Tag: Cryptocurrencies

By Amanda Cooper

LONDON (Reuters) – A blast of suspected intervention by the Bank of Japan (BOJ) on Monday to shore up the yen did little to tame the strength of the dollar, while the pound rose as former finance minister Rishi Sunak emerged as frontrunner to become Britain’s prime minister.

The yen hit a low of 149.70 per dollar overnight before being swept to a high of 145.28 within minutes in a move that suggested the BOJ, acting for Japan’s Ministry of Finance (MOF), had stepped in for a second successive day. The yen was last at 149.22, down nearly 1% on the day against the greenback.

“The price action should be worrying for the MOF, as it suggests that there is strong demand to buy into dollar/yen dips,” said Sean Callow, a senior currency strategist at Westpac in Sydney.

“The timing should have been good for intervention, with U.S. yields still falling in the wake of the WSJ Fed story Friday.”

Yen overnight volatility surged to its highest since Sept. 21, the day before the BOJ stepped in to prop up the currency for the first time since 1998.

European stocks rallied, while bond yields fell, extending gains from Friday when the Wall Street Journal reported Federal Reserve officials will likely debate the size of future hikes, fuelling hopes that a Fed pivot might be near.

Japan had also intervened in the foreign exchange market on Friday, buying yen in the second confirmed instance in a month after the currency hit a 32-year low near 152 to the dollar, policy sources said.

That triggered a rally of more than 7 yen for the Japanese currency to 144.50 per dollar.

Traders also suspect the BOJ has intervened more than once in the past month to shore up a currency that has tumbled 22% this year against the dollar.

Referring to how Japan had a classic open economy ‘trilemma’ forcing it to intervene in both bond and currency markets concurrently, Goldman analysts said: “While sub-optimal and unsustainable in the medium term, we think this policy mix could be in place for some time.”

The U.S. dollar also made gains against other major currencies, with the euro down 0.3% at $0.9829.

Sterling see-sawed on news former prime minister Boris Johnson had dropped out of running for British prime minister and was last up 0.1% at $1.1323, off an overnight high above $1.14.

Johnson said he has withdrawn from Monday’s contest to replace Liz Truss, who was forced to resign after launching a fiscal plan that unleashed turmoil in UK markets.

Former Chancellor Rishi Sunak has emerged as the clear frontrunner to become Britain’s next prime minister.

“Sterling price action seems to assume the advent of a Sunak/Hunt ticket as PM/Chancellor and a focus on trying to restore some of the UK’s lost fiscal credibility,” ING strategist Chris Turner said.

“After the failed experiment with Trussonomics, the challenge facing the new team will be harder than the one that existed earlier this summer and probably a reason why international investors will not want to chase GBP/USD above the 1.15 level. FX volatility does remain exceptionally elevated, however, and large swings cannot be ruled out,” he added.

(Additional reporting by Vidya Ranganathan and Kevin Buckland in Singpoare and Stella Qiu and Wayne Cole in Sydney; Editing by Shri Navaratnam & Simon Cameron-Moore)

(Reuters) – Banking regulators expect to provide industry guidance to financial institutions on crypto-related activities once agencies better understand the associated risks, said the acting chairman of the Federal Deposit Insurance Corp.

“We must understand and assess the risks associated with these activities the same way that we would assess the risks related to any other new activity,” said Martin Gruenberg on Thursday during a speech at the Brookings Institution.

Gruenberg also added that a potential future payments system based on the use of stablecoin, which are crypto-assets typically pegged to the U.S. dollar, should complement the Federal Reserve’s forthcoming FedNow service, as well as a possible U.S. central bank digital currency.

(Reporting by Hannah Lang in Washington)

(Reuters) – Former Celsius executive Aaron Iovine has joined JPMorgan Chase & Co as executive director of digital assets regulatory policy, according to his LinkedIn profile, days after the bank’s Chief Executive Jamie Dimon blasted cryptocurrencies as fraud and decentralized ponzi schemes.

Iovine was head of policy and regulatory affairs at bankrupt crypto lender Celsius, which he left in September after an eight-month stint.

Celsius filed for bankruptcy in July, as risk assets including bitcoin were crushed by monetary policy tightening. Crypto markets were also squeezed by the collapse of major tokens TerraUSD and Luna in May.

JPMorgan did not immediately respond to a Reuters request for comment. It was not immediately clear what Iovine’s day-to-day functions would be.

Dimon has been a vocal critic of cryptocurrencies. At the Institute of International Finance meeting last week, he repeated his criticism of the digital assets, saying crypto tokens lacked value.

(Reporting by Niket Nishant in Bengaluru; Editing by Shailesh Kuber)

By Kevin Buckland and Joice Alves

LONDON/TOKYO (Reuters) – Sterling weakened on Wednesday after hotter-than-expected consumer price inflation and fears of a deeper recession bolstered expectations of a less aggressive rate hike by the Bank of England in November.

The U.S. dollar held at a 32-year peak against the yen and rose from a two-week trough against a basket of major peers, underpinned by expectations of aggressive U.S. Federal Reserve interest rate hikes.

The British pound GBP=D3 fell 0.6% at 0827 GMT to $1.12500 after data showing Britain’s annual consumer price inflation inched up to 10.1% in September, rising more than expected and returning to a 40-year high hit in July.

Investors expect sterling to remain under pressure amid the outlook for rising inflation and a recession in Britain which could lead the BoE to hike by 75 basis points rather than 100 bps at its November meeting.

“Sterling edged lower against its peers after yet another upside surprise in the latest UK inflation data… The outlook for the UK economy remains relatively murky, with ballooning borrowing costs, soaring consumer prices and a government in chaos with its credibility shot to bits unlikely to inspire much confidence,” said Matthew Ryan, Head of Market Strategy at Ebury.

“Following the budget fiasco, there is also a great deal of uncertainty as to the pace of upcoming Bank of England interest rate hikes,” he added.

Money markets are pricing in a total 300 bps of BoE interest rates hikes by May, according to Refinitiv data. IRPR

The BoE said it would start selling some of its huge stock of British government bonds from Nov. 1, but would not sell this year any longer-duration gilts that have been at the centre of market volatility in the wake of the government’s “mini-budget” fiasco. (Full Story)

Elsewhere, the dollar pushed as high as 149.48 yen JPY=EBS for the first time since August 1990 in early London trading. Dollar/yen pair JPY= was last up 0.1% at 149.40 yen.

Traders are on high alert for the Ministry of Finance and Bank of Japan to step into the market again, as the currency pair pushes toward the key psychological barrier at 150. A cross of 145 a month ago spurred the first yen-buying intervention since 1998.

Japanese Finance Minister Shunichi Suzuki said on Wednesday that he was checking currency rates “meticulously” and with more frequency, local media reported. (Full Story)

“Intervention risk remains present, since the MOF has already crossed the Rubicon (but) its purpose is surely only to limit the scale of speculative positioning rather than driving a sustained reversal,” said Sean Callow, a currency strategist at Westpac in Sydney.

Given the BOJ’s position as the only developed-market central bank pursuing a negative interest rate policy, “it’s hard to see why the pair wouldn’t extend into the 150-155 area”, Callow added.

DOLLAR KING

The dollar index =USD – which measures the currency against six peers including the yen, sterling and euro – added 0.46% to 112.49, after dropping to the lowest since Oct. 6 at 111.76 on Tuesday.

The greenback, which currently reigns as the safe-haven currency of choice, has sagged this week amid the bear rally in equities globally following some upbeat earnings.

But underlying support continues to come from market pricing for two more 75 bps hikes from the Fed this year as it focuses on red-hot inflation, even at the risk of sparking a recession. FEDWATCH

Fiscal uncertainty in Britain is also clouding the outlook for markets globally.

The euro EUR=EBS sank 0.45% to $0.98175, retreating from Tuesday’s high of $0.98755, a level last seen on Oct. 6.

Economists in a Reuters poll predict another 75 bps rate hike from the European Central Bank on Thursday of next week. (Full Story)

The New Zealand dollar NZD=D3 remained elevated, up 2% this week, following Tuesday’s blowout consumer price data, which raises expectations for continued aggressive tightening by the Reserve Bank of New Zealand. The currency last traded 0.2% lower at $0.56760, close to Tuesday’s two-week high of $0.5719.

(Reporting by Joice Alves and Kevin Buckland; Editing by Nick Macfie)

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The U.S. dollar edged higher against a basket of currencies on Tuesday, shaking off some of the weakness of the previous session, but a revival in risk appetite in global financial markets kept a lid on its gains.

“Yesterday’s risk-on vibe looks to be continuing into today’s session,” said Michael Brown, head of market intelligence at payments firm Caxton in London.

“A lack of any major headlines, coupled with some semblance of fiscal stability in the UK, appear to be the culprits,” he said.

Britain’s new Finance Minister Jeremy Hunt on Monday scrapped Prime Minister Liz Truss’s economic plan, which had sapped investor confidence in Britain in recent weeks.

Relief at the U-turn prompted a rally in risk assets, including on wall Street. U.S. stock market gains were also driven by strong corporate earnings from Goldman Sachs and Johnson & Johnson.

The British finance minister’s decision to reverse most of the government’s “mini-budget” prompted investors to reassess the outlook for UK interest rates and sent the pound 0.4% lower on the day to $1.1316.

The Bank of England said on Tuesday it would go ahead with plans to start selling some of its huge stock of government bonds with the first sale due on Nov. 1, a day later than previously planned to avoid clashing with a government fiscal statement.

Last month, that market upheaval caused by the government’s now-abandoned tax-cutting mini-budget, prompted the BoE to start an emergency round of bond-buying and push back the start of its ‘quantitative tightening’ (QT) sales from Oct. 6 to Oct. 31.

Against a basket of currencies, the dollar was 0.07% higher at 112.15, having earlier slipped to a near two-week low of 111.76. The index, which fell 1% in the previous session, remains just 2% shy of the two-decade high of 114.58 touched in late September.

“With the Fed remaining one of the most hawkish G10 central banks, and downside risks to the outlook continuing to intensify … I stay bullish on the USD over the medium-term,” Caxton’s Brown said.

The dollar found some support after data showed production at U.S. factories rising in September, led by output gains in durable and nondurable goods, indicating that the manufacturing sector remains on a reasonable footing despite the Federal Reserve’s efforts to limit demand through higher interest rates.

Meanwhile the Japanese yen traded near a 32-year trough to the dollar at 149 yen, putting the major psychological barrier of 150 in focus and raising the possibility of the Bank of Japan doing more to support the battered currency after its first yen-buying intervention since 1998 on Sept. 22.

“I think there is an expectation that they (Bank of Japan) may intervene, however authorities seem more concerned with the speed of any move rather than the level at which we trade,” Brown said.

The risk-sensitive New Zealand dollar rose about 0.63% to $0.5671, taking support from hotter-than-expected consumer inflation data which bolstered bets for further rate hikes.

Bitcoin was 1.9% lower at $19,165, clinging close to the levels it has traded at for the last four weeks.

(Reporting by Saqib Iqbal Ahmed; Editing by Ken Ferris and Nick Zieminski)

By Lisa Pauline Mattackal and Medha Singh

(Reuters) – A growing number of funds are betting on the long-term appeal of bitcoin and ether, a gritty gambit in the depths of a crypto winter.

Unfazed by a collapse in prices over the past 11 months, investment firms have unleashed a flurry of exchange-traded funds, anticipating that elite cryptocurrencies and their underlying technology will eventually prevail.

Of more than 180 total active crypto exchange traded products (ETPs) and trust products globally, half have launched since the bitcoin bear market started, Morgan Stanley said in a note published this month. The proliferation came even as the total value of assets in the market slumped 70% to $24 billion in that period as crypto prices tanked.

About 95% of those 180 funds are focused on the top two coins, bitcoin and ether, Morgan Stanley said.

“Naturally when the market is slower, prices are lower, people have lost money, the intensity of the appetite does diminish,” said Chen Arad, co-founder of crypto risk monitoring firm Solidus Labs. “But it’s not the case in the long run. As a whole, I don’t think anyone is giving up.”

The attraction of ETPs is that they provide exposure to digital assets on a regulated stock exchange, so retail and institutional investors don’t have to worry about securely storing their crypto and eluding hacks and heists.

In terms of money, cryptocurrency investment products have attracted about $453 million in net inflows this year with much of it going into bitcoin and investment vehicles that include the biggest cryptocurrencies, according to a report from digital asset manager Coinshares.

“There is more asset allocation towards baskets that combine the top five or 10 crypto assets by market cap. It’s a flight to quality compared to alternative assets in the crypto industry,” said Eliezer Ndinga, director of research at 21shares.

Other major cryptocurrencies include solana, cardano and ripple.

TICK BY TICK

Most active crypto ETP products are registered outside the United States, though, with Switzerland, Canada, Australia and Brazil racing ahead with spot crypto offerings.

One reason is that U.S. regulators have turned down several applications for spot bitcoin funds, which mirror the cryptocurrency’s price movements tick-by-tick, citing multiple reasons including a lack of surveillance-sharing agreements with regulated markets relating to the spot funds’ underlying assets.

Investors in futures-based funds must often shoulder the additional cost of the futures rollover as contracts approach settlement day, to maintain their position.

Bitcoin has lost 17% in the past three months, while ProShares Bitcoin Strategy’s ETF, which tracks bitcoin futures, has shed about 21%. The world’s largest bitcoin fund, Grayscale Bitcoin Trust, is down 34% in the same time.

ProShares Bitcoin Strategy ETF, has seen assets under management (AUM) shrink to just over $600 million as of the end of September, according to Refinitiv Lipper data. At its debut a year ago it pulled in over $1 billion in a matter of days.

At Grayscale’s Bitcoin Trust, the AUM have tumbled to $12.2 billion from over $30 billion at the end of 2021, data from the firm showed.

Will Peck, head of digital assets at WisdomTree, whose spot bitcoin ETF was blocked by U.S. watchdogs last week, said he wasn’t surprised by the decision, but expressed hope that an agreement could be reached.

“I think we’ll ultimately get there. But we’ll be in a holding pattern for the foreseeable future.”

GRAPHIC – Allure for crypto funds

https://graphics.reuters.com/FINTECH-CRYPTO/WEEKLY/lgpdwrydyvo/chart.png

(Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Vidya Ranganathan and Pravin Char)

(Reuters) – Creating a U.S. central bank digital currency is likely not important to the long-term status of the U.S. dollar, Federal Reserve Governor Christopher Waller said Friday.

In a speech during an event held by the Harvard National Security Journal, Waller said that a digital dollar would not offer material benefits over making U.S. dollar-denominated payments, especially because the introduction of a central bank digital currency, or CBDC, would introduce additional risks, such as cybersecurity threats.

“I don’t think there are implications here for the role of the United States in the global economy and financial system,” Waller said, suggesting instead that the debate around a digital dollar should focus on financial stability, payment system innovations and financial inclusion.”

(Reporting by Hannah Lang in Washington)

WASHINGTON (Reuters) – The U.S. Congress should give the Commodity Futures Trading Commission more powers to police cryptocurrency stablecoins to reduce risks to the financial system, Securities and Exchange Commission Chair Gary Gensler said on Friday.

Stablecoins are usually pegged to the U.S. dollar and are primarily used to facilitate trading in other digital assets.

With around $150 billion in market capitalization, stablecoins have many similarities to money market funds, and need to be regulated accordingly, Gensler said at a conference held by Georgetown University’s Psaros Center for Financial Markets and Policy in Washington.

While the CFTC has anti-fraud and anti-manipulation regulatory authorities over firms that issue dollar-backed stablecoins, they do not have “actual plenary authority to write rules around the exchanges,” Gensler said.

“I think the CFTC could have greater authorities. They currently do not have direct regulatory authorities over the underlying non-security tokens,” he said.

The vast majority of cryptocurrencies, including so-called algorithmic stablecoins, are securities, and fall under the SEC’s authority, while a handful are not, Gensler said.

In March, TerraUSD, an algorithm-based, rather than asset-pegged, stablecoin, blew up spectacularly, pushing another major stablecoin, Tether, below its dollar peg and sending ripples through the global cryptocurrency market.

The Financial Stability Oversight Council, a U.S. regulatory panel comprising top financial regulators, earlier this month recommended that Congress pass legislation addressing the risks digital assets pose to the financial system, including bills to bolster oversight of crypto spot markets and stablecoins.

It remains unclear when Congress might pass crypto-related legislation, although several bills have been introduced to address stablecoins and digital commodities regulation.

(Reporting by John McCrank; Editing by Paul Simao)

By Pete Schroeder and Hannah Lang

WASHINGTON (Reuters) – A leading U.S. bank regulator said his caution over banks partnering with fintechs is not meant to stifle those arrangements, but rather reflects his concern that firms must adequately gauge their risks.

Michael Hsu, the acting Comptroller of the Currency, also told Reuters in an interview that policymakers may be devoting too much time and energy to thinking about cryptocurrency, at the expense of figuring out the best way to police other types of financial technology.

“Look, bank-fintech partnerships, they’re here to stay. I’m not trying to do away with them,” Hsu said on Wednesday. “This is the future, so let’s do the future right.”

BANKING ON FINTECH

In remarks last month that raised eyebrows across the financial services industry, Hsu said that the Office of the Comptroller of the Currency had observed partnerships between banks and fintechs growing at “exponential rates,” and which were increasingly becoming more complex.

“My strong sense is that this process, if left to its own devices, is likely to accelerate and expand until there is a severe problem or even a crisis,” Hsu said at the time.

House Republicans criticized Hsu’s comments in a letter sent to the OCC head on Tuesday, contending that the technological innovation enabled by bank-fintech partnerships has allowed banks to reach underserved customers.

Hsu explained on Wednesday that his concern over banks and fintechs joining forces is the possibility that responsibilities for monitoring risk can become muddied when multiple firms, sometimes with different incentives, share responsibilities.

“When everything is done within a bank, we know exactly who is accountable when things break,” he said. “When you start chopping these things up … and the business models are different, that’s when risk can get lost.”

Hsu said the proper regulatory approach to fintech partnerships remains unclear, as agencies work to get a handle on the various issues at play and then determine what authorities to use.

OVERWEIGHT CRYPTO

On cryptocurrency, Hsu said he was actually worried policymakers in Congress and regulators are overextending themselves to the detriment of other areas.

“We’re spending too much time on crypto,” he said. “It’s interesting, it has thorny issues… but relative to other technology and banking issues, I think we’re now kind of overweight crypto.”

The rapid rise of crypto and related products like stablecoins has occupied the attention of numerous government agencies, including the OCC, the Securities and Exchange Commission and the Treasury Department, and has even been the focus of an executive order from President Joe Biden.

In Congress, lawmakers are juggling multiple measures to establish some sort of regulatory framework for cryptocurrency.

But Hsu cautioned that with so many policymakers focused on this one facet of emerging financial technology issues, other matters more relevant for banks may be neglected.

“Crypto is just occupying a lot of brain space for an awful lot of people, both on [Capitol] Hill and the regulatory community,” he said. “The persistence of the occupation of brain space, it’s starting to worry me now that we’re not spending that time and attention on some other things.”

(Reporting by Pete Schroeder and Hannah Lang in Washington; Editing by Matthew Lewis)

(Reuters) – Tether, the world’s largest stablecoin by market value, says it has has completely eliminated commercial paper from its reserves and has replaced those investments with U.S. Treasury bills.

Tether eliminated $30 billion of commercial paper without any losses, according to a company blog post.

In August, Tether reported that it had reserves worth $66.4 billion as of the end of June, down from $82.4 billion at the end of March.

Tether has said that it would aim to release monthly reports on the status of its reserves by the end of the year.

(Reporting by Hannah Lang in Washington)

SHANGHAI (Reuters) – Transactions using China’s digital yuan surpassed 100 billion yuan ($13.9 billion) as of Aug. 31, China’s central bank said on Wednesday, as the country continues its roll-out of a central bank digital currency.

The spending involved 360 million transactions in pilot areas in 15 provinces and municipalities, the People’s Bank of China (PBOC) said, adding that more than 5.6 million merchants could now accept payments with the digital currency.

China is at the fore of a global race to develop central bank digital currencies, although adoption is still in the early stages. Transactions using e-CNY rose from 87.6 billion yuan by the end of 2021, the PBOC said.

Pilot regions offered nearly 30 rounds of e-CNY subsidies in 2022, including $4.5 million in free digital cash in Shanghai in May, to stimulate consumption, fight the pandemic and promote low-carbon transport, the PBOC said.

The central bank also took part in the cross-border multiple Central Bank Digital Currency (mCBDC) Bridge trial developed by the Bank of International Settlements and conducted tests to connect with Hong Kong’s local digital payment system, it said.

The e-CNY has so far been used mainly for domestic retail payments, but will be promoted for use in corporate and personal business, as well as in finance, taxation, and government affairs, the bank said.

It also vowed to connect the e-CNY system with the traditional digital payment system, dominated by Alibaba Group’s Alipay and Tencent Holding’s WeChat Pay, to make it more convenient for consumers and merchants.

(Reporting by Jason Xue and Brenda Goh; editing by Richard Pullin)

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The dollar climbed to a fresh 24-year peak versus the yen on Wednesday, holding above levels that prompted intervention by Japanese officials last month, while sterling rose after a sharp fall in the previous session as investors pondered the Bank of England’s next steps.

The greenback pared gains after minutes from the last Federal Reserve meeting showed some dovish undertones. Several participants noted the importance of calibrating the pace of further tightening to mitigate the risk on the U.S. economy, the minutes said. The Fed though remained committed to raising interest rates in order to bring down inflation.

“Maybe there is a bit of hope within the minutes that basically officials are weighing the risk of going too hard or going too high on hiking,” said Juan Perez, director of trading at Monex USA in Washington.

“That’s not the number one concern right now. Number one concern continues to be inflation.”

The pound, on the other hand, rose following a drop to a two-week low versus the dollar and euro late on Tuesday, after the Financial Times reported that the BoE has signaled privately to lenders it is prepared to prolong its bond purchases.

Data showing U.S. producer prices increased more than expected in September, further boosted the dollar against the yen. The producer price index for final demand rebounded 0.4%, above the forecast for a 0.2% rise. In the 12 months through September, the PPI increased 8.5% after advancing 8.7% in August.

In the wake of the U.S. PPI data, the greenback rose as high as 146.98 yen, its strongest since August 1998. It was last up 0.7% at 146.85, marking a fifth straight session of gains.

Japan staged its first yen-buying intervention since 1998 on Sept. 22, when the dollar was at 145.90 yen.

“This just reaffirmed that the BoJ (Bank of Japan) did not defend a particular level, but was addressing volatility,” said Marc Chandler, chief market strategist, at Bannockburn Global Forex in New York, adding that the three-month yen volatility was lower on Wednesday than when Japan intervened last month.

Three-month implied volatility on the yen was 11.9% , compared with a high of 13.26% on Sept. 22 when Japan stepped in to prop up the Japanese unit.

Officials have reiterated they stand ready to take appropriate steps to counter excessive currency moves, though whether they wish to defend particular levels is less clear.

Yields outside Japan have been pushed higher by spillover from the turmoil in Britain’s bond market.

Long-dated gilt yields jumped again, with the 20-year hitting a 14-year high a day after BoE Governor Andrew Bailey reiterated late Tuesday that the central bank would end its emergency bond-buying programme on Friday, telling pension fund managers to finish rebalancing their positions by then.[GB/]

Sterling fell to a two week low of $1.0925 after Bailey’s remarks, which were reiterated by a central bank spokesperson on Wednesday. The currency later rebounded to stand 1.2% higher at $1.1083, after the FT report which said the BoE had suggested to private lenders that it was open to extending its bond purchases.

Against the euro, the pound gained. In afternoon trading, the euro was down 1.2% at 87.40 pence.

Elsewhere, the euro remained under pressure, down 0.1% at $0.9696.

The risk-sensitive Australian dollar sank to a 2 1/2-year low of US$0.6236, and was last flat at US$0.6274.

========================================================

Currency bid prices at 3:12PM (1912 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index 113.2800 113.3400 -0.04% 18.416% +113.5900 +113.0200

Euro/Dollar $0.9699 $0.9706 -0.07% -14.68% +$0.9735 +$0.9668

Dollar/Yen 146.8800 145.8650 +0.73% +27.63% +146.9550 +145.6000

Euro/Yen 142.47 141.58 +0.63% +9.32% +142.6300 +141.4500

Dollar/Swiss 0.9978 0.9959 +0.23% +9.43% +1.0004 +0.9932

Sterling/Dollar $1.1092 $1.0961 +1.22% -17.96% +$1.1132 +$1.0925

Dollar/Canadian 1.3812 1.3795 +0.13% +9.25% +1.3830 +1.3762

Aussie/Dollar $0.6274 $0.6273 +0.03% -13.67% +$0.6298 +$0.6236

Euro/Swiss 0.9678 0.9677 +0.01% -6.66% +0.9690 +0.9644

Euro/Sterling 0.8744 0.8847 -1.16% +4.10% +0.8867 +0.8729

NZ $0.5604 $0.5582 +0.42% -18.10% +$0.5632 +$0.5561

Dollar/Dollar

Dollar/Norway 10.7725 10.7445 +0.14% +22.14% +10.7980 +10.6415

Euro/Norway 10.4468 10.4347 +0.12% +4.33% +10.4696 +10.3665

Dollar/Sweden 11.3402 11.3577 -0.19% +25.75% +11.3961 +11.3051

Euro/Sweden 10.9994 11.0203 -0.19% +7.43% +11.0385 +10.9822

(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Amruta Khandekar in Bengalaru, Alun John in London, Kevin Buckland in Tokyo, Georgina Lee in Hong Kong, and Vidya Ranganathan in Singapore; Editing by Paul Simao and Nick Zieminski)

(Reuters) – Banks that accept deposits from cryptocurrency companies should be aware of increased liquidity risks, particularly if firms are highly interconnected with other digital asset businesses, said Michael Barr, the Federal Reserve’s vice chair of supervision, on Wednesday.

Barr said the Fed is working with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp to warn that banks could experience deposit fluctuations linked to broader crypto market developments.

“The recent volatility in crypto markets has demonstrated the extent of centralization and interconnectedness among crypto-asset companies, which contributes to amplified stress,” he said.

“While banks were not directly exposed to losses from these events, these episodes have highlighted potential risks for banking organizations.”

Read more:

EXPLAINER-EU agrees rulebook for ‘Wild West’ crypto markets

(Reporting by Hannah Lang in Washington; Editing by Lisa Shumaker)

(Reuters) – Cryptocurrency platform Crypto.com will set up its European regional headquarters in Paris, the Singapore-based company said on Wednesday.

The firm will invest 150 million euros ($145.7 million) in France to support the establishment of its market operations, it said in a statement, adding it will hire local talent in the fields of compliance, business development and product.

The cryptocurrency exchange platform, which has more than 50 million users worldwide, received regulatory approval by the French market authority last month, allowing it to offer products and services to customers in France.

Crypto.com also got regulatory approval in the United Kingdom and Italy earlier this year.

In May, cryptocurrency exchange Binance said it had registered with France’s market regulator, with Binance France’s general manager David Prinçay adding it was now seeking a formal licence to open a regional headquarters in France.

($1 = 1.0299 euros)

(Reporting by Elena Vardon, Editing by Louise Heavens)

By Yousef Saba

DUBAI (Reuters) – Crypto investment products firm 21.co said on Wednesday its subsidiary 21Shares AG has listed a bitcoin exchange-traded product on Nasdaq Dubai, making it the Middle East’s first physically-backed bitcoin ETP.

The 21Shares Bitcoin ETP trades, under the ticker ABTC, in the same way as the 21Shares Bitcoin ETP in Europe, 21.co said in a statement.

Dubai has ambitions to become a global cryptocurrency hub and has attracted big industry players to set up shop like Binance, which went on a UAE hiring spree this year and is helping to shape the Middle East commercial hub’s virtual assets regulations.

Following the Dubai listing, 21Shares has 46 listed products in seven countries, 21.co added.

Swiss-based 21.co last month raised $25 million in a funding round that valued it at $2 billion, which it said made it “Switzerland’s largest crypto unicorn”.

The crypto market has suffered a rout that has forced some of its biggest players to lay off thousands of employees to cut costs.

But Sherif El-Haddad, appointed 21Shares head of Middle East in August, was upbeat, saying cryptocurrencies were “fast becoming the asset of the future for investors and wealth managers around the world”.

The Middle East and North Africa is the world’s fastest-growing cryptocurrency region, where the volume of crypto received jumped 48% in the year to June, blockchain researcher Chainalysis said in a report last week.

Hany Rashwan, CEO and co-founder of 21Shares, said in the statement the company “will continue to support the Middle East’s ambitions to become a global crypto hub”.

(Reporting by Yousef Saba; editing by Barbara Lewis)

By Jody Godoy

(Reuters) – Grayscale Investments said in a court filing Tuesday that the U.S. Securities and Exchange Commission set the bar too high for spot bitcoin exchange-traded funds, which have so far not been approved for listing on U.S. exchanges.

Grayscale sued the regulator in June, after the SEC denied its bid to convert its Grayscale Bitcoin Trust, the world’s largest bitcoin fund, into an ETF for listing on Intercontinental Exchange Inc’s NYSE Arca exchange.

The regulator had said that the proposal did not meet standards designed to prevent fraudulent practices and protect investors.

The SEC has rejected over a dozen spot bitcoin ETF applications, and approved several bitcoin futures-based ETFs. The rejections have focused on applicants’ lack of surveillance-sharing agreements with regulated markets relating to the spot funds’ underlying assets. Such agreements entail sharing trade data and other information to allow the exchange to detect manipulation.

Grayscale argued in the court filing that the SEC had not applied its standards evenly to spot bitcoin ETFs and bitcoin futures-based ETFs, even though both types of funds are both fundamentally tied to the price of bitcoin.

“There is only one reasonable conclusion to draw: the Commission is treating spot bitcoin ETPs with special harshness based on its opinion about bitcoin’s merits as compared to other types of investments,” the company said in the filing.

There is no spot bitcoin market that the SEC considers to be regulated, Grayscale said. But the NYSE Arca had entered a surveillance-sharing agreement with the Chicago Mercantile Exchange, where bitcoin futures trade, it said.

Since the SEC deemed other agreements with CME sufficient to prevent fraud in bitcoin futures-based ETFs, the same should apply to bitcoin spot ETFs since both types of fund rely on the price of bitcoin, Grayscale said.

Grayscale also argued the SEC acted outside its authority by not accepting other means of mitigating fraud risk.

(Reporting by Jody Godoy in New York; Editing by David Gregorio)

By Huw Jones

LONDON (Reuters) – Britain’s financial services minister said on Tuesday that a lengthy delay in issuing a digital pound would create problems for finance and the economy.

The finance ministry and the Bank of England are jointly assessing a digital pound, with public consultation due later this year.

“There are some very broad geopolitical concerns if the UK sits out indefinitely the ability to issue its own digital currency. Others will,” newly appointed City minister Andrew Griffith told parliament’s treasury select committee.

The Bank of International Settlements, a forum for central banks, said in June that central bank digital currencies are needed to modernise finance and ensure Big Tech does not take control of money.

Around 90% of the world’s central banks are now using, trialling or looking into digital currencies, worried about being left behind by private-sector bitcoin and other cryptocurrencies used for making payments.

“If the counterfactual is that either private enterprises or states come forward with their equivalent currencies, and the UK, either the government or the Bank of England, have no play in that domain at all, then you could end up with some quite difficult consequences in terms of macroeconomic policy, but also the ability to regulate individual transactions,” Griffith said.

Rishi Sunak, who was finance minister at the time, last year asked the BoE to look at the case for a new “Britcoin” or digital pound.

(Reporting by Huw Jones; Editing by Cynthia Osterman)

(Reuters) – The U.S. Treasury Department said on Tuesday that cryptocurrency exchange Bittrex Inc was fined about $53 million to settle “apparent violations” of U.S. sanctions on certain countries and anti-money laundering laws.

The fines of more than $24 million and $29 million were announced by the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN), respectively.

The OFAC alleged that Bittrex failed to prevent people located in the sanctioned jurisdictions of Ukraine’s Crimea region, Cuba, Iran, Sudan, and Syria from using its platform between March 2014 and December 2017.

The FinCEN said its investigation found that from February 2014 through December 2018, Bittrex failed to maintain an effective anti-money laundering program.

“Bittrex’s AML program failed to appropriately address the risks associated with the products and services it offered, including anonymity-enhanced cryptocurrencies,” it added.

Cryptocurrencies and other digital assets have soared in popularity over recent years and are getting increasingly intertwined with the regulated financial system, saddling policymakers with monitoring risks in a largely unregulated sector.

Bittrex did not immediately respond to a Reuters request for comment on the fines.

(Reporting by Manya Saini in Bengaluru; Editing by Anil D’Silva)

(Reuters) – Bank of New York Mellon Corp is adding cryptocurrencies to assets that it holds as a custody manager, as it looks to attract a diverse set of investors and traders by tapping into the popularity of bitcoins and ethers.

Trading in cryptocurrencies has skyrocketed worldwide, drawing many traditional institutions to an asset that was previously shunned by Wall Street due to its wild swings and increased scrutiny.

Nasdaq Inc and BlackRock Inc have already rolled out custody platforms for their clients, as they look to gain foothold in a market dominated by traditional players like Coinbase Inc and Binance.

BNY formed an enterprise Digital Assets Unit in 2021 to develop solutions for digital asset technology, and tapped tapped digital asset technology companies Fireblocks and Chainalysis, it said in a statement on Tuesday.

The 238-year-old bank won the approval of New York’s financial regulator earlier this fall and is the first of the eight systemically important U.S. banks to store digital currencies and allow customers to use one custody platform for both its traditional and crypto holdings, the Wall Street Journal reported earlier on Tuesday.

(Reporting by Mehnaz Yasmin and Manya Saini in Bengaluru; Editing by Anil D’Silva)

By Hannah Lang

(Reuters) – It’s not easy being a crypto investor.

They’ve seen the value of their holdings drop like a brick this year, and now many are stewing over the safety of their crypto cash after a series of heists that’s seen around $2 billion spirited away by hackers.

Enter the ghost of technology’s past.

Hardware wallets – old-school physical devices similar to USB drives that stash crypto holdings offline – might seem a throwback to a more innocent digital age, but they’re proving to be a popular response to a cutting-edge conundrum.

The global hardware wallet market, valued at $245 million in 2021, is expected to swell to over $1.7 billion by 2030, according to market research firm Straits Research.

It’s being fueled by a steady stream of cyber robberies that, according to researcher Chainalysis, has seen thieves steal $1.9 billion in crypto in the first seven months of the year, an increase of 60% from a year earlier. Much of this was stolen directly from blockchains or “hot” online wallets.

It’s not only hacks making investors edgy. Others lost access to their crypto when major lenders such as Celsius Network and Voyager Digital collapsed in July.

“We have definitely seen increased interest in hardware wallets, and in general self-custody, post-several issues,” said Adam Lowe, chief product and innovation officer at U.S.-based CompoSecure, one of several hardware wallet makers seeking to capitalize on a rush for safety.

“The day of or day after those events, we would see very significant (sales) lifts.”

There’s no such thing as a free crypto lunch, though: While hot wallets are convenient and allow for quick trading, hardware wallets typically don’t appeal to first-time investors, who often buy cryptocurrencies on big exchanges and might choose to keep their assets on those platforms, where they can simply log in with a username and password.

BLOWING HOT AND COLD

Although hot wallets are usually free and offer quick access to crypto, they can be vulnerable to hacks. In August, nearly 8,000 crypto wallets on the Solana blockchain were hit by hackers who made off with more than $5 million in crypto.

“Users are strongly encouraged to use hardware wallets,” Solana said at the time.

France’s Ledger, another hardware wallet maker, said it saw a spike in sales after the Solana wallets heist.

“We do see significant uptick in user-based interest in some of these situations of stress in the markets,” aid Alex Zinder, global head of Ledger Enterprise.

Most hardware wallets connect to a mobile app, where the owners of the digital keys needed to access their crypto keys can control their funds. Some use “Secure Enclave” technology, a security feature used to store sensitive data.

Josef Tětek, bitcoin analyst at Czech-based hardware wallet company Trezor, says he expects better phone interaction with cold storage wallets in the future, to serve investors in places like South America and Africa, where it’s more common for users to have mobile phones than personal computers.

Yet companies in this ballooning market might be advised to make hay while the sun shines.

One long-term question is whether phone makers will want to get in on the action, said Stan Miroshnik, co-founder and partner at 10T Holdings, which led Ledger’s $380 million Series C funding round last year.

“One question, I think, for the industry and where it’s going and in part what will drive consumer adoption, is what if every iPhone has a built-in Secure Enclave hardware wallet?”

(Reporting by Hannah Lang in Washington; Editing by Tom Wilson and Pravin Char)