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Study warns of crypto market implosion; JPMorgan wins French tax probe ruling


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Essential IR Insights Newsletter - February 2023

Study warns of crypto market implosion; JPMorgan wins French tax probe ruling

U.K.-based research firm Juniper Research warned that the cryptocurrency industry seems to be "on the brink of an implosion," Bloomberg News reports. In a study titled "The Future of Cryptocurrency: Bitcoin & Altcoin Trends & Challenges 2018-2023," Juniper noted that Bitcoin's daily transaction volumes decreased to an average of 230,000 per day in September from around 360,000 in late 2017, and daily transaction values fell to less than $670 million from more than $3.7 billion during the same period. Juniper estimates a further 47% quarter-on-quarter decrease in transaction values in the third quarter, according to the report.

France's top court ruled in favor of JPMorgan Chase & Co. in its bid to strike down a 2016 indictment ordering the bank to stand trial for allegedly aiding tax fraud at French investment company Wendel SA, Bloomberg reports. In its ruling, Cour de Cassation said the indictment should have been tossed after the lower court found that French investigators did not properly observe procedures for interrogating and charging JPMorgan's Paris unit in 2015. While investigators could still reopen the probe and re-indict the bank, completing such a process could take several years, according to the report.

Federal Reserve Bank of New York President John Williams expects target interest rates to reach neutral levels within "the next year or so," The Wall Street Journal reports. Speaking at a conference in Bali, Indonesia, Williams said a bright economic outlook warrants more rate hikes by the central bank. He added that with with monetary policy moving into a more normal stance, "explicit forward guidance about the future path of policy will no longer be appropriate."

In an interview with the Journal, Federal Reserve Bank of Dallas President Robert Kaplan said the Federal Reserve's independence is "extremely important" and "should never be taken for granted." "[I]t's up to us at the Fed to conduct ourselves in a manner divorced from politics, without consideration of political influence, and continue to strive to adhere to that discipline and this governance and review of our frameworks," he added.

President Donald Trump again criticized the Fed's rate hikes, saying it was unnecessary "to go as fast" on rates given the apparent lack of inflationary pressures in the economy, The Wall Street Journal reports. Speaking to reporters outside the White House, Trump expressed his concerns that higher rates would slow down economic growth. However, he did not voice his concerns to Fed Chairman Jerome Powell because Trump did not want to intervene with monetary policy, according to the report.

Blockchain technology is coming to commodity markets where it will help deal with complex and inefficient supply chains, Blythe Masters, CEO of blockchain startup Digital Asset Holdings, said at the London Metal Exchange annual dinner, Bloomberg reports. The former JPMorgan Chase & Co. banker also said there are "tens if not hundreds" of commodity-blockchain projects in the pipeline.

In Massachusetts, Bridgewater CU and Merrimack Valley CU are again pursuing a merger after a federal court ruling foiled the parties' first merger attempt, the Boston Business Journal reports. Members of the two credit unions will vote on the proposed transaction a second time on Oct. 29.

And J.P. Morgan Securities LLC has fired Trevor Rahn, a broker, for alleged excessive and unauthorized trading in a customer's account three months after it settled with the customer, The New York Times reports.

In other parts of the world

Asia-Pacific: Indian lender in asset buy; Vietcombank to sell bank stakes; ANZ case adjourned

Europe: BoE flags concerns about leveraged loans; HSBC settles US RMBS claims for $765M

Middle East & Africa: Bank of Israel names new governor; South Africa finance minister resigns

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Q3'18 results could be 'inflection point' for large banks: For more than half of top 20 U.S. banks, analysts expect third-quarter earnings to be flat or down from the previous quarter.

NY Fed researchers cast doubt on significance of $10B threshold for US banks: A study by researchers at the Federal Reserve Bank of New York shows that Consumer Financial Protection Bureau's supervision may make banks more risk-averse, and that banks do not significantly alter their growth strategies around the $10 billion asset threshold.

The day ahead

Early morning futures indicators pointed to a lower opening for the U.S. market.

In Asia, the Hang Seng increased 0.08% to 26,193.07, and the Nikkei 225 rose 0.16% to 23,506.04.

In Europe, around midday, the FTSE 100 increased 0.01% to 7,238.30, and the Euronext 100 decreased 0.56% to 1,025.23.

On the macro front

The Mortgage Bankers' Association's mortgage applications report, the Producer Price Index-Final Demand report, the Federal Reserve Bank of Atlanta's business inflation expectations report and the wholesale trade report are due out today.

Click here to read about today's financial markets, setting out the factors driving stocks, bonds and currencies around the world ahead of the New York open.

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