|
|
|
|
|
The Morning Risk Report: Fed’s Michael Barr Says Crypto Turmoil Highlights Potential Risks to Financial System
|
|
|
|
|
|
Good morning. Tumult in the cryptocurrency market represents a red flag to the broader financial system, the Federal Reserve’s top banking regulator told lawmakers Tuesday, while pressing for tougher guardrails in the wake of the rapid collapse of crypto exchange FTX.
|
|
Michael Barr, the Fed’s vice chairman for supervision, said crypto-related activities need to be regulated in a manner similar to more traditional financial-services providers. While most crypto activities are occurring outside the perimeter of traditional banking regulation, that could change over time.
“Recent events in crypto markets have highlighted the risks associated with new asset classes when not accompanied by strong guardrails,” Mr. Barr told lawmakers. He didn’t identify any crypto companies by name.
Mr. Barr, in written testimony, said crypto-market meltdowns “remind us of the potential for systemic risk if interlinkages develop between the crypto system that exists today and the traditional financial system.”
|
|
|
Content from our Sponsor: DELOITTE
|
|
Quantifying Trust in the Tech Industry
|
As customer trust in the tech industry erodes, leaders can execute trust-building actions across strategic domains to influence stakeholder perceptions and behaviors. Read More ›
|
|
|
|
|
|
|
|
WSJ Risk & Compliance Forum
|
|
|
Speakers at the WSJ Risk & Compliance Forum today include Brian Nelson from the U.S. Treasury Department and Robert Silvers from the Department of Homeland Security, along with multiple experts on corporate risk and compliance. Sign up here for discussions on economic sanctions, forced labor, climate change regulation, whistleblowers and cybersecurity.
|
|
|
Blockchain.com Appoints Former OCC Regulator to Board
|
|
Cryptocurrency exchange Blockchain.com Inc. said it has named a former comptroller of the currency to its board, as the nascent industry faces increasing turmoil amid the collapse of exchange FTX.
Joseph Otting led the OCC, the nation’s primary banking regulator, between 2017 and 2020 after decades in the banking industry. He is expected to help guide the exchange in an evolving regulatory environment, Blockchain.com said Wednesday. The OCC has worked to clarify banks’ authority to conduct activities involving cryptocurrency over the last few years.
Blockchain.com’s business model and risk management policies are some of the reasons that led Mr. Otting to join the board, he told Risk & Compliance Journal. “Those who are prudent and conservative will be rewarded,” he said, referring to those players in the crypto industry with safe and sound practices.
Mr. Otting’s appointment comes as the crypto industry faces the repercussions from FTX’s bankruptcy filing last week. FTX lent billions of dollars worth of customer assets to fund risky bets by its affiliated trading firm, Alameda Research, setting the stage for the exchange’s implosion, a person familiar with the matter told The Wall Street Journal.
–Mengqi Sun
|
|
|
|
|
Financial Crimes Enforcement Network headquarters in Vienna, Va. The Treasury arm has already struggled to meet a timeline for establishing a corporate-ownership database. PHOTO: JIM LO SCALZO/EPA-EFE/SHUTTERSTOCK
|
|
|
|
A small business group is suing to block a law that was designed to stop money-laundering by rooting out the use of anonymous shell companies, reports Risk & Compliance Journal's Dylan Tokar.
The lawsuit was filed Tuesday by the National Small Business Association in the U.S. District Court for the Northern District of Alabama, and argues the shell-company bill is unconstitutional because it infringes on protected rights of state sovereignty, privacy and due process.
|
|
|
The Securities and Exchange Commission ramped up its enforcement efforts in the last fiscal year, reports Risk & Compliance Journal’s Mengqi Sun, as the markets regulator focused its sights on prosecuting high-profile cases and imposing steep penalties for misconduct under the leadership of Chair Gary Gensler.
The SEC filed 760 enforcement actions in the year ending Sept. 30, up 9% from the year before, according to the agency’s annual enforcement report, which was made public Tuesday. The SEC imposed a total of $6.44 billion in monetary penalties, the highest amount on record and 67% above the previous year.
|
|
|
The U.S. has imposed sanctions on an Iranian drone maker that officials said supplied Russia with weapons used in Ukraine.
The Treasury Department’s Office of Foreign Assets Control on Tuesday announced the sanctions against Shahed Aviation Industries Research Center, also called SAIRC, a company linked to Iran’s Islamic Revolutionary Guard Corps that designs and produces drones.
The department also imposed sanctions on Success Aviation Services FZC and i Jet Global DMCC, two United Arab Emirates-based air transport companies it said worked with an already sanctioned Iranian company to help ship drones, personnel and equipment from Iran to Russia.
|
|
|
-
Walmart Inc. has agreed to pay $3.1 billion to settle opioid-crisis lawsuits brought by several U.S. states and municipalities, adding to a landmark settlement with rival pharmacy chains.
-
A congressionally convened commission is calling on the U.S. to review Chinese trade practices and to suspend normal trade ties if the review determines Beijing hasn’t lived up to its promises under a 1999 pact.
-
Tesla Inc. Chair Robyn Denholm kicked off testimony Tuesday in the second day of a trial over Elon Musk’s multibillion-dollar pay package at the electric-vehicle maker.
|
|
|
|
|
The site of a missile strike in Przewodów, Poland. PHOTO: OMAR MARQUES/GETTY IMAGES
|
|
|
|
A missile that crashed in Poland on Tuesday, killing two people, was from a Ukrainian air-defense system, according to two senior Western officials briefed on preliminary U.S. assessments, but Poland is continuing its own investigation of the explosion.
The findings will be discussed Wednesday at an emergency meeting at the North Atlantic Treaty Organization, where ambassadors from the alliance’s 30 members are set to review intelligence and consider their options.
|
|
|
After nine months of warfare, tens of thousands killed or wounded, and billions of dollars in lost economic output, it might not sound like a diplomatic breakthrough to describe the conflict in Ukraine as a war.
But for leaders of the Group of 20 advanced and developing economies, meeting in Bali for a summit dominated by Russia’s invasion of Ukraine and its economic fallout, such a declaration would represent exactly that.
|
|
|
A few weeks after House Speaker Nancy Pelosi’s August visit to Taiwan, advisers to President Biden quietly opened back-channel talks with a senior Chinese diplomat. Beijing had largely severed lines of communication with the U.S. government, and the two sides were looking for a way forward.
Over frequent video and phone calls throughout the subsequent weeks, the group laid the groundwork for the first face-to-face meeting between the U.S. and Chinese presidents since Mr. Biden was elected, according to U.S. officials.
|
|
|
-
The Earth is now home to eight billion people, the United Nations said, because people are living longer and fertility rates have surged in some countries.
-
U.S. supplier price increases slowed in October for the second straight month, adding to signs that inflation pressures could be abating.
-
An Israeli-owned oil tanker was hit by a suspected Iranian drone Tuesday night in the Gulf of Oman, according to people familiar with the incident, creating a hole in the ship but causing no injuries or deaths.
|
|
|
|
|
TCI urged Alphabet to reduce losses in long-term bets such as the self-driving car unit Waymo. PHOTO: PETER DASILVA/REUTERS
|
|
|
|
Activist hedge fund TCI Fund Management called on Google parent Alphabet Inc. to aggressively cut costs and reduce losses in long-term bets such as the self-driving car unit Waymo, claiming the company would be more efficient with fewer employees.
London-based TCI, which said it owned Alphabet shares worth more than $6 billion, made the requests in a letter to Chief Executive Sundar Pichai on Tuesday, writing that it has been a significant shareholder since 2017.
|
|
|
-
Estée Lauder Cos. will acquire Tom Ford in a deal valued at roughly $2.8 billion, building on a longstanding licensing agreement and marking the cosmetics giant’s largest-ever acquisition, executives said Tuesday.
|
|
|
|
|
Nextracker, which makes racks that enable solar panels to pivot to follow the sun, teamed up with steel fabricator BCI Steel to make the equipment at a plant in Leetsdale, Pa. PHOTO: ROSS MANTLE FOR THE WALL STREET JOURNAL
|
|
|
|
Solar accounts for about 4% of U.S. power generation. President Biden and other advocates of green energy are trying to boost that number significantly.
To make that happen, though, the U.S. would need to build a supply chain almost from scratch.
At the moment, the U.S. has little or no manufacturing for almost any component needed to produce solar energy. China, which can produce solar components less expensively, controls more than 80% of the supply chain, dominating the manufacture of solar panels and other vital equipment. In recent years, China has spent almost 10 times as much on solar manufacturing as the U.S. and Europe combined.
|
|
|
|
|
|
|