reimagine the production and distribution of economic value within their communities.

As of 10:27 am AST, cryptocurrency prices hours before the New Year ….

PairsBTCETH
 BTC/USD=28124.40ETH/USD=733.872
 BTC/EUR=22,895.20ETH/EUR=597.422
 BTC/JPY=2,903,660ETH/JPY=75,767.30
 BTC/CNH=183,043ETH/CNH=4,776.27
 BTC/DKK=170,321ETH/DKK=4444.31
 BTC/CHF=24,829.20ETH/CHF=647.888
 BTC/GBP=20,711.40ETH/GBP=540.437
Source: OANDA

Legal Events Impacting Trade in Cryptocurrency/Digital Assets

None to report.

As of 12:07 pm AST, Bitcoin and Ethereum exchange rates as US Senate ponders $2000 checks for hurting households …

BTC/USD=26,950.30ETH=719.429 
BTC/EUR=22,062.30ETH/EUR=588.96 
BTC/JPY=2,792,990.00ETH/JPY=74,558.10 
BTC/CNH=175,910.00ETH/CNH=4,695.87 
BTC/DKK=164,071.00ETH/DKK=4,379.82 
BTC/CHF=23,971.50ETH/CHF=639.912 
BTC/GBP=19,949.70ETH/GBP=532.551 
   
Source: OANDA

Legal/Political Events Impacting Cryptocurrency

No events of significance at this time.

How the regulator’s mindset may impact cryptocurrency …

An article today in Bloomberg discussing how a Biden administration would address the regulation of cryptocurrency has me putting myself in the place of the regulator. What is the U.S. Securities and Exchange Commission’s world view of digital assets? How will the Commodity Futures Trading Commission’s view toward regulation of exchanges evolve? Will the Board of Governors of the Federal Reserve System view the payment system aspect of cryptocurrency as a threat to the current national and global payment system regime or as a welcome supplement that brings more efficiency and transparency?

Clarity on what may happen on the regulatory side of cryptocurrency requires that the trader first take a top-down view of how governments view the world and especially how they view markets. You will never hear a regulator utter the term “free markets.” That phrase is best suited for the rhetoric of politicians who inherit worn out campaign slogans and reboot them for the latest run for office. I doubt they themselves, a significant number of whom are not trained in economics, truly understand what a market is or can likely identify threats to it. Compound markets for digital assets with the mechanics of payment systems and the politician’s eyes glaze over and she falls back to what she knows best: sloganeering tainted with tropes that appeal to individualism, consumerism, collectivism, or whatever narrative they believe their constituency will buy into.

The professional regulator, on the other hand, uses law and regulatory code as a front or an excuse. Statutes and codes give the professional regulator cover for their underlying philosophy and narrative. Unlike the elected official who only spends minutes on issues of markets and their regulation, the professional regulator is the expert spending years developing her own philosophy and transitive narrative and reconciling that philosophy and narrative with at times archaic statutes that the elected official has dumped on her to interpret. With archaic statutes and codes as cover for the regulator, it is the trader’s task not only to generate returns from holding a digital asset but to best understand what that regulator’s philosophy is.

There are two types of regulator. One I term as the myopic regulator. This regulator focuses on the black letter of the law and the code. Their focus is primarily on whether the market participants are following the rules on the books. He does not take into consideration any wider view of the philosophy behind markets and regulation. If the rules are skewed more to trader protection, his interest will be in outcomes that favor trader protection. If the rules skew more toward brokerage or platform protection, the regulator’s interest will be in outcomes favoring platform protection.

On the other side is what I term the universal regulator. They have managed to synthesize the role of government, traders, and platforms. They have an interest in maintaining the viability of the market system. Government’s role, in their view, is to provide for an efficient and productive trading post where there is sufficient transparency between traders and where the exchange platform ensures speed, efficiency, and clarity of trade because without these characteristics, the American markets as a whole become less viable, less reliable. Government will expand or contract in order to meet its universal role.

The trader should be mindful of this regulatory environment, particularly the tug-of-war between more or less regulation of exchanges. Eventually the trader pays the price in terms of transparency, price fairness, and the level of fees, especially where trade is her primary means of livelihood and income. After all, trade boils down to an information game and staying informed on government actions as well as on how government itself can disrupt information flow is important to the trader’s success.

As of 1:08 pm AST, this is how BTC and ETH are faring in the cryptocurrency markets

BTC/USD = 22,599.70 ETH/USD = 648.854

BTC/EUR = 18,463.40 ETH/EUR = 530.098

BTC/JPY = 2,331,500 ETH/JPY = 66,939.10

BTC/CNH = 147,150 ETH/CNH = 4,224.79

BTC/DKK= 137,367 ETH/DKK = 3,943.93

BTC/CHF =19,980.40 ETH/CHF = 573.653

Source: OANDA

Regulatory/Legal News Impacting Cryptocurrency Trade

December 18, 2020

Washington, D.C. —The Commodity Futures Trading Commission today announced that Jaime L. Klima, the CFTC’s Chief of Staff and Chief Operating Officer, will depart the agency for a role in the private sector next month. Ms. Klima has served in her executive leadership role since joining the agency in July 2019, where in addition to being the lead advisor to Chairman and Chief Executive Heath P. Tarbert on legal, policy, and administrative matters, she has been responsible for managing the daily operations of the agency and overseeing its nearly 1,000 personnel.

“Jaime is a Team Tarbert original, having been with my office from the very beginning of my tenure at the CFTC. From our historic rulemaking and enforcement agenda to our efforts to enhance the agency’s culture and operational effectiveness, she’s been instrumental to every one of our many successes,” said Chairman Tarbert. “I couldn’t have picked a better person, manager, or attorney to help me lead this agency, and I’m confident she’ll excel in her future endeavors.”

“My time at the CFTC has been more rewarding than I could have imagined,” said Ms. Klima. “The pandemic made this year challenging, to say the least, but I’m incredibly proud of how the agency has risen to the occasion. Notwithstanding those headwinds, Chairman Tarbert’s strategic leadership has led us to tremendous success, and I’m grateful to have been a member of the team. I also thank the Commissioners and the agency staff for being such exceptional colleagues.” 

Prior to joining the CFTC in 2019, Ms. Klima spent seven years serving in a variety of senior legal and policy roles at the U.S. Securities and Exchange Commission, most recently as Chief Counsel to SEC Chairman Jay Clayton. She also spent nearly a decade working in private practice on legal and regulatory compliance matters for clients in the financial services sector. Ms. Klima holds a bachelor’s degree from the University of Virginia and earned her master’s and juris doctor degrees from Duke University.

Source: Commodity Futures Trading Commission

In a 5G world, can an individual be their own bank?

A thought ….

That Covid-19 has sped up the exposure of workers to the possibility of automation replacing them is a saying that is becoming almost cliché. Television commercials remind us that we are “all in this together” and that we should wear masks and safely social distance. Meanwhile, telecommunications companies are promoting 5G technology that when fully deployed will help alleviate the downsides of working from home with a technology that moves data faster and can help connect all your devices and appliances so that you can better manage the data flowing through your home. But what if, in addition to connecting your mobile phone to your refrigerator which may allow you to determine whether to buy more milk, that 5G also helps to turn you into a micro bank by taking a real-time audit of the assets in your possession and using them as a basis for issuing your own coin?

The thought came to me today while conversing with two friends about the probability of Facebook becoming its own “nation.” Facebook, the world’s largest social media platform, is backing a group that plans to issue a cryptocurrency next month called Diem. Diem will hopefully help people send money around the world almost instantaneously. Unlike other cryptocurrencies, Diem will be a “stable coin” meaning it will be backed by reliable fiat currencies like the U.S. dollar or the euro.

But what if we could take the Facebook macro-model and make it micro to you? For example, with 5G-driven internet of things and block chain technology, why couldn’t a real time audit of a person’s possessions be taken and instead of the individual issuing digital fiat currency or even stable coin, the individual could issue their own personal currency. Tom Steyer, for example, could digitally tally up his cash, land, securities, and other holdings and issue a digital certificate that could be used in the digital marketplace. A man of his wealth could take a position in a number of different currencies but should he choose to engage exclusively in the digital world on his own dime, he could do so without any rules or regulations that come along with currency issued by a nation-state, a social media platform, or a corporation.

The advantages to such a scheme compound when more people with the material means decide to go digital and trade either the social media platform’s coin or, if affluent enough, their own coin. This would be true personal banking.