Skip to main content

The cryptocurrents are flowing in strange and opposing ways, like the Hudson River at high tide. On the one hand, it fauxrencies remain the preferred tender of the global underworld, underwriting the growing cyberransoms paid by large companies to get the fuel or factory-farmed meat flowing once more. So popular and useful has bitcoin and its ilk been for this that the revelation that transactions therein are not quite as untraceable by law enforcement as hoped counts are genuinely bad news for the sector. On the other, more legitimate, hand, bitcoin is now the co-currency of an actual sovereign state and will soon be available in your 401(k), for better or worse for the millennials likely to bet their futures on it.

None of the above makes global regulators particularly happy, and they have some ideas about bitcoin themselves.

The Basel Committee for Banking Supervision.… said that banks should apply a 1,250% risk weight to bitcoin, which is “similar in effect to the deduction of the asset from capital.” If a bank holds $100 of bitcoin exposure, it would give rise to risk-weighted assets of $1,250, which when multiplied by the minimum capital requirement of 8% results in setting aside at least $100, the committee said in its statement…. The committee proposed less-stringent capital requirements for crypto assets that meet certain conditions, such as tokenized traditional assets and stablecoins.

"Cryptocurrency has created opportunities to scam investors, assist criminals, and worsen the climate crisis," [Sen. Elizabeth Warren] said at a congressional hearing. "The threats posted by crypto show that Congress and federal regulators can't continue to hide out, hoping that crypto will go away. It won't. It's time to confront these issues head-on."

The heads of Colonial Pipeline and JBS, and anyone else who’s been paying attention, might justly say it’s actually well past time, but better late than never, we guess, although our money (in this case neither actual nor fake but figurative) is on never.

"We don’t need a state-sponsored bank interfering with this successful free-enterprise system," said Senator Pat Toomey, who instead urged continued growth of private digital currencies.

Bitcoin, Other Crypto Assets Targeted for Stiff Banking Regulation [WSJ]
Warren: U.S. government needs to confront crypto threats ‘head on’ [Reuters]
Pipeline Investigation Upends Idea That Bitcoin Is Untraceable [NYT]
JBS paid $11M in Bitcoin to resolve ransomware attack [CNET]
Bitcoin jumps after El Salvador says it'll start accepting it as legal tender [CNN]
Cryptocurrency Comes to Retirement Plans as Coinbase Teams Up With 401(k) Provider [WSJ]
Millennial millionaires have a large share of their wealth in crypto, CNBC survey says [CNBC]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.



President Biden Direct Regulators To Really Seriously Think About This Bit-Thingies

Grandpa Joe’s not quite sure what to do with these newfangled doohickies. But hedge funds are.

By US government [Public domain], via Wikimedia Commons

Gary Gensler Stands Astride History Yelling Stop

Actually, he’s not saying anything. Just suing.

merrick garland

Merrick Garland Is Looking To Nail Some Corporate A**es To The Wall

The Justice Department is going holistic on wrongdoers.

By Mike Cauldwell ( [Public domain], via Wikimedia Commons

Even Gary Gensler Thinks He’s Wasting A Lot Of Time On Cryptos

Since all that work will be moot soon enough, once they cease to be.

By Mike Cauldwell ( [Public domain], via Wikimedia Commons

Largest Crypto Exchange Banned From Britain, Hottest Digital Token Tanks, Bitcoin Soars, Rinse, Repeat

For something so volatile and theoretically interesting, the not-particularly-trying trials of faux currencies are actually quite boring.

By US government [Public domain], via Wikimedia Commons

Joe Biden Getting Gary Gensler A New Friend

And she doesn’t like cryptos any better than him.

merrick garland

Merrick Garland Gets Busy

The Justice Department has a new squad of crypto-cops, a new taste for white-collar criminal enforcement, a new demand for cyber-ransom notifications. And if you happen to know where all of Tether’s money is, it would appreciate a call on that, as well.