Wednesday, November 10, 2021.
There’s a lot for regulators to think about, but the same old menu for crypto may not be enough.
Yahoo Finance joined Decrypt on Tuesday in an attempt to highlight all of the ways that bitcoin is suddenly becoming mainstream. And there’s no lack of stories proclaiming how digital currency are captivating the public’s attention.
Bitcoin (BTC-USD) is now trading at more than $68,000. Memecoins are no longer a joke, but rather a serious investment. Jobs in the industry are being created at a breakneck speed.
Exchange-traded funds (ETFs) based on spot and futures are expected to be the next big thing. Decentralized finance (DeFi) and digital wallets are also attracting a large number of small investors, which is garnering the attention of authorities such as the Securities and Exchange Commission (SEC).
Even the real estate industry is joining in on the fun.
So, when new products like ETFs emerge and the blockchain creates new digital currencies (Morgan Stanley recently placed the crypto universe at about 10,000), which agency is most positioned to function as the sheriff of the “Wild West” of financial markets, as SEC Chair Gary Gensler describes it? Should regulators impose decades-old securities regulations on a new, technologically savvy industry being hailed as nothing short of a financial revolution?
As the regulatory discussion unfolds, an argument made by Ripple CEO Asheesh Birla to Yahoo Finance’s Jennifer Schonberger on Tuesday has at least some merit. Clearer rules, according to Birla, would help the business thrive, but he cautioned that the haphazard enforcement of antiquated laws may hamper innovation.
“I’m not supporting putting old legislation over bitcoin like peanut butter,” he remarked. “We’re calling for clear, updated regulations that reflect what blockchain and cryptocurrencies can achieve, which hasn’t been the case thus far.”
Given that Congress is presently considering a slew of blockchain-related measures, including control of crypto miners who may operate as brokers, stablecoin issuance, and organizations (DeFi) that lend like conventional banks, that theme rings especially true.
“Does regulation assist or hinder?” In a recent study, Morgan Stanley analysts posed the question.
“Defined regulation, assuming it is comparable to what is now being proposed in developed nations, may boost the appeal of adding cryptocurrency exposure to portfolios for institutional investors,” the bank said.
Expect the argument over regulation to become more prominent as more ETFs come to market. Products based on derivatives or real-time pricing “has become a bit of a political problem,” Grayscale CEO Michael Sonnenshein told Yahoo Finance’s Brian Cheung on Tuesday.
“We’ve actually seen bipartisan support for a bitcoin spot ETF in the past week… fighting for this and ensuring there’s a fair playing field amongst different apps out there, and investors really do have the choice,” he said.
As the market becomes more sophisticated, opponents will want more stringent investor safeguards. As a result, further issues will arise regarding whether the current securities architecture is appropriate for this massive new digital structure known as cryptocurrencies.
By Javier E. David, a Yahoo Finance editor. @Teflongeek is his Twitter handle.
What to Look Out For Today in the Economy
MBA Mortgage Applications, week ending Nov. 5th, 7:00 a.m. ET (-3.3 percent during prior week)
8:30 a.m. ET: Initial unemployment claims for the week ending Nov. 6 are released (260,000 expected, 269,000 during prior week)
Continuing claims, week ending Oct. 30: 8:30 a.m. ET (2.050 expected, 2.105 million during prior week)
Consumer Price Index, month over month, October, 8:30 a.m. ET (0.4 percent expected, 0.2 percent in September)
Consumer Price Index, year over year, October, 8:30 a.m. ET (5.9 percent expected, 5.4 percent in September)
Consumer Price Index excluding food and energy, year over year, October, 8:30 a.m. ET (4.3 percent . expected, 4.0 percent in September)
10:00 a.m. ET: September final wholesale inventories, month over month (1.1 percent expected, 1.1 percent in prior print)
2:00 p.m. ET: October monthly budget statement (estimated to be -$179.0 billion, down from -$61.5 billion in September)
4:05 p.m. Eastern Time: On sales of $18.78 billion, Disney (DIS) is forecast to announce adjusted profits of 49 cents per share.
4:05 p.m. Eastern Time: On sales of $2.01 billion, Opendoor Technologies (OPEN) is forecast to announce adjusted losses of 3 cents per share.
Beyond Meat (BYND) is projected to disclose adjusted losses of 38 cents per share on $106.08 million in sales at 4:05 p.m. ET.
Compass (COMP) is scheduled to disclose adjusted losses of 17 cents per share on $1.71 billion in sales at 4:05 p.m. ET.
4:05 p.m. Eastern Time: On sales of $198.54 million, Bumble (BMBL) is forecast to announce adjusted profits of 2 cents per share.
Wish (WISH) is projected to disclose adjusted losses of 13 cents per share on $373.89 million in sales at 4:05 p.m. ET.
Figs (FIGS) is scheduled to post adjusted profits of 3 cents per share on $98.90 million in sales at 4:05 p.m. ET.
Affirm Holdings (AFRM) will post adjusted losses of 42 cents per share on sales of $252.15 million at 4:05 p.m. ET.
4:10 p.m. ET: On sales of $252.50 million, SoFi Technologies (SOFI) is likely to post adjusted losses of 11 cents per share.