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Thursday, March 10, 2022

Plaudits for Biden on crypto order, but challenges loom

The pistol for cryptocurrency regulation has officially been fired — and the crypto world is ready and raring to go.

On Wednesday, the Biden administration issued its hotly-anticipated executive order that directs the federal government (with the advice and consent of Congress) to begin creating the architecture of the framework that will ultimately govern the whipsaw world of the nearly $2 trillion digital token market, Yahoo Finance’s Jennifer Schonberger reported.

The devil, as he always is, remains in the details. The White House has left itself much room for interpretation, and the involvement of the other major players in Washington (like Congress and the alphabet soup of federal agencies).

Yet at a high level, the White House went out of its way to avoid even the semblance of red flags. That was sufficient for crypto industry participants to give the beleaguered president — buffeted by soaring inflation and an armed conflict in Eastern Europe — some rare praise.

In fact, after months of trepidation over what regulation might look like in the future, many of them were downright effusive, as Yahoo Finance’s David Hollerith found when he canvassed opinion of those in the sector.

“I think this is a big milestone for the industry, and the Biden administration was thoughtful in their approach and restraint here,” Ryan Selkis, founder and chief executive officer of crypto research platform, Messari, said.

That’s quite an opinion shift from just last fall, when a harsh assessment of the industry from Securities and Exchanges Commission Chair Gary Gensler — combined with a few decisive instances of enforcement — set some crypto participants on edge.

At least for now, all appears to be forgiven — and judging by Wednesday’s price action in digital currencies like bitcoin (BTC-USD) and ether (ETH-USD), investors seem to agree.

“Simply put, the most powerful economy in the world is acknowledging crypto as a growing industry crucial to maintaining U.S. global competitiveness,” Grayscale crowed in a statement on Wednesday — unlike, say, China, which rocked the market last year when it effectively banned crypto.

In fact, a laissez-faire approach to crypto regulation is arguably the best outcome that many industry participants have sought for some time. Frequent government critics braced for an “abrasive approach,” as bitcoin maximalist Anthony Pompliano wrote in his newsletter on Wednesday, couldn’t do much except marvel at Biden’s order.

Still, the praise could easily give way to prickliness down the road, as the government moves to do two critical things: protect small and large investors that are lining up to reap meaty returns in digital tokens; and ensure the stability of the financial system in the event of a dramatic market shakeout. The latter has largely informed the debate surrounding stablecoins (also covered by Yahoo Finance’s Schonberger), with some officials arguing in favor of a more restrictive approach for those issuers.

Meanwhile, lending in decentralized finance (DeFi) — a frequent target of SEC’s Gensler and an area where investors are already getting fleeced by bad actors — may also lead to fireworks between the government and crypto’s true believers, as regulators move to guard against money laundering, wallet hacking and illicit flows.

And we won’t even mention the coming debate over central banking digital currencies (CBDCs). Among other things, monetary officials see that segment of crypto as a way to expand banking to underserved populations and ensure dollar dominance, but many crypto true believers are deeply ambivalent — if not openly hostile – to the idea.

“CBDCs are anything from largely unnecessary (say, blockchain-izing bank reserves) to horrible (say, abolishing cash or banks and having people just have Fed CBDC accounts),” Themilio founder Eric Dong said in a statement on Wednesday.

“I worry that current ideas are an attempt to cover up bad monetary policy through financial repression and capital controls, both of which are much easier to enforce with CBDC, and trend towards ‘horrible,’” he added.

That, of course, will have to be a battle for another day. But at least for the moment, crypto investors can rest comfortably, savoring the knowledge that Uncle Sam isn’t coming for their digital wallets.

By Javier E. David, editor at Yahoo Finance. Follow him at @Teflongeek

What to watch today

Economy

  • 8:30 a.m. ET: Consumer Price Indexmonth-over-month, February (0.8% expected, 0.6% in January)

  • 8:30 a.m. ET: CPI excluding food and energymonth-over-month, February (0.5% expected, 0.6%. in January)

  • 8:30 a.m. ET: CPI year-over-year, February (7.9% expected, 7.5% in January)

  • 8:30 a.m. ET: CPI excluding food and energy year-over-year, February (6.4% expected, 6.0% in January)

  • 8:30 a.m. ET: CPI Index NSA, February (283.7 expected, 281.12 in January)

  • 8:30 a.m. ET: CPI Core Index NSA, February (289.5 expected, 286.43 in January)

  • 8:30 a.m. ET: Real average hourly earnings, February (-1.7% prior, revised to -1.8%)

  • 8:30 a.m. ET: Real average weekly earnings, February (-3.1% prior, revised to -3.0%)

  • 8:30 a.m. ET: Initial jobless claims, week ended March 5 (217,000 expected, 215,000 during prior week)

  • 8:30 a.m. ET: Continuing claims, week ended February 26 (1.450 million during prior week)

  • 12:00 p.m. ET: Household change in net worth, 4Q ($2.4 trillion in 3Q)

  • 4:00 p.m. ET: Monthly budget statement, February (-$212.0 billion in February, $310.9 billion in January)

Earnings

Post-market

  • DocuSign (DOCU) is expected to report adjusted earnings of $0.48 per share on revenue of $561.65 million

  • Rivian (RIVN) is expected to report an adjusted loss of $1.97 per share on revenue of $63.96 million

  • Oracle (ORCL) is expected to report adjusted earnings of $1.18 per share on revenue of $10.51 billion

  • Ulta Beauty (ULTA) is expected to report adjusted earnings of $4.61 per share on revenue of $2.70 billion

Politics

  • President Biden will continue working the phones today to tackle that “little thing going on in Europe right now” (as he said yesterday). He has a call with Turkish President Recep Tayyip Erdoğan at 10:00 a.m. ET to discuss the latest around Russia and Ukraine. Then Biden welcomes Iván Márquez, President of the Republic of Colombia, for a White House visit, at 1:40 p.m. ET.

Top News

European stocks fall as oil prices cool ahead of ECB rates decision [Yahoo Finance UK]

Amazon announces 20-for-1 stock split, $10 billion share buyback [Reuters]

UK imposes asset freezes on Abramovich, Rosneft boss Sechin [Reuters]

Shell faces writedown on exit from Russian downstream business [Reuters]

Yahoo Finance Highlights

 

Investors pour into Cathie Wood’s ARKK despite losses

Gas prices: Biden administration ‘making sure consumers are not taken advantage of,’ official says

US ‘working with the private sector’ to source commodities, Commerce Secretary says

Read the latest financial and business news from Yahoo Finance

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