Of corn and crypto- POLITICO

With the help of Steve Heuser, Konstantin Kakaes and Derek Robertson

If you still see the crypto boom as a novelty for everyday traders, or maybe those cousins ​​you only meet on vacation, there’s one fights in a small Washington regulatory agency that suggests how much the world of traditional finance could transform.

Sam Bankman-FriedThe billionaire founder of global FTX cryptocurrency exchange wants to allow US retail investors to place highly leveraged bets on cryptocurrency futures and other digital derivatives, and to place those bets not only during normal business hours, but all the time, 24 hours a day. day, 7 days a week.

Although margin trading is widely available outside the United States, FTX’s push to persuade the Commodity Futures Trading Commission to approve these products for domestic traders has sparked a wave of opposition.

Opposition comes not only from players who would expect to be resilient to change (traditional financial powers like the NYSE owners and Chicago commodity trading wells), but also from the crypto world’s major competitors worried that FTX would gain a big advantage. for the first engine. of launching a new kind of high-risk trading.

Bankman-Fried’s ambitions have already been the subject of a further three-hour hearing by the House Agriculture Committee. At the end of this week, the CFTC will host one round table all day where FTX and its opponents will present their case.

“We are amazed at the amount of stress, attention, that has been achieved,” Bankman-Fried said. in an interview. “Some people may be approaching this from an angle of, you know, what’s important to your business.”

The pro / con argument for the new platform it will sound familiar to anyone who has noticed the rise of new exchanges and trading systems in traditional finance. FTX says its plan will reduce market inefficiencies by bringing the speed and immediacy of cryptocurrency trading closer to the complicated market models that have long ruled financial derivatives: think of soybean futures or “Trading Places” orange juice contracts – and eliminate the need for financial intermediaries that slow down transactions and increase the cost of trading.

The pillars of the derivatives market argue that it will really increase the risk and increase the speed with which things can go wrong, as these same intermediaries play a key role in absorbing price shocks and preserving the positions of farmers, commodities traders premiums and financial institutions that depend on them. trades to fill their positions.

“This is a proposal that is fraught with danger,” the CME Group CEO said Terry Duffywho runs one of the world’s largest derivatives exchange operators said during a hearing in the May House Agriculture Committee.

There are also fears about the extent to which this could encourage FTX to move from bitcoin to more traditional futures markets, such as energy contracts or pork bellies. While Bankman-Fried says he has no plans to go beyond cryptocurrency trading in other more traditional derivatives, there is reason to think his three-year-old company has the whole industry in its sights.

The company recently launched a beta program that will allow its customers to buy traditional stocks and publicly traded funds, and the president of FTX.US Brett Harrison he told The Wall Street Journal that long-term plans include the creation of an “all-in-one application for financial services” that could also include other asset classes, including futures contracts.

Read the full story here.

The digital future has a big presence in Davos this yearwith panel after panel on crypto, AI, and metaverse.

But what does that really mean for leaders attending an event that is largely a celebration of traditional (very analog) power?

A disturbing answer to the question came in a side panel Ukrainian war and geopolitics.

Brad Smiththe president of Microsoft, said his company had a very different view of war than conventional.

For one thing, he suggests re-dating the start of the Russian assault to February 23, a day before the “official” invasion date of February 24. That’s when Microsoft saw Russia launch a sudden total attack on Ukrainian institutions. many of which Microsoft was already working on. Smith counted 300 coordinated Russian cyberattacks against the Ukrainian government and Ukrainian banks. The company monitored (and defended) the attacks not in Kiev, but from Seattle.

Smith also offered a disturbing view to Westerners who see war as a Russian ceasefire: “There’s often a misunderstanding when people say, ‘Oh, the Russians didn’t take their A team to cyber war.’ “They have just concentrated all their assets on Ukraine itself, so they have not been involved in cyberattacks, for example, in the rest of Europe or against other NATO countries.” – Steve Heuser

Since 63.575 percent of the world’s muckety-mucks gather in Davos, Switzerland, many of them are not satisfied with cryptocurrencies. Managing Director of the International Monetary Fund Kristalina Georgieva He pointed to the big player on the block: “Bitcoin can be called a currency, but it’s not money,” he said. agree with Fortune. Christine Lagardepresident of the European Central Bank, he agreed, telling the founder of the World Economic Forum Klaus Schwab that “cryptocurrencies are not currencies at all.”

That’s the first half of every appointment. The second half reveals why Georgieva and Lagarde are protesting a bit. “A prerequisite for something to be called money is to be a stable reserve of value,” Georgieva continued. Lagarde opined that cryptocurrencies are “speculative assets, whose value changes enormously over time, and are presented as currencies, which are not.”

You don’t have to be a particular fan of cryptocurrencies to see that Lagarde and Georgieva are participating in a bit of magical thinking. It’s great when the money is stable. But the Zimbabwean dollar is arguably a currency (it lost about half its value daily between 2007 and 2008), as was the Yugoslav dinar (313 billion percent of the monthly inflation rate in the early 1990s), and as the German mark in the 1920s (~ 30,000 euros). percentage of monthly inflation).

One does not have to resort to the worst cases of hyperinflation to see that staying unchanged over time is not a prerequisite for being a currency. Even the nearly 10 percent annual inflation the U.S. dollar is experiencing is a vivid enough reminder that currencies, even the most established ones, change value painfully. And like George Soros vividly pointed out 30 years ago it is very possible to make money by speculating with conventional currencies.

The instability of bitcoin and other cryptocurrencies is a real problem for those who would use them as a medium of exchange. But it doesn’t make them “no money”. – Konstantin Kakaes

When you are the richest person in the world, you get used to making demands.

That doesn’t mean they always make sense: In response to Elon MuskResearch seeks evidence that less than 5 percent of Twitter users are robots before completing the purchase of the platform, Indiana University computer scientists Kai-Cheng Yang e Filippo Menczerwrote an article for The Conversation Briefly titled “How many bots are there on Twitter? The question is hard to answer and you lose the point.”

Yang and Menczer argue that while Twitter may have a not insignificant number of accounts that aren’t linked to individual humans, it’s almost impossible to determine the true number, and that even if someone did, deleting them would only make a dent. problems such as misinformation, fraud and conflicts that people blame.

I called Yang to ask about his research and that of Menczer, and how he sees fit into the overall effort to make our digital lives more authentic and less, well … lousy.

The good news? Twitter is much more affluent than most social networking platforms by sharing data about their accounts with outside researchers, giving Yang and his colleagues a broad set to work with. The bad news? All the data in the world may not be enough to solve what is happening to us.

“I don’t think there’s a simple solution,” Yang said. “People think that removing all bots, removing all spam, removing all fake accounts, it will get better. I don’t think so … You have to think big: why do people love to share and believe misinformation? Why do people hate each other so much?

Yang does not believe that the research that he and his colleagues are in vain: the more information we have about where, how and why the worst content is spread on a platform like Twitter, the better will be the political leaders to do it. something about it.

“The first step is to know that there is a problem,” Yang said. “We are doing this research now not only to track bots, but also other inauthentic or bad behaviors to review them first … once we can reveal these actors and these behaviors, and policymakers begin to recognize that this is a problem, then we can start the conversation on how to find a solution “. – Derek Robertson

Keep in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Konstantin Kakaes ([email protected]); and Heidi Vogt ([email protected]).

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