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The Morning Risk Report: Lawmakers Near Deal on Tougher Rules for Stablecoins
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Good morning. U.S. lawmakers moved closer to a bipartisan agreement on new legislation that would regulate so-called stablecoins as part of efforts to impose basic safeguards on volatile cryptocurrency markets.
The potential deal would mark the first significant step to apply tougher rules on an industry that developed with virtually no regulation. Biden administration officials and a bipartisan group of lawmakers worry that current laws don’t provide comprehensive standards for the new assets and have warned of potential risks to financial stability posed by stablecoins, a type of cryptocurrency intended to be pegged to the dollar or another national currency.
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Content from our Sponsor: DELOITTE
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Corporate Travel Spend Remains Below 50% of Pre-Pandemic Levels
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Corporate travel spend remains below pre-pandemic levels but should grow significantly over the rest of 2022. Still, many uncertainties remain. Read More ›
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Those anxieties have grown in recent months after Tether, the largest stablecoin, briefly lost its peg during the collapse in May of TerraUSD, a so-called algorithmic stablecoin that was backed by another cryptocurrency rather than cash or safe assets.
“Investors are getting hurt now and eventually this market could become systemic, which is why they need to establish some oversight now,” said Sheila Bair, a former chairwoman of the Federal Deposit Insurance Corp. “Nobody has clear jurisdiction and that’s why Congress would ideally move ahead.”
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Switzerland Is Urged to Adopt Whistleblower Protection Laws
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Switzerland urgently needs to adopt key anti-foreign bribery legislation, including protections for whistleblowers and an increase in maximum fines for violators, an OECD antibribery group said on Wednesday.
In a report, the Organization for Economic Cooperation and Development’s Working Group on Bribery in International Business Transactions said it is concerned the Swiss government hasn’t adopted legislative reforms since it was last evaluated in 2011.
The suggested changes include legislation to compensate and provide anti-discriminatory protections to private-sector whistleblowers who report suspicions of foreign bribery. A draft law was rejected by the Swiss Parliament in 2020 with no immediate reconsideration of the issue, the working group said. Switzerland also needs to increase its statutory maximum fine on companies convicted of foreign bribery. The ceiling is currently set at 5 million Swiss francs, or approximately $5.14 million.
The OECD Working Group is planning to visit Switzerland in December–unless the Swiss authorities take steps to implement its two recommendations by then.
—Mengqi Sun
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Crypto broker Voyager Digital filed for bankruptcy earlier this month.
PHOTO: GABBY JONES/BLOOMBERG NEWS
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Eugene Erlikh had about $25,000 in his account at Celsius Networks LLC last September when he borrowed $4,000 in a so-called margin loan to buy cardano, a cryptocurrency. The loan put the 32-year-old Los Angeles resident on the wrong side of one of the great meltdowns in the cryptocurrency world. On June 12, Celsius told users that it was pausing withdrawals and transfers. On June 18, Celsius said Mr. Erlikh would need to transfer the company half of a bitcoin—worth about $10,000, or more than twice the amount of his loan—or face liquidation of his account. In July, Celsius filed for bankruptcy protection.
Margin loans are one of the most common sources of the borrowed money, or leverage, that underlies the zigs and zags of financial markets. During the current winter for crypto firms and their investors, leverage is exposing crypto lenders’ risk-management failures and exposing many of their customers to significant losses and stressful uncertainty.
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A compressor station in Mallnow, Germany. PHOTO: FILIP SINGER/SHUTTERSTOCK
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Russian natural gas began flowing again at a reduced volume through a critical pipeline into Europe on Thursday, according to its operator, buying time for governments to decouple from the Kremlin’s exports amid what they expect will be an increasingly unreliable supply of energy from Moscow heading into the winter.
The Nord Stream pipeline connecting Russia with Germany under the Baltic Sea resumed operation after its annual maintenance, ending 10 days of tense speculation about whether President Vladimir Putin’s regime would cut off the gas flow to Europe in retaliation for Western sanctions after his invasion of Ukraine.
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U.S. Strategic Command hosted first meeting on Pyongyang’s weapons program; event showed priority is deterrence not disarmament, some participants say.
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Disbarred lawyer Alex Murdaugh pleaded not guilty Wednesday to murder charges in the fatal shooting of his wife, Maggie, and son Paul.
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The U.S. launched a trade fight against Mexico on Wednesday, accusing President Andrés Manuel López Obrador’s government of favoring its state-owned utility and oil company at the expense of American businesses.
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Aluminum cans on the production line at Ball Corp. The company had disagreed with the new rule’s provisions in March.
PHOTO: ANDREW YATES/REUTERS
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U.S. companies will have to disclose the terms and the size of their supply-chain financing programs under a new rule from the Financial Accounting Standards Board, which approved it on Wednesday.
Supply-chain financing has gained popularity as companies stock up on inventory and push their payment terms out further. The tool allows companies to pay bills later, while suppliers get their cash more quickly. A third party—usually a bank—pays the vendor’s invoices, but takes a cut. The business pays the bank what was due under the invoice, though at a later date than originally required.
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Some California lawmakers said the legislation could pre-empt state laws. A train station in San Francisco.
PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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Bipartisan legislation to give Americans more control over their online data moved forward in Congress on Wednesday, even as new objections to the bill emerged from California and other states.
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An overheated market for cybersecurity products means vendors must ensure their products work better with each other if they want new business, cyber executives say.
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Firefighters contain a wildfire in Sheffield, England. CHRISTOPHER FURLONG/GETTY IMAGES
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Temperature records were broken across Europe and the U.K. as extreme heat swept through the region over the past week. Hundreds of people have died, including 659 people in Portugal. Thousands have been evacuated from their homes as wildfires scorched swaths of Southern Europe.
Meanwhile, record-setting heat across France and other countries has turned some of Europe’s most popular destinations for summer tourism into tinderboxes, highlighting the struggle to adapt to a changing climate.
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President Biden said he considered the environmental risks created by climate change to be “an emergency” and signaled plans to use his presidential powers “to turn these words into a formal, official government action.”
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European Central Bank President Christine Lagarde faces a three-pronged challenge this week as she steers Europe’s currency union through an increasingly hostile landscape of surging prices, slowing economic growth and political turbulence.
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A mortgage protest persisted in bubbling up in China on Wednesday, adding pressure on Chinese authorities to directly address growing discontent among home buyers who have plowed their savings into apartments that haven’t been completed.
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Chipotle is closing a Maine store where workers were trying to unionize. PHOTO: ANDREW KELLY/REUTERS
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Chipotle Mexican Grill Inc. is closing a store in Maine where workers were trying to unionize.
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Lyft Inc. has shed about 60 people while hitting the brakes on renting its cars to riders and consolidating its global operations team, according to people familiar with the matter and an employee memo reviewed by The Wall Street Journal.
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Staffers at HarperCollins Publishers staged a one-day strike Wednesday following the breakdown of contract negotiations between the publisher and a union that represents some 250 of its employees.
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Freight operators in Oakland, Calif., are bracing for continued protests by truckers that have blocked operations this week at the West Coast’s third-busiest container port, adding new disruptions to already-strained U.S. supply chains.
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