TFU | Dec. 18, 2017 – Jan. 7, 2018

Leading Off

Happy New Year!  The U.S. government denied Ant Financial’s bid to acquire MoneyGram; the CFTC outlined its current approach to regulating cryptocurrency derivatives markets; Goldman announced plans to set up a cryptocurrency trading desk later this year; digital currency exchange Coinbase is investigating allegations of insider trading; and the WSJ discusses China’s rapid movement toward a “cashless society,” led by large tech firms like Tencent and Alibaba.

 

In the News…

CFIUS scuttles Ant-MoneyGram deal.  After months of deliberation, the Committee on Foreign Investment in the United States (CFIUS) denied Ant Financial’s $1.2 billion offer to acquire MoneyGram. Citing “national security concerns,” the deal is “the latest in a [recent] string of [proposed] Chinese acquisitions of U.S. companies that have failed to clear CFIUS.”

The CFTC discusses cryptocurrency policy.  The Commodity Futures Trading Commission (CFTC) provided new information on its approach to regulating cryptocurrency derivatives markets, including a statement from Chairman Chris Giancarlo, a short paper on state and federal crypto regulation, and proposed guidance detailing the CFTC’s authority over crypto retail trading.

Goldman Sachs to set up crypto trading desk.  The bank plans to begin buying and selling  digital currencies by June, but is “still figuring out how it will store the digital assets and keep them secure . . . [and] in which division [the desk] will be housed.” The global digital currency market grew to over $600 billion in December 2017 from $18 billion at the beginning of the year.

Japanese and Korean banks partner on Ripple pilot tests.  A coalition of 61 Japanese banks announced they will work with South Korea’s Woori Bank and Shinhan Bank to test Ripple’s xCurrent settlement utility for cross-border transaction settlement. “[This] pilot . . . brings us closer to sending money in an important corridor,” said Ripple’s director of partnerships.

Coinbase investigates insider trading claims.  The popular digital currency exchange is investigating whether its employees profited from insider knowledge of the firm’s plans to trade Bitcoin Cash ahead of the currency’s first day of trading. Coinbase CEO Brian Armstrong said the firm will conduct an internal review.

Value of Ethereum tokens reaches $1,000.  The digital currency experienced heavy trading in December, riding the wave of increased market interest in Bitcoin and other cryptocurrencies to a value of over $1,000 per token early las week. Ethereum’s total market capitalization is now approximately $100 billion, third overall behind Bitcoin and Ripple.

Trade associations call for federal data breach regulations.  A group of 22 “financial, retail and technology trade associations” sent a letter to the House Energy and Commerce Committee encouraging Congress to “establish a single set of rules to handle data breaches [with] clear preemption of the existing patchwork of often conflicting and contradictory state laws.”

China is moving toward a cashless future.  The Wall Street Journal profiles the rise of cashless payments in China, which more than quadrupled from 2014 levels to total more than $9 trillion in 2016. The advent of the “cashless society” is supported by China’s tech giants, Alibaba and Tencent, which are “fast becoming the way many people in China pay for just about everything.”

Mufti says crypto trading violates Sharia.  Egypt’s Grand Mufti, the country’s highest Islamic religious leader, declared that “cryptocurrency trading is forbidden under Islamic . . . law due to the risk associated with [it].” In issuing his fatwa, Allam cited the enablement of “tax evasion, money laundering, fraudulent activities and terrorist financing” as reasons for his decision.

Can blockchain revive “traditional” P2P lending?  The American Banker’s Penny Crosman discusses whether blockchain may reinvigorate “the original premise of online [P2P] lending platforms,” i.e., disintermediated loans made from one person to another. The article profiles some leading blockchain-based P2P lending platforms and key challenges they must overcome.

Bubble tea, anyone?  In December, an unprofitable iced tea company (from Hicksville — literally!) rebranded as a blockchain firm and saw its stock quickly jump about 200%. Now, Long Blockchain Corp. has filed paperwork with the SEC in advance of setting up a $4.2 million bitcoin mining facility in Iceland. The company released this statement (use headphones).

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