BIS Caution On Cryptos Hints Toward Long Fizzle

The year is drawing to a close. Bitcoin hovers at $7,100 and change. Depending on how you view it, it’s a nice bounce off of nadirs of below $4,000 earlier in the year but well off 2019 highs that broke through $11,000 … and a far cry from halcyon days when the price was $20,000.

Along the way, bitcoin — and all digital coins, really — have had a rough time of it. There are estimates that cryptocurrency-related fraud and theft has made off with $4.4 billion. Various regulators have brought into question whether Facebook’s Libra should ever get off the drawing board.

And now looms a call for the blueprints of a comprehensive regulatory framework that just might short-circuit the anonymous, unfettered trading that crypto enthusiasts have coveted. If bitcoin and other offerings have had their roots in the dream of making an “end run” around traditional banking conduits (and central banking, especially), what happens when the banks co-opt cryptos and place some tight shackles around what they can do and how they are traded?

News came this week that the Basel Committee has said in a paper that a “prudential” regulatory framework should be constructed by stakeholders — banks included — in a bid to address concerns over risks to the financial system.

And the risks are there, and are far-reaching, as the paper noted. The Basel Committee on Banking Supervision said the risks are tied to liquidity, credit and fraud.

Call it a shot across the bow — that an umbrella group of regulators from around the globe is already calling for a framework, even despite the fact that “while the crypto-asset market remains small relative to the size of the global financial system, and banks’ exposures to crypto-assets are currently limited, its absolute size is meaningful, and there continues to be rapid developments with increased attention from a broad range of stakeholders.”

And perhaps most telling: The paper says cryptos “do not reliably provide the standard functions of money, and can be unsafe to rely on as a medium of exchange or store of value.” To address those risks, the advice is to apply what is deemed a “conservative” treatment that would apply liquidity rules and capital requirements. In other words, the very digital assets that were, just a few years ago, going to refashion banking are going to have parameters drawn that have governed banking for decades.

The call for comments will last into March of 2020 and then … it may be safe to say that the crypto revolution may be remembered more as fizzle than sizzle.

Sizzle

Super Saturday: The U.S. consumer keeps on spending. Retail analysts expect shopping on the Saturday before Christmas (that’s this weekend, of course) to surpass all other single-day tallies this year — including Black Friday. Analysts estimate that spending could top $35 billion on Super Saturday.

Wearables: Tech behemoth Apple can expect to see booming demand for its wearables, nearly doubling from current levels to as much as 273 million units by 2023. That estimate comes from International Data Corp. and demand will be strong for AirPods and Apple Watches, among other offerings.

Scooters and Bikes: Might the Continent be the hotbed for scooters and bikes? Uber has said that in Europe, the use of Jump bikes and scooters is stronger than has been seen in the U.S., with 5 million trips taken through the first eight months of the year.

Fizzle

Big Tech Regulation: Big Tech is gaining more scrutiny abroad, and regulators may start clamping down even more than they already have. The U.K. is planning to create a tech regulator next year, post-Brexit. Japan has passed a bill to boost Big Tech oversight as well, with a focus on eCommerce and app stores filing reports about their operations with the government.

FedEx: Shares sink into the end of the week on the heels of an earnings miss, and Amazon cuts off FedEx Ground for Prime shipments through the holiday season — and where the eCommerce giant has said that FedEx is too slow.

Cannabis Firms: Cash crunches loom, and yet these same firms cannot seek bankruptcy protection (and thus breathing room to restructure) as Chapter 11 is off limits (due to the illegal nature of cannabis at the state level).