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| The biggest crypto news and ideas of the day Mar. 17, 2022 Was this newsletter forwarded to you? Sign up here. Supported by
Welcome to The Node.
In today’s newsletter: Binance is looking to buy banks and payment processors in Brazil. Eight members of Congress are asking for clarity from SEC. And EU warns investors about losing all of their money in crypto.
Today’s must-reads Top Shelf LATIN AMERICA: Binance is the world’s largest cryptocurrency exchange, and it’s looking to buy banks and payment processors in Brazil. Amid a crypto boom in South America’s largest economy, Binance CEO Changpeng “CZ'' Zhao said it plans to buy more companies in non-crypto industries as a way of expanding the appeal of digital assets. To foster the development of crypto, Zhao said the exchange plans to work closely with regulators and agencies “in a healthy and collaborative way.”
CRYPTO CLARITY: Eight members of Congress have asked the U.S. Securities and Exchange Commission for details surrounding the probing of crypto companies. The bipartisan group asked a series of 13 detailed questions about documents the SEC is requesting of crypto industry participants, including the number of questions in them and how much time companies have to respond to them. Rep. Tom Emmer (R-Minn.) wrote in an accompanying tweet to the letter that “crypto startups must not be weighed down by extra-jurisdictional and burdensome reporting requirements. We will ensure our regulators do not kill American innovation and opportunities.”
NEWLY APPOINTED: Former head of cryptocurrency exchange Binance’s U.K. operations, Jonathan Farnell, has been appointed as the new CEO of Nasdaq listed crypto exchange Eqonex (EQOS). Last week Binance launched fiat-to-crypto payments provider Bifinity, through which it will provide a convertible loan to Eqonex. As part of the terms of the deal, Binance was given the right to appoint Eqonex’s CEO, chief financial officer and chief legal officer from within Bifinity.
CRYPTO RISK? On Thursday, a group of top financial regulators in the European Union (EU) warned consumers they faced the very real possibility of losing all of their money investing in crypto assets. Currently, no sufficient measures to protect consumers are in place, but proposed regulations for crypto in the EU continue to move through the union’s legislative process. The EU’s warning follows a parliamentary committee vote on the Markets in Crypto Assets (MiCA) package, which passed Monday and squashed the proposed rule to ban bitcoin.
Overheard on CoinDesk TV... Sound Bites "I do think that we're seeing some expressed concern [over cryptocurrency]. That's a key issue for us [in Washington]."
–White House NSC director of cybersecurity and Secure Digital Innovation, Carole House, on CoinDesk TV's "First Mover."
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What others are writing... Off-Chain Signals New Job Openings at Spotify Indicate a Move to Web3 Technology (Decrypt) Class action suit against Coinbase alleges unregulated securities sales (Cointelegraph) Block invests in Japanese challenger bank Kyash in $41 million round (The Block) Beware Celebrities Pitching Crypto, European Watchdogs Say (Bloomberg) The FTC’s ‘profoundly vague’ mission to kill algorithms will be messy (Protocol)
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Putting the news into perspective The Takeaway The fight against inflation has begun and bitcoin is ready to help
Hello! Helene Braun here with some good news for savers and bad news for borrowers. If you haven’t heard it already, the U.S. Federal Reserve’s interest rate hike sprint has begun, so make sure to pay off your credit card debt ASAP.
Wednesday, the Fed confirmed what has long been anticipated by traders and economists, or the “fed bringing a water gun to an inflation war,” if you ask Anthony Pompliano. In a statement, the Federal Open Market Committee (FOMC), the central bank’s monetary policymaking body, said it would lift the Federal Funds rate by 25 basis points, to a 0.25%-0.5% target rate.
No surprise here. Fed Chair Jerome Powell already hinted at rate hikes at the FOMC’s March meeting and earlier this month, during a testimony before two congressional panels. Powell reiterated how strongly he feels about a quarter-percentage point increase, which gave traders plenty of time to price in a hike and weaken the effect of Wednesday’s decision on asset prices. Wall Street doesn’t like to be surprised, and the Fed doesn’t like to surprise Wall Street.
It’s not only traditional bankers who are carefully parsing the words out of Powell’s mouth; crypto traders are listening, too. Some crypto bros believe bitcoin (BTC) to be a hedge against inflation because it can’t be manipulated by an FOMC-type body.
But recent bitcoin movements don’t back this theory. The largest cryptocurrency by market cap is down nearly 30% over the last year, while inflation has been climbing to a four-decade high. Even Tesla CEO Elon Musk said Monday that in times of high inflation it’s best to put your money in “physical things.”
He might be right. Traders want to store their money in a safe haven asset that shows high levels of stability. However, with bitcoin’s volatile history, investors might prefer to go with the traditional alternative: gold.
“Inflation still has less influence on bitcoin’s price than other speculative factors. … The idea that bitcoin is an inflation hedge has really not been proven yet, it’s still kind of somewhat theoretical,” said Scott Bauer, a former Goldman Sachs trader who's now CEO of Prosper Trading Academy.
But the Fed’s decision certainly had an effect on bitcoin. The cryptocurrency briefly dipped to $39,513 after the decision but then quickly rebounded, climbing as high as $41,454 on Wednesday and trading slightly below $41,000 on Thursday morning.
Messari founder Ryan Selkis seemed very bullish after the Fed news, tweeting a picture that seemed to imply that bitcoin would stay over $40,000 for a while.
You can think what you want about the correlation between bitcoin and inflation. In the end, bitcoin is a lot of things to a lot of people, and that’s what makes it exciting to watch. Some people think of it as a technology. To others, it’s a form of payment or simply a store of value, whether inflation is high or low.
This week, the cryptocurrency has moved enough to reinforce the idea that it could be a way to make money at a time when the state of traditional money makes you think twice about heating your living room.
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