Investors looking to put money into U.S. and China internet giants should be cautious as these companies are facing a myriad of challenges, strategists told CNBC.
Investment bank Macquarie said large consumer tech companies like Facebook and Amazon are in the “sunsetting” phase.
“You have to be very careful when you approach companies like [Facebook-parent] Meta or Alphabet because as I said, in my view, they are sunsetting. They’re suffering from a number of issues,” Viktor Shvets, head of global and Asian strategy at Macquarie Capital. He also named other companies like i-Phone maker Apple and Chinese e-commerce platform Alibaba.
Headwinds may include “major economies of scale,” as well as significant political and social pressure, Shvets told CNBC’s “Street Signs Asia” on Thursday.
“So be very careful about these large digital platforms, but there are a lot of opportunities and profitable opportunities in the rest of [the] tech universe,” he said.
Both American and Chinese tech giants have come under regulatory scrutiny in recent years.
Read more about China from CNBC Pro
In the past year, Chinese authorities cracked down on its tech companies, introducing legislation targeting areas from anti-monopoly to data protection.
Shares of Tencent, Alibaba and Didi sold off last year as the companies were caught in the regulatory crosshairs. The Hang Seng Tech index is still down more than 40% compared to a year ago, as of its Feb. 11 close.
In the U.S., President Joe Biden last year signed a new executive order aimed at cracking down on anti-competitive practices in Big Tech, among other sectors.
Next generation tech bets
The world is set to transit from second-generation technologies to third-generation, said Shvets. The question is: Which tech companies will survive that major transition?
“One thing we have learned in those transitions — that only one or two companies actually make it through. So for example, Microsoft is really the only major technology company to move from first generation to second — pretty much nobody else [has] done that,” he said.
“So the question with those large digital platforms, which one of those companies do you think has the greatest opportunity or possibility or capacity to actually transit? And right now, it’s not clear. Should you bet on Meta, should you bet on Google, should you bet on [Alibaba]? It’s unclear.”
Shvets did not specify what the third-generation tech transition will entail, but the buzz around Web 3.0, or the next generation of the internet, started growing late last year.
Metaverse refers broadly to a virtual world where humans interact through three-dimensional avatars. In that space, users can engage in virtual activities such as gaming, concerts or live sports that can be controlled via virtual reality headsets or augmented reality gear.
Facebook-parent Meta, Apple, Microsoft and Google are gearing up to release new hardware products and software services for the metaverse.
Social networking giant Facebook changed its name to Meta late last year, reflecting the company’s growing ambition to embrace the future of the internet in a virtual world. However, the stock plunged in early February and recorded its largest one-day drop, after the company forecasted weaker-than-expected revenue growth in the next quarter.
Meta reported that its Reality Labs segment made $877 million in revenue in the fourth quarter with an operating loss of $3.3 billion.
‘Ferociously competitive’ markets in China
While China’s big tech companies are under tremendous regulatory pressure, they are also facing a lot of strong competition, says Roderick Snell, an investment manager at Edinburgh-based Baillie Gifford.
He said his firm has been underweight on big tech names such as Alibaba and Tencent for the last couple of years. An underweight stock rating indicates an analyst believes the firm’s stock will not perform as well relative to its peers in the market.
“I still think … the biggest issue for the likes of Alibaba, Tencent in China is always the most ferociously competitive market in the emerging markets,” he told CNBC’s Pro Talks on Wednesday.
“The likes of Tencent’s 40% market share in social media advertising has gone to other players … in the past three or four years,” Snell said. “So that’s actually my biggest concern … the amount of competition that’s coming in. So we’ve been underweight … and [keeping] the opportunities elsewhere.”
“Probably won’t be changing that in the future,” he added.
Apple today filed unreleased iPhone and iPad models in the Eurasian Economic Commission database, as spotted by French blog Consomac.
The filings likely represent the rumored third-generation iPhone SE, fifth-generation iPad Air, and potentially more. The unreleased iPhone models have the identifiers A2595, A2783, and A2784, while the unreleased iPad models have the identifiers A2588, A2589, A2591, A2696, A2757, A2759, A2761, A2766, and A2777.
Eurasian Economic Commission filings like these have foreshadowed the release of new Apple products on numerous occasions over the years, including several Mac, iPhone, iPad, iPad Pro, Apple Watch, and AirPods models. The filings are legally required for any devices that offer encryption sold in Russia and select other countries.
The third-generation iPhone SE is expected to have the same design as the current iPhone SE, including a 4.7-inch display. Key new features rumored for the device include the same A15 Bionic chip as iPhone 13 models and 5G support.
The fifth-generation iPad Air is expected to adopt features from the sixth-generation iPad mini, including an A15 Bionic chip, 12-megapixel Ultra Wide front camera with Center Stage support, 5G for cellular models, and Quad-LED True Tone flash.
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Cellphone carriers AT&T and Verizon on Wednesday proposed limits on their 5G networks for the first half of 2022 in an effort to launch their services while also addressing regulatory concerns about potentially disrupting air traffic safety, The Wall Street Journal reported.
The Journal, which obtained a copy of a letter that both carriers sent to Federal Communications Commission chairwoman Jessica RosenworcelJessica RosenworcelHillicon Valley — Presented by Ericsson — House passes Biden plan with 0M for cyber FCC votes to let people text 988 to reach suicide prevention hotline Hillicon Valley — TikTok, Snapchat seek to distance themselves from Facebook MORE on Wednesday, reported that the companies proposed to reduce or cap the strength of its 5G services across the country, especially near helipads and airports.
“This is an important and encouraging step, and we are committed to continued constructive dialogue with all of the stakeholders. We look forward to reviewing the AT&T and Verizon proposal,” the Federal Aviation Administration (FAA) said in a statement. “The FAA believes that aviation and 5G C-band wireless service can safely co-exist.”
The proposal represented “one of the most comprehensive efforts in the world to safeguard aviation technologies,” a FCC spokesman said, according to the Journal.
At the crux of the issue is how frequencies from 5G may affect a system used to calculate distance between the ground and aircraft, which is measured by radar altimeters, according to the Journal.
Some radar altimeters may be sensitive and able to pick up the transmissions of 5G, though cellphone carriers contend those 5G transmissions are lower than those picked up by the altimeters. The cellphone carrier proposed the limits as a way to give the government time to look into the issue.
Although the carriers said the limits would not have a significant impact on the speed of services they provide to customers, The Journal noted that the proposal is significant because the companies have spent billions on the 5G spectrum licenses.
The Hill has reached out to AT&T, Verizon and the FCC for comment.
A woman sorting medicine in the pharmacy of the Yueyang Hospital, part of the Shanghai University of Traditional Chinese Medicine, in Shanghai.
JOHANNES EISELE | AFP | Getty Images
China’s health-care sector will probably be the next to fall under scrutiny, analysts warn, as the country’s regulators crack down on everything from tech to education to data security.
Chinese President Xi Jinping this week again reiterated the need to support moderate wealth for all — or the idea of “common prosperity” which he has been promoting for months.
That’s what’s driving the spate of crackdowns on companies, analysts say.
“‘Common prosperity’ remains an idea that is still in search of an implementation strategy,” said Rory Green, China economist at TS Lombard. “For now, it is much easier to regulate industry and capital markets than it is to institute structural reform.”
He predicted that alongside the property market, health care will be Beijing’s next target.
The health-care industry is one of the country’s so-called “three big mountains,” which refer to spiraling costs in the education, real estate and health sectors— all of which pose obstacles to affordable living.
Health care is the “only one not yet hit by regulatory scrutiny” and is “particularly vulnerable,” said Green in a Aug. 31 note.
Read more about China from CNBC Pro
The Chinese government previously pledged to keep prices in check, but efforts are now set to intensify, Capital Economics said in a Tuesday note.
“Public housing and healthcare is likely to be expanded while private medical providers and real estate developers could soon face greater constraints on their ability to set prices and pursue profits,” wrote Julian Evans-Pritchard, senior China economist at Capital Economics.
Chinese regulators have already stepped up restrictions on the country’s education sector and targeted the after-school tutoring segment worth billions of dollars.
China stocks could dive another 15%
China’s crackdown in the past year has been on a broad swathe of industries, from tech to education and food delivery.
That’s led to steep selloffs in Chinese stocks, wiping out billions of dollars from tech stocks in recent months.
So far this year, China’s health-care stocks have done better than the broader China indices.
MSCI’s China health-care index has declined marginally below the flatline year-to-date, compared to the MSCI China index which has tumbled more than 13%.
But some health-care stocks, especially businesses that use tech platforms, are already hurting. JD Health, for instance, has dropped almost 50% this year. Alibaba Health has tumbled more than 40% year-to-date.
Green said TS Lombard predicts the MSCI China index could dive another 10% to 15%, in a worst-case scenario.
He warned investors to be cautious, saying that political risk will remain elevated leading up to the Chinese Communist Party’s 20th National Party Congress next year.
“The political calendar is charged; and with cadres keen to bolster populist credentials in pursuit of promotion, political scrutiny of markets is likely to remain elevated – rather than taper off – in the coming months,” Green wrote.
What could be safer to buy? The so-called government favorites, said Green. They include relatively safe sectors such as tech hardware, clean energy, as well as defense.
It has been about five years since it emerged that Wells Fargo staff had been opening accounts for customers without their permission.
Justin Sullivan/Getty Images
Wells Fargo
‘s regulatory trouble aren’t yet in the rearview mirror. The stock is tumbling because of it.
On Tuesday, Bloomberg reported that the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau were disappointed in Wells Fargo’s (ticker: WFC) progress in remunerating victims from its fake- accounts scandal and beefing up its internal controls. The slower-than-hoped-for pace could mean that the bank will face additional sanctions, according to the report.
Wells Fargo shares fell 5.6% Tuesday and were down nearly 4% in Wednesday’s trading. Representatives from Wells Fargo declined to comment, as did the CFPB and the OCC.
Wells Fargo’s recent trading is a blip for a stock that had been soaring both on hopes of a recovering economy and expectations that the bank would soon get out of the regulatory penalty box. Just three weeks ago, Wells Fargo shares were up nearly 70% on the year, outpacing the
SPDR S&P Bank ETF
(KBE), which is up nearly 25%.
Wall Street had been giving credit to Chief Executive Charlie Scharf, who took the helm nearly two years ago. Under Scharf, the bank made changes to its leadership ranks and worked on cost-cutting and other measures to improve its operations. While Scharf has warned that the path to recovery may be uneven, Wall Street wasn’t anticipating Tuesday’s negative news.
“This marks an unfortunate and unexpected turn,” Scott Siefers, managing director at Piper Sandler, wrote in a note Tuesday, reiterating his Neutral rating on the shares. “We believe the market had hoped that any incremental news would be good, rather than akin to what we learned [on Tuesday].”
Other analysts were similarly cautious, calling the report a near-term negative for shares. John Pancari, analyst at Evercore ISI, noted that the Bloomberg report didn’t appear to reveal regulatory concerns about additional wrongdoing by the bank, but that the prolonged recovery could mean higher expenses.
“[The] risk of incremental regulatory action is a negative given implications for the timing of resolution, as well as impact to operating costs,” he wrote. “Additionally, we cannot rule out that these issues could impact investors’ perception of management’s ability to address the various concerns,”
Pancari maintained his Outperform rating on the shares.
The negative news comes almost exactly five years after it emerged that Wells Fargo employees—anxious to hit aggressive sales targets—were opening accounts for clients without their permission. The unauthorized accounts led to extra fees and dings to clients’ credit scores. Quantifying the impact and compensating victims accordingly has proven to be a challenge.
Write to Carleton English at carleton.english@dowjones.com
Apple’s commissions, for example, go as high as 30% on some purchases made through the company’s platform — and developers say they have little choice but to comply, since Apple does not allow customers to download apps from any source other than the company’s official store.
Legislators have been reviewing an amendment to the Telecommunications Business Act, which would ban app store operators from “unfairly using their market position to force a certain manner of payment” upon businesses. Once enacted, violators could be fined up to 3% of their annual sales, in addition to up to 300 million Korean won ($257,000) in penalties.
The bill was expected to be submitted for voting on Monday, but the parliamentary session was abruptly delayed.
If the law is passed, developers will be able to select which payment systems to use to process in-app purchases, meaning they may be able to bypass hefty charges imposed by the two longtime leaders.
South Korea isn’t the only country in the region scrutinizing the two companies. On Monday, Australian Treasurer Josh Frydenberg called for new regulations on digital payments.
“Digital wallets such as Apple Pay and Google Pay are used to make contactless payments just like debit cards issued by a bank, but the parties are subject to different regulatory settings,” he wrote in an op-ed in The Australian Financial Review.
“If we do nothing to reform the framework, it will be Silicon Valley that determines the future of a critical piece of our economic infrastructure.”
A brewing battle
The bill in South Korea, which is being closely followed internationally, could set the stage for similar action elsewhere. Numerous investigations of the app ecosystem arealready underway around the world, including in Europe and the United Kingdom.
The South Korean proposal has been dubbed the “anti-Google law” in the country, as politicians argue that the Silicon Valley behemothhas taken advantage of itslongstanding dominance in the field and undercut developers.
In July, South Korean lawmaker Jun Hye-sook urged parliament to move the bill along quickly, calling it “a law to prevent Google from lording [its position] over others,” and a move that would “protect IT developers from the platforms lording over them.”
According to the most recent government study available, Google(GOOGL) and Apple(AAPL) made about $5.2 billion and almost $2 billion, respectively, in each of their app stores in South Korea in 2019.
Both companies have hit back, arguing that the law could hurt app developers and consumers in the long run.
“While the law has not yet been passed, we worry that the rushed process hasn’t allowed for enough analysis of the negative impact of this legislation on Korean consumers and app developers,” Wilson White, Google’s senior director of public policy, said in a statement.
“If passed, we will review the final law when available and determine how best to continue providing developers with the tools they need to build successful global businesses while delivering a safe and trustworthy experience for consumers.”
Apple said that the move would “put users who purchase digital goods from other sources at risk of fraud, undermine their privacy protections, make it difficult to manage their purchases, and features like ‘Ask to Buy’ and Parental Controls will become less effective.” The tools refer to protections the App Store has rolled out for parents to better oversee activity on their families’ accounts.
According to Apple, there are more than 482,000 registered app developers in South Korea, and they have earned more than 8.55 trillion Korean won ($7.3 billion) to date with the iPhone maker.
“We believe user trust in App Store purchases will decrease as a result of this proposal — leading to fewer opportunities for [them],” it added in a statement.
South Korean Communications Commission Chairman Han Sang-hyuk, however, contends that new rules are needed as the platforms continue to exercise their “influence.”
“Those app market operators are gaining controlling power in the market. It is becoming necessary to regulate them,” he told lawmakers last week.
Mounting pressure
Last week, Apple announced concessions to developers in the United States, saying it would relax some restrictions on how iPhone app makers could communicate with customers outside its App Store.
On Thursday, the company said that “developers can use communications, such as email, to share information about payment methods outside of their iOS app,” as long as users consent to receiving those emails and have the right to opt out.
The move gives developers more leeway to collect payments from their customers without having to pay Apple’s commission on in-app purchases. It came as part of a proposed settlement in a class action lawsuit brought in 2019.
Apple and Google’s app store fees have increasingly come under scrutiny as lawmakers and regulators have zeroed in on their dominance over the iOS and Android operating systems.
Earlier this month, a bipartisan US Senate bill also took aim at both players by seeking to ban restrictions on app developers.
Currently, the iPhone maker’s commissions are at the center of several legal disputes, including a separate lawsuit by one of Apple’s biggest developers — Epic Games.
Apple has taken steps to reach out to developers, announcing last November that it would slash the fees it charged them from 30% to 15% if the developer made less than $1 million in the prior year.
— Yoonjung Seo, Gawon Bae, Rishi Iyengar, Brian Fung and Lauren Lau contributed to this report.
Global cryptocurrency exchange Binance has made regulatory compliance its top priority. The exchange is on a hiring spree to “significantly” add to its compliance and legal teams. “We are going through a pivot from a technology innovator into a financial services company, so we need to be fully compliant,” said the CEO of Binance.
Binance’s Regulatory Compliance Plans
Binance is focusing on regulatory compliance as the exchange pivots from a technology startup into a financial services company, CEO Changpeng Zhao (CZ) explained in an interview with Bloomberg TV Tuesday.
Commenting on crypto regulatory efforts in the U.S., he said: “The U.S. is very mature on the crypto regulation part. They are leading now. They have a cryptocurrency exchange listed on Nasdaq which is very positive.” The executive continued:
When the new crypto regulations come in, many of them will be somewhat restrictive. That’s kind of expected. But over time, we do think that regulations will adjust with market demand, and hopefully will get better.
“I believe, right now, all the regulators around the world view crypto as financial instruments one way or another,” he further opined.
The CEO said that he spends almost all of his time, which is “probably 80% or more,” on compliance, noting that he is “not really involved in the day-to-day operations of the exchange.”
Zhao explained:
We are going through a pivot from a technology innovator into a financial services company, so we need to be fully compliant.
He named some priorities Binance is focusing on in order to become compliant. “We have to hire a lot more people,” he began. “We need to hire people with regulatory compliance experience and very senior people that can bring teams in. We need to significantly … increase the size of our compliance, legal teams.”
Binance announced Wednesday that it has hired Greg Monahan, former U.S. Treasury Criminal Investigator, who joins the organization as a Global Money Laundering Reporting Officer (GMLRO).
Earlier this month, former acting Comptroller of the Currency, Brian Brooks, stepped down as the CEO of Binance US due to “differences over strategic direction.”
Zhao also explained that Binance needs to ditch its decentralized vision. “We were shooting for the decentralized organizational structure which does not work with regulators … Now, we are establishing headquarters, proper structures, proper governance, proper audits, etc.”
Furthermore, the CEO said: “We need to make sure that all of our products are fully compliant … This is why we’ve been limiting our futures, derivatives products in most of Europe and some parts of Asia as well.”
Next, he said Binance needs “to apply for licenses,” emphasizing that it is “very important” for the company “to communicate with the regulators” and “request regular meetings where we proactively update them on what we do.”
A number of regulators worldwide recently issued warnings about Binance. They include regulators in the U.K., Japan, Malaysia, Thailand, Germany, Cayman Islands, Lithuania, and Hong Kong.
What do you think about Binance’s compliance plans? Let us know in the comments section below.
Image Credits: Shutterstock, Pixabay, Wiki Commons
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.
Top Stories This Week
Square to acquire Australian fintech Afterpay in $29B deal
Jack Dorsey’s digital payments firm Square entered into a $29 billion stock deal to purchase Australian buy now, pay later (BNPL) firm Afterpay this week.
Just like the name Afterpayimplies, Square will essentially be buying the firm now and paying later, with the transaction set for the first quarter of 2022 and to be paid out entirely in Square common stock.
Bitcoin (BTC) proponent Anthony Pompliano was pleased with the news, noting on his web series The Best Business Show that Square is one of the only stocks he owns, as he forecasted that the firm’s valuation will explode following the acquisition.
In an Aug. 3 YouTube video, Pomp went for sheer and utter clickbait with the title “SQUARE is going to be worth 1 TRILLION dollars,” and he emphasized the potential of rolling out Afterpay’s BNPL services to 70 million Cash App users and 2 million Square merchants.
Ethereum London hard fork goes live
The London hard fork arrived almost on schedule on Aug. 5, ushering in Ethereum Improvement Proposal 1559. An interesting feature of the upgrade is that it also ushered in some bullish sentiments from Ethereum (ETH) proponents and some sour grapes from Bitcoin maxis.
Ethereum has now transitioned away from a bidding-based fee market to a fixed price-and-burn mechanism, which may see the asset become deflationary if more ETH is burned than issued in block rewards. However, this may be more likely after the switch to proof-of-stake with ETH 2.0. If the asset does become deflationary, it would reach the status of “ultrasound money,” which is a term that has also been a long-running meme in ETH communities that mocks Bitcoiners’ description of BTC as sound money due its capped supply of 21 million.
BREAKING: White House confirms support for minor changes to crypto tax proposal
The White House officially backed a last-minute amendment to the controversial U.S. infrastructure plan that proposes expanded cryptocurrency taxation to raise an additional $28 billion in revenue. The amendment maintains stringent reporting requirements for blockchain developers and validators while exempting miners.
However, the amendment’s vague wording and lack of clearly defined terms suggest that crypto developers and proof-of-stake validators would still be subject to expanded reporting and taxation that some have described as “unworkable.”
For some reason, members of the White House seem intent on cracking down on tax evasion in crypto without understanding the nuances of the industry. They also seem to overlook the blatant rorting of the system from multinational giants who essentially vacuum capital out of the people’s pockets while paying zero tax.
Mike Novogratz blasts US officials for poor grasp of crypto industry
Amid the backdrop of looming crypto regulations that will most likely increase taxes and decrease profits, Galaxy Digital CEO Mike Novogratz has come out swinging in response to Senator Elizabeth Warren’s remarks calling cryptocurrency “the wild west” of the U.S. financial system.
The billionaire crypto proponent’s jabs were, of course, delivered through social media, with Novogratz taking to Twitter on Aug. 3 to assert that most U.S. officials have no idea what they are talking about when it comes to crypto:
“Crypto is the future of our financial system and our citizens deserve officials that do their homework to understand this new technology. Most of our leaders haven’t done that yet. We also need regulators and politicians who understand that new ideas need room to grow.”
Circle and Unstoppable Domains to introduce username-based USDC payments
Circle and Unstoppable Domains are working to introduce username-based addresses as an alternative to long-winded alphanumeric crypto wallet addresses to aid the not-so-tech-savvy, a.k.a. newbies and boomers.
According to an Aug. 4 announcement, blockchain domain name provider Unstoppable Domains and stablecoin issuer Circle are collaborating to release readable “.coin” usernames for USD Coin (USDC) transfers.
As part of the partnership, both companies will collaborate to enable support for .coin username extensions across wallets and crypto exchanges that list the number two-ranked stablecoin.
Under this arrangement, USDC transfers will become akin to sending an email, likely mitigating the problem of transferring coins to the wrong address, losing funds forever and living with regrets over one’s lack of due diligence.
Winners and Losers
At the end of the week, Bitcoin is at $42,651, Ether at $2,867 and XRP at $0.74. The total market cap is at $1.73 trillion,according to CoinMarketCap.
Among the biggest 100 cryptocurrencies, the top three altcoin gainers of the week are Voyager Token (VGX) at 94.22%, THORChain (RUNE) at 50.69%, and Ravencoin (RVN) at 44.13%.
The top three altcoin losers of the week are Amp (AMP) at -14.97%, XinFin Network (XDC) at -4.74%, and Telcoin (TEL) at -1.66%.
For more info on crypto prices, make sure to read Cointelegraph’s market analysis.
Most Memorable Quotations
“We can see Bitcoin on the balance sheets of cities, states, governments, companies, small [and] big investors.”
Michael Saylor, MicroStrategy CEO
“We’re now moving into a world where we have these nonfungible software objects that have unique identities that can actually accept money, pay money and can participate in governance, either in decentralized autonomous organizations or potentially other kinds of governments that can govern themselves.”
Joe Lubin, ConsenSys founder and CEO
“I’m spending five hours a day on everything from regulation to licensing and everything in between.”
Sam Bankman-Fried, FTX CEO
“Primarily, crypto assets provide digital, scarce vehicles for speculative investment. Thus, in that sense, one can say they are highly speculative stores of value.”
Gary Gensler, chair of the U.S. Securities and Exchange Commission
“Crypto is a bit like the parable of the blind men and the elephant. People touch it from different sides. They get distracted and carried away and energized about these different topics.”
Marc Andreessen, Andreessen Horowitz general partner and co-founder
“If you put a gun to my head, and you said, ‘I can only have one.’ I would choose gold.”
Ray Dalio, billionaire hedge fund manager
“Just so we’re all clear here, the SEC has no authority over pure commodities or their trading venues, whether those commodities are wheat, gold, oil….or #crypto assets.”
Brian Quintenz, U.S. CFTC commissioner
“The more people with stablecoins in the pocket, the more people who can participate in decentralized finance.”
Matthew Gould, Unstoppable Domains CEO
Prediction of the Week
Bitcoin chart fractal suggests BTC price will have rallied to at least $80K by September
If this latest bullish BTC prediction turns out to be true, Bitcoiners may soon be able to start driving their lambos on the moon.
Nunya Bizniz, an independent market analyst, posted a bullish prediction on Aug. 1, as they highlighted that the recent rally of around 40% in late July included 10 consecutive days of lovely green candles, and not those horrible red ones that bears love so much.
The analyst noted that each of BTC’s previous 10-day bull runs has ended up with at least a 100% price increase within 30 to 60 days. Therefore, if history repeats itself, Bitcoin’s price may double and surge to new all-time highs around the $80,000 mark.
FUD of the Week
South Korean regulator to reportedly shut down 11 crypto exchanges
Crypto regulations in South Korea may become more stringent after news circulated this week that South Korea’s top financial regulator, the Financial Services Commission, or FSC, is reportedly planning to shut down a dozen local cryptocurrency exchanges amid accusations of fraud.
The FSC will suspend operations of at least 11 mid-sized crypto exchanges in South Korea due to alleged illegal activities and fraudulent collective accounts, according to local media outlets.
The publication cited anonymous industry sources claiming that the names of the exchanges were not yet disclosed, so Koreans will not know exactly what to FUD over until the names come to light. The sources argued that the mentioned crypto exchanges will be unable to get approval for operation by the FSC.
The report also notes that the authority is planning to implement stricter regulations for smaller crypto exchanges in South Korea, meaning that anyone firm that wants to partake in illegal behavior will have to do it on a large scale.
Monero’s former maintainer arrested in the US for allegations unrelated to cryptocurrency
Speaking of alleged illicit behavior, Riccardo Spagni, the former maintainer of the Monero (XMR) cryptocurrency, was arrested last month in Nashville, Tennessee, but not for anything related to crypto.
Spagni is facing fraud charges tied to alleged offenses in South Africa between 2009 and 2011, during his time serving as an information technology manager at a company dubbed Cape Cookies.
Spagni allegedly fabricated additional invoices from a supplier of Cape Cookies, which included inflated prices for goods and services, along with his bank details instead of the suppliers’. He now faces a hearing on Aug. 5 to determine whether he is held, pending trial. If convicted in South Africa, he faces 20 years in prison.
Bitcoin SV reportedly suffered a “massive” 51% attack on Aug. 3 that resulted in up to three versions of the chain being mined simultaneously.
Speaking about the attack, Lucas Nuzzi, a network data product manager at Coin Metrics, stated on Twitter that “someone is seriously trying to destroy BSV,” and added that:
“For over 3 hours, attackers were able to take over the chain. All exchanges that received BSV deposits during that time might have been double spent.”
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Former acting Comptroller of the Currency Brian Brooks has resigned as the CEO of Binance U.S. after just over three months. He cited “differences over strategic direction.” Meanwhile, Binance is facing regulatory scrutiny worldwide, including in the U.K., Malaysia, Japan, Cayman Islands, Hong Kong, Thailand, Germany, and Lithuania.
CEO of Binance US Resigns
The CEO of Binance U.S., Brian Brooks, announced Friday on Twitter that he has resigned from Binance. The former acting Comptroller of the Currency and former chief legal officer at cryptocurrency exchange Coinbase tweeted:
Greetings crypto community. Letting you all know that I have resigned as CEO of Binance US. Despite differences over strategic direction, I wish my former colleagues much success.
Brooks joined Binance at the beginning of May following his resignation as acting Comptroller of the Currency on Jan. 14, before President Joe Biden took office.
Responding to Brooks’s announcement, Binance U.S. posted a message on Twitter from Changpeng Zhao, CEO of Binance and chairman of the board at Binance U.S.
“I remain confident in Binance.US’s business and its commitment to serve its customers and innovate,” he wrote. “This transition will not impact Binance.US customers in any way as the company will continue to deliver best-in-class products and services.”
Wishing the former acting comptroller “the very best in his future endeavors,” Zhao further tweeted, “We hope he will continue to be an integral part of the crypto industry’s growth, advocating for regulations that move our industry forward.”
A number of regulators worldwide have issued warnings about Binance, including those in the U.K., Malaysia, Japan, Cayman Islands, Hong Kong, Thailand, Germany, and Lithuania.
Several banks in the U.K. have also suspended payments to Binance, including Barclays, Santander, Natwest, and HSBC.
In a recent interview, Binance’s CEO commented on the mounting regulatory scrutiny, stating that Binance had been looking for a CEO with a strong compliance background. Furthermore, he said that the company wants to be regulated everywhere and become a financial institution. Zhao also tweeted Friday that Binance is “pivoting from reactive compliance to proactive compliance,” asking people to “stay tuned.”
What do you think about Brian Brooks resigning as the CEO of Binance US? Let us know in the comments section below.
Tags in this story
Binance CEO, binance compliance, binance regulation, Binance.us, brian brooks, Changpeng Zhao, Coinbase, comptroller of the currency, CZ, OCC, Regulation, regulatory scruitny
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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Investors watch computer screens at a stock exchange hall on July 13, 2020 in Nanjing, Jiangsu Province of China.
Jiang Ning | VCG | Getty Images
Days of heavy selling in Chinese stocks have left two major indexes in the country as the worst-performing markets of Asia-Pacific.
At the close of regional markets on Tuesday, the CSI 300 — which tracks the largest stocks listed in mainland China — had plunged 8.83% so far this year. Hong Kong’s Hang Seng index also suffered heavy losses, falling 7.88% in the same period.
“There hasn’t been a single two-day decline (for the Hang Seng index) since the Financial Crisis that has exceeded the magnitude of the last two days,” analysts at Bespoke Investment Group wrote in a note.
Other major mainland indexes such as the Shanghai composite and Shenzhen component were also in negative territory for the year, among the few major Asia-Pacific markets that lost ground year-to-date.
Separately, the MSCI Emerging Markets index has also tumbled into negative territory for the year. Chinese internet giants such as Tencent, Alibaba and Meituan were among the top 5 constituents of the index, as of Jun 30.
The declines come as Chinese regulators continue to step up their oversight in sectors spanning from technology to education and food-delivery. The increased scrutiny spooked investors and sent many scrambling for the exit.
Hong Kong and China markets traded mixed in Wednesday morning trade, struggling to recover from the declines of the past few days.
At the start of the second half, all the major Chinese indexes and the Hang Seng were in positive territory for the year. The Shenzhen component was up 4.78% while the CSI 300 index was just 0.24% higher as of end June. Hong Kong’s Hang Seng index was also up 5.86% in the same period.
Timeline of events
A painfully sobering message may be: ‘You can take the company listing out of China, but you can’t take China (risks) out of the company.’
Vishnu Varathan
Head of Economics and Strategy, Mizuho Bank
Beijing’s intentions “cannot be faulted on merit,” Mizuho Bank’s Vishnu Varathan said in a Tuesday note, arguing that authorities’ concerns over sectors such as education were aimed at social welfare, while technology is “ostensibly trained on worrying data rights/abuse issues.”
Still, he acknowledged the “unintended consequences” of Beijing not appropriately timing and tuning the execution of its intentions.
Read more about China from CNBC Pro
“For private (global) investors brutally blind-sided by the rude shocks to many of these internationally listed Chinese companies, a painfully sobering message may be: ‘You can take the company listing out of China, but you can’t take China (risks) out of the company,'” Varathan said.
JPMorgan sees ‘opportunity’ in mainland shares
Even in the current market turmoil, JPMorgan Private Bank’s Alex Wolf sees opportunity in mainland-listed stocks, which are harder for retail investors to access compared to those listed in Hong Kong.
Most Chinese stocks — a sector among the hardest hit in the recent market meltdown — are listed overseas in the U.S. and Hong Kong and such stocks tend to be largely owned by overseas investors due to how difficult it is for mainland investors to access, said Wolf, who is head of investment strategy for Asia at the firm.
“We do like A-shares on a relative basis just because they’re less exposed to internet, they’re also less exposed to foreign flows,” Wolf told CNBC’s “Street Signs Asia” on Tuesday.
A-shares refer to stocks of mainland China-based firms listed on the Shanghai Stock Exchange or Shenzhen Stock Exchange.
We do think A-shares represent a good opportunity amidst this shift and amidst … some of the uncertainty that we’re seeing.
Alex Wolf
JPMorgan Private Bank
“From a onshore investors perspective, A-shares — we think given that it’s majority domestic owned — often is tied to policy initiatives,” he explained. “They tend to be shielded from these flows.”
Wolf cited Beijing policy initiatives such as a shift toward decarbonization and localization as moves that are likely to benefit firms listed in mainland China.
“We do think A-shares represent a good opportunity amidst this shift and amidst … some of the uncertainty that we’re seeing,” he said.
