While You Were Working - January 18

Bitcoinitis

Much like the when the unrelenting buzz about blockchain once caused me to coin the phrase “blockchainitis,” it is safe to say that bitcoin buzz has reached that level (or maybe even surpassed it). Hence, my first comments about “bitcoinitis.”

If you think the roller coaster ride bitcoin investors have experienced is impressive, try being a regulator. Bitcoin used to be a nefarious thing only used by drug dealers and tech geeks. As recently four short months ago, Jamie Dimon was calling bit coin a “fraud.”

But now that Cboe and CME have launched bitcoin products, it looks like bitcoin is a thing.  A real thing.

Just how that thing can/will/should be treated from a regulatory perspective is anyone’s guess. Regulators simply aren’t used to moving this fast on any new market development. That’s why it is no surprise that ESMA is eyeing a ban on cryptocurrency retail derivatives. There simply isn’t enough data out there yet for regulators to act with any sound guidance when it comes to contracts for difference.

And if you think the markets won’t like such a ban, you should consider the viewpoint of Cboe’s own Ed Tilly.  

"Before you get into mainstream [exchange-traded products], we need to get through a series of settlements before that makes sense to regulators. … Those boxes have to be checked before there’s a mass roll-out of exchange-traded products.”

How long will it take to amass enough settlements? Well, Cboe’s very first bitcoin futures contract expired yesterday.

950% interest rates are A-OK

In addition to requesting zero budget for the second quarter, the Consumer Financial Protection Bureau is dropping a lawsuit against payday lenders. This is part of the regulatory changes the Trump administration has been making at the agency (or bureau) level.

I don’t have a dog in the payday lender fight because I don’t use them – and neither do any of the policymakers shaping the CFPB’s new tactics. But I do know who does: The working poor.

Wouldn’t it be great if some populist politician ran for president in hopes of protecting the working poor?

For Whom die Glocke Tolls

Deutsche Bank boss John Cryan remains on the hot seat, despite assurances that his turnaround plan for the embattled bank is now into its “third phase.” That is all well and good, but what inquiring minds and shareholders really want to know is this: How many phases are there?

Nevertheless, Cryan is still one of the most powerful men in the world. His bank holds the details of hundreds of millions of dollars in deals related to President Trump and Jared Kushner. I, for one, am keen to see how great a distance Cryan keeps between himself and Trump and Kushner next week in Davos.

The Weather and WMDs

Speaking of Davos, the World Economic Forum is out with its annual Global Risks Report ahead of report ahead of next week’s meet up. The survey found the following issues to be the top three risks:

  1. Weapons of mass destruction
  2. Extreme weather event
  3. Natural disaster

I gotta admit I struggle to think of a natural disaster that is not caused by an extreme weather event, so I am not sure why they are listed separately. I also find it interesting that terror attacks are nestled somewhere in the mid-teens on the list. That is probably because terror attacks aren’t as big a risk as WMD (unless the terrorists use WMD), but it also says something about how normalized terror attacks have become. Markets rarely register terror attacks anymore and it seems like the news cycle even moves on after a few days – or even hours.

WYWW Appetizers