Crypto meltdown is wake-up call for many, including lawmakers

Crypto meltdown is wake-up call for many, including lawmakers
A representation of virtual currency bitcoin and a US one dollar banknote are seen in front of a stock graph in this illustration. (REUTERS)
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Updated 08 June 2022

Crypto meltdown is wake-up call for many, including lawmakers

Crypto meltdown is wake-up call for many, including lawmakers
  • Roughly 16% of adult Americans, or 40 million people, have invested in cryptocurrencies, survey shows
  • Stablecoin TerraUSD's collapse has led to an estimated $40 billion in investor funds erased

NEW YORK: Meltdowns in the cryptocurrency space are common, but the latest one really touched some nerves. Novice investors took to online forums to share tales of decimated fortunes and even suicidal despair. Experienced crypto supporters, including one prominent billionaire, were left feeling humbled.
When the stablecoin TerraUSD imploded last month, an estimated $40 billion in investor funds was erased — and so far there has been little or no accountability. Stablecoins are supposed to be less vulnerable to big swings — thus the name — but Terra suffered a spectacular collapse in a matter of days.
The Terra episode publicly exposed a truth long-known in the always-online crypto community: for every digital currency with staying power, like bitcoin, there have been hundreds of failed or worthless currencies in crypto’s short history. So Terra became just the latest “sh— coin” — the term used by the community to describe coins that faded into obscurity.
Terra’s quick collapse came just as bitcoin, the most popular cryptocurrency, was in the midst of a decline that has wiped out nearly half of its value in a couple of months. The events have served as a vivid reminder that investors, both professionals and the mom and pop variety, can be rolling the dice when it comes to putting money into digital assets.
After being mostly hands-off toward crypto, it appears that Washington has had enough. On Tuesday, two senators — one Democrat and one Republican — proposed legislation that seeks to build a regulatory framework around the cryptocurrency industry; other members of Congress are considering more limited legislation.
What’s surprising, however, is that the cryptocurrency industry is signaling its cooperation. Politicians, crypto enthusiasts, and industry lobbyists all point to last month’s collapse of Terra and its token Luna as the possible end of the libertarian experiment in crypto.
Stablecoins are typically pegged to a traditional financial instrument, like the US dollar, and are supposed to be the cryptocurrency equivalent of investing in a conservative money market fund. But Terra was not backed by any hard assets. Instead, its founder Do Kwon promised that Terra’s proprietary algorithm would keep the coin’s value pegged to roughly $1.00. Critics of Terra would be attacked on social media by Kwon and his so-called army of “LUNAtics”
Kwon’s promise turned out to be worthless. A massive selling event caused Terra to “break the buck” and collapse in value. Reddit boards dedicated to Terra and Luna were dominated for days by posts referencing the National Suicide Prevention Hotline.
Terra’s ascendance attracted not only retail investors but also better-known cryptocurrency experts. One notable “Lunatic” was billionaire Mike Novogratz, who tattooed his upper arm with the word Luna and a wolf howling at the moon. Novogratz told his followers that the tattoo “will be a constant reminder that venture investing requires humility.”
Michael Estrabillo entrusted his crypto investments to stablegains, an investment vehicle that he says had assured him and other investors that the funds were secured in USD Coin, one of the largest stablecoins. Then, on May 9, he said he was informed his money was locked up in Terra.
“Had I known I was involved in a currency that was backed by an algorithm, I would have never invested in that,” Estrabillo lamented.
Washington may also be waking up to the fact that what used to be niche part of the Internet and finance has gone mainstream and can no longer be ignored.
The total value of crypto assets hit a peak of $2.8 trillion last November; it’s now below $1.3 trillion, according to CoinGecko. Surveys show that roughly 16 percent of adult Americans, or 40 million people, have invested in cryptocurrencies. Retirement account giant Fidelity Investments now offers crypto as a part of a 401(k) plan. Sen. Cory Booker, D-New Jersey, has repeatedly pointed out that crypto is particularly popular among Black Americans, a community long distrustful of Wall Street.
Further, crypto has permeated popular culture. Numerous Super Bowl ads touted crypto. Sports arenas are now named after crypto projects and the Washington Nationals baseball team took a sponsorship deal from Terra before it collapsed. Celebrities routinely shill crypto on social media, and YouTube personalities generate millions of views talking about the latest crypto idea.
Terra’s collapse was a bridge too far, it seems.
On Tuesday, Sen. Kirsten Gillibrand, D-New York, and Sen. Cynthia Lummis, R-Wyoming, proposed a framework to start regulating the industry, which would include giving the Commodity Futures Trading Commission full regulatory jurisdiction over cryptocurrencies such as bitcoin and rewriting the tax code to include crypto. It would also fully regulate stablecoins for the first time ever.
This comes after the Biden administration’s working group on financial markets issued a 22-page report last November, calling on Congress to pass legislation that would regulate stablecoins. One recommendation includes a requirement that stablecoin issuers become banks that would hold sufficient cash reserves.
Treasury Secretary Janet Yellen has also called for stablecoin regulation, saying “we really need a regulatory framework to guard against the risks,” during a House committee meeting in May.
Further, it appears that the cryptocurrency industry — with its libertarian leanings and deep skepticism of Washington — might also be on board.
“I do think this is a bit of a wake-up call. A lot of people were taken aback by Terra’s failure,” said Perianne Boring, founder of the Chamber of Digital Commerce, one of the top lobbyists for the cryptocurrency industry.
Other crypto lobby groups, like the Association for Digital Asset Markets, have announced support for the Lummis-Gillibrand bill.
One idea that Washington seems to be coalescing around is that entities that issue stablecoins — often used as a bridge between traditional finance and the crypto world — need to be transparent about the assets backing them and be as liquid as any other instrument playing a key role in finance.
Sen. Pat Toomey, R-Pennsylvania, is circulating a separate bill that would require stablecoin providers to have a license to operate, restrict the types of assets they carry to back those stablecoins, as well as be subject to routine auditing to make sure they are complying.
Describing Terra as a “debacle,” Toomey said in an interview that Terra’s collapse made it even more important that Washington build some guardrails around stablecoins. Toomey is the top Republican on the Senate Banking Committee.
“It’s always difficult to get anything across the goal line in the Senate, but there’s nothing politically polarizing about creating a statutory regime for stablecoins,” Toomey said.
After Terra’s collapse there are two remaining big stablecoins: USD Coin issued by the company Circle, and Tether, created by the Hong Kong-based company Bitfinex. Both hold hard assets to back their value, but Bitfinex is less transparent about the assets it holds and is not audited. There are also a host of smaller stablecoin issuers, which in the world of crypto could become the latest hot item overnight.
“It’s not just urgent that Washington step in, it’s urgently urgent,” said Jeremy Allaire, founder and CEO of Circle, in an interview.
 

Decoder

What are Stablecoins?

Stablecoins are cryptocurrencies supposedly pegged to a cryptocurrency, fiat money, or to exchange-traded commodities. They are supposed to be less vulnerable to big swings, but Terra suffered a spectacular collapse in a matter of days, publicly exposing a truth long-known in the always-online crypto community: for every digital currency with staying power, like bitcoin, there have been hundreds of failed or worthless currencies in crypto’s short history.


Heathrow extends passenger cap into October

Heathrow extends passenger cap into October
Updated 17 sec ago

Heathrow extends passenger cap into October

Heathrow extends passenger cap into October

LONDON: Heathrow airport said on Monday it was extending its capacity limit through most of October to reduce the chaos caused by a post-pandemic surge in passengers amid a lack of staff.

Europe’s largest airport introduced a cap of 100,000 departing passengers per day in July, which was originally slated to have expired at the end of September.

“Since the cap was introduced, passenger journeys have improved with fewer last-minute cancelations, better punctuality and shorter wait times for bags,” said Heathrow.

It said the extension through Oct. 29 “will provide passengers with confidence ahead of their half-term getaways.”

Airlines scheduled thousands of flights in Europe this summer season to capture a boom in travel demand following the relaxation of COVID-19 restrictions.

But having cut back staff drastically during the pandemic, both airlines and airports found it difficult to hire enough employees.

This led to long waits to check-in, clear security and collect bags in many airports across Europe, as well as to cancelations of flights due to lack of crew.

The Heathrow cap was set at roughly 4,000 passengers per day fewer than scheduled flight capacity.

Airlines have canceled flights in response to the cap, as well as in recognition of their staffing levels.

Heathrow said it was regularly reviewing the situation and would remove the cap early if it sees an improvement.

“We want to remove the cap as soon as possible, but we can only do so when we are confident that everyone operating at the airport has the resources to deliver the service our passengers deserve,” Heathrow Chief Commercial Officer Ross Baker said.

Amsterdam and Frankfurt airports have also instituted caps.


Saudi Arabia’s agricultural sector grew at a rate of 7.8% in 2021

Saudi Arabia’s agricultural sector grew at a rate of 7.8% in 2021
Updated 38 min 54 sec ago

Saudi Arabia’s agricultural sector grew at a rate of 7.8% in 2021

Saudi Arabia’s agricultural sector grew at a rate of 7.8% in 2021

RIYADH: Saudi Arabia’s agricultural sector grew at a rate of 7.8 percent in 2021 as compared to the previous year, the Saudi Press Agency reported on Monday.

The agricultural output during the period was valued at SR72.25 billion ($19.23 billion) — the highest in more than five years — as compared to SR67.05 billion in the previous year.

The Ministry of Environment, Water and Agriculture attributed this growth to its strategies implemented in line with Vision 2030. In addition to that recovery from the coronavirus disease pandemic also helped the sector’s growth, the ministry added.

The Kingdom’s agriculture output in 2017 was estimated at SR65.29 billion, around SR65.49 billion in 2018, and SR66.20 billion in 2019.

It recorded around SR67.05 billion in 2020, noting that the sector’s contribution to the gross domestic product in general amounted to 2.3 percent last year, while the contribution of agricultural output to non-oil GDP was 3.6 percent, an increase of 0.2 percent compared to 2020.

The ministry highlighted that the Kingdom’s balance of trade achieved a surplus of SR462.5 billion, an increase from the year 2020, which recorded SR134.5 billion, due to increased exports during 2021. The agricultural exports amounted to SR13.16 billion.


PIF, Cain International invest $900m in Aman Group to boost its global expansion

PIF, Cain International invest $900m in Aman Group to boost its global expansion
Updated 15 August 2022

PIF, Cain International invest $900m in Aman Group to boost its global expansion

PIF, Cain International invest $900m in Aman Group to boost its global expansion

RIYADH: Saudi Arabia’s Public Investment Fund and Cain International have invested $900 million in Aman Group to help accelerate the global expansion of the hospitality and lifestyle brand management company.

The investment will be used to enhance the existing portfolio, drive the construction of the pipeline of Aman and Janu destinations, as well as support the acquisition and development of additional sites, according to a statement issued on Monday. 

Following the new funding, the company is now valued at over $3billion.

Aman is a renowned collection of 34 hotels across 20 countries, 12 of which include Aman Branded Residences, with nine further hotels and residences projects under construction and a committed pipeline of additional destinations in countries including USA, Japan, Mexico, South Korea, Saudi Arabia, and European destinations, among others. 

Vlad Doronin, owner, chairman and CEO of Aman Group, said: “The investment from PIF and Cain International is a vote of confidence in my vision and the work the team has done over the last eight years, cementing the brand’s evolution and ability to deliver this vision at pace.”

Commenting on the investment, Turqi Al-Nowaiser, deputy governor and head of International Investments Division at PIF, said: “The investment is in line with PIF’s strategy to invest in promising sectors to achieve sustainable, attractive returns in Saudi Arabia and globally.”

“We are excited to be investing in this phenomenal brand and look forward to building upon our longstanding partnership with Vlad and his team,” said Jonathan Goldstein, CEO and co- founder of Cain International. 


PIF-owned Helicopter Co. to add Airbus ACH160 to its fleet 


PIF-owned Helicopter Co. to add Airbus ACH160 to its fleet 

Updated 35 min 22 sec ago

PIF-owned Helicopter Co. to add Airbus ACH160 to its fleet 


PIF-owned Helicopter Co. to add Airbus ACH160 to its fleet 


RIYADH: The Helicopter Co., fully owned by the Public Investment Fund, has announced that Airbus ACH160 multi-purpose helicopter will become part of its fleet in early 2023.

The new ACH160 is one of the world’s most technologically advanced helicopters with a new rotor blade design that results in significantly reduced noise, according to a statement posted on LinkedIn.

The company will obtain six new ACH160 helicopters, with the first being set to join the fleet early in 2023.

The new helicopter comes in line with the firm’s aims to deliver an improved environmental footprint and lower fuel consumption.


Macro Snapshot — China unexpectedly cuts key rates as economic data disappoints; Japan’s economy expands

Macro Snapshot — China unexpectedly cuts key rates as economic data disappoints; Japan’s economy expands
Updated 15 August 2022

Macro Snapshot — China unexpectedly cuts key rates as economic data disappoints; Japan’s economy expands

Macro Snapshot — China unexpectedly cuts key rates as economic data disappoints; Japan’s economy expands

CAIRO: China’s central bank cut key lending rates in a surprise move on Monday to revive demand as data showed the economy slowing in July, with factory and retail activity squeezed by Beijing’s zero-COVID policy and a property crisis.

The grim set of figures indicate the world’s second largest economy is struggling to shake off the June quarter’s hit to growth from strict COVID-19 restrictions, prompting some economists to downgrade their projections.

Egypt’s unemployment rate  

Egypt’s unemployment rate in April to June remained unchanged from the previous quarter at 7.2 percent, the country’s Central Agency for Public Mobilization And Statistics announced on Monday.

Thai GDP grows 

Thailand’s economy expanded at the fastest pace in a year in the second quarter as eased COVID-19 restrictions boosted activity and tourism, reinforcing views that more rate hikes will be needed to curb inflationary pressures.

The Southeast Asia’s second-largest economy is making a steady recovery after the lifting of pandemic curbs but still faces headwinds ranging from inflation at 14-year highs to China’s slowdown and weaker global demand. Read full story

The government slightly revised its 2022 economic growth forecast to 2.7 percent to 3.2 percent from an earlier 2.5 percent to 3.5 percent range. Last year’s 1.5 percent growth was among the slowest in Southeast Asia.

Japan’s economy expands

Japan’s economy expanded an annualized 2.2 percent in the April-June period to mark the third straight quarter of expansion on solid private consumption, government data showed on Monday.

The increase in gross domestic product was slower than a median market forecast for a 2.5 percent expansion. It translated into quarterly growth of 0.5 percent against market forecasts for a 0.6 percent rise.

Private consumption rose 1.1 percent in the April-June period from the previous quarter, compared with a median market forecast for a 1.3 percent increase, the data showed.