With markets mixed, we’re hunting for billion dollar returns and the Libra Investment Token in a major revision to the Libra white paper.

Tune in as CoinDesk podcasts editor Adam B. Levine and senior markets reporter Brad Keoun run down recent action, track interesting longer-term trends, and highlight the best “thinking with tokens” and some of the most important crypto industry developments of the day.

No time to listen? Scroll down for our full episode transcript with embedded links.

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Transcript

Markets Daily Show

December 12, 2019

On Today’s episode, we’re talking job cuts in the crypto industry, the vanishing Libra Investment Token, and what the late Federal Reserve Chair Paul Volcker might have thought about a digital dollar

Adam B. Levine: It’s Thursday, December 12, and you’re listening to Markets Daily, I’m Adam B. Levine, Podcast editor here At Coindesk, along with our senior markets reporter, Brad Keoun, to give you a concise daily briefing on crypto markets and some of the most important news developments in the sector over the past 24 hours. 

MARKET NUMBERS (Segment 1)

Adam: Bitcoin is down slightly this morning, about six tenths of a percent over the past 24 hours to $7195. Ether is down nine tenths of a percent to $144, and XRP from Ripple is off six tenths of a percent to 22.1 cents. 

In traditional markets, after a Federal Reserve meeting on Wednesday that contained few surprises, Standard & Poor’s 500 futures and 10-year U.S. Treasury yields are little changed. Gold is up nine tenths of a percent to $1,488 an ounce. Not much action in global currency markets either with the dollar looking pretty stable against the euro, yen and British pound. 

Adam: Brad, tell us what we’re seeing in the bitcoin market

MARKETS NEWS ROUNDUP (Segment 2)

Brad Keoun:

Bitcoin has fallen to two-week lows near $7,070, and traders are wondering where it will head from here

CoinDesk’s Omkar Godbole writes that the price charts are currently looking bearish, and if bitcoin stays on the current trend, it might fall as far as $6,500. 

Analysts agree that the breaking point for a bull run would be $7800 so the price has a way to go.

In related news, this sluggish market appears to be leading some crypto companies to cut back for the holidays

CoinDesk’s Ian Allison reports that ConsenSys, an ethereum blockchain development company, has eliminated eleven positions as it shut down key operations in India and the Philippines

And Circle, one of the earliest crypto adopters in the fintech space, has laid off about ten employees, barely a week after the firm’s co-CEO, Sean Neville, announced he would step down from his role at the end of 2019. 

On the regulatory front, the U.S. Securities and Exchange Commission has charged Shopin, a developer of blockchain-based tools for retail sales, with defrauding investors after a $42 million initial coin offering

Founder Eran Eyal also is accused of failing to develop the platform as promised while also misappropriating at least $500,000 for his personal use, including spending ICO cash on a dating service

Meanwhile, CoinDesk’s Dan Palmer reports that the liquidator for the collapsed New Zealand-based crypto exchange Cryptopia has retrieved $7.2 million since the hackers stole $16 million from the platform in January

 Cryptopia went into liquidation in May after the financial losses, but the assigned liquidator, the accounting firm Grant Thornton, said Wednesday in a report that it’s proving extremely difficult to ascertain what assets customers held on Cryptopia, partly since crypto assets were pooled into general wallets instead of individual for customer wallets 

In a more positive sign for the crypto industry, Reuters reports that the big Dutch bank ING is working on developing technology to help clients safely store digital assets

 ING said it QUOTE “sees increasing opportunities with regard to digital assets on both asset backed and native security tokens,” END OF QUOTE

Brad: BACK TO YOU, ADAM

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FEATURED STORY – Hunting for Billion Dollar Returns and the Libra Investment Token  (Segment 3)

Adam: And for todays featured story, we’re taking a look at recent changes to the Libra Whitepaper.  Libra is of course the high profile, dollar pegged,  so called “stablecoin” project first proposed earlier this year with the support of Facebook, Paypal, Mastercard and other major players.  Stablecoins are designed to have their value match something like the US dollar, a crucial distinction when compared with more volatile cryptocurrencies like Bitcoin.

Writing for FinTechPolicy.org, Georgetown University law professor Chris Brummer notes 

“The key change, of course, is that interest earned from reserve assets will not be used to pay dividends to investors.  This is a considerable departure from the plans first spelled out in June. Indeed, on the Libra website I don’t see any obvious mention of dividends at all, or for that matter, any mention of Libra Investment tokens to be offered to early investors. “ End Quote

Although not widely known, the Libra project as originally proposed in June was built around the idea of not one, but two coins; The proposed dollar pegged stablecoin that was simply called Libra, and a “Libra Investment Token” which was available only to select parties, and at minimum purchase amounts of ten million dollars.   Those millions would be used to power the network through its early days, but if the network were successful would represent one of the best investment returns we’d ever seen.   

In July, I enlisted blockchain CPA Kirk Phillips to help me figure out exactly how good those returns could be under various adoption scenarios. In an article linked in todays shownotes entitled Billion-Dollar Returns, the Upside of Facebook’s Libra Cryptocurrency, we laid out the case, which, without getting into it could have seen a literal tens of billions of dollars per year in returns for individual investors.

Well, since July, things have changed.  After a series of frosty interactions with global, but especially US representatives and regulators, this rewrite appears to throw out the entire concept of a second token, and apparently the profit potential that was baked in.  

Now, all of this is still hypothetical as the LIBRA token is not launched. Since the original announcement, the basket of companies supporting the project has changed as payment processors Paypal, Mastercard and others seem to rethink their support, at least publicly.

In the big picture, Libra is a project which if it ever sees the light of day will be a game-changer regardless of its implementation. Facebook and some of its partners are the largest companies in the world with staggering reach and enormous audiences, globally. 

The removal of the Libra Investment Token concept is both good and bad for differing and perhaps conflicting reasons.  On the one hand, by simplifying the concept to just the non-speculative dollar pegged stablecoin, the project seems more likely to see the light of day.  It’s just a simpler project without any obvious profit motive, billion dollar returns, or people who stand to substantially gain from its success.

On the other hand, does anyone doubt the companies launching a successful Libra won’t see it as an opportunity to profit?  We used to know how that would happen, but now? We’ll just have to wait and see.

SPONSOR Consensus2020.com

Hey folks, Adam B. Levine here to remind you about Consensus, the Anchor event for each years Blockchain Week NYC hosted by CoinDesk, This year it’s all happening May 11-13. And you’re not going to want to miss what’s planned.

In previous years, speakers have included Democratic presidential candidate Andrew Yang, Coinbase CEO & Co-Founder Brian Armstrong, and BitMex CEO Arthur Hayes.

But prices go up this Friday, December 13th, at midnight EST. Save $500 on your pass and register now. Visit Consensus2020.com and hit “Get Tickets.” See you in May!

Markets Spotlight (Segment 4)

Adam: And now, for our market spotlight, we’re looking at the concept of a digital dollar, and whether the late Federal Reserve Chair Paul Volcker might have embraced it, or not. Brad has the details for you and what it all means for crypto traders

Brad: 

Today we’re focusing on central bank digital currencies, which have become a very hot topic both in the crypto space as well as among authorities as they try to grapple with how the global monetary system might evolve in the near future, especially given the rapid development of cryptocurrencies and blockchain technology

These digital assets, unlike private-sector efforts like Bitcoin and Ethereum, would be under the control of central authorities, which as we discuss today can have both pros and cons

Authorities from Ghana to Sweden are examining the concept while China, the world’s second-largest economy, is moving forward with tests of a digital version of its national currency, the yuan. 

But in the U.S., authorities don’t seem too keen on the idea: U.S. Treasury Secretary Steven Mnuchin said last week that he and the current Fed chair, Jerome Powell, agree that there’s no need for a digital version of the dollar in the next five years. Even Federal Reserve Chair Paul Volcker, who died this month at 92, never really said much about cryptocurrencies during his lifetime; in fact he once told a Quartz reporter that he was too old to know anything about bitcoin

But Volcker is regarded as perhaps the most effective and credible Fed chief of the past half century, based on his successful push to combat double-digit inflation in the late 1970s and 80s. 

The promise of these government-backed digital currencies is that they might reduce the need for paper bills and coins, making it easier for consumers and businesses alike to exchange payments. 

And those are benefits that Volcker likely would have embraced, says Richard Sylla, a New York University economics professor emeritus who specializes in financial history.

 After the financial crisis of 2008, Volcker famously said that he thought the ATM machine was the most important banking-industry innovation of the prior 20 years, because it actually improved people’s lives by making it easier for them to get cash

His point was to distinguish such advances in payments technology from the financial-engineering wizardry of Wall Street concoctions like collateralized debt obligations, a type of bonds packaged out of subprime mortgages that were popular in the 80s, that is until they nearly bankrupted the global financial system when the housing market deteriorated

Dick Bove, a five-decade financial-industry analyst for brokerage firm Odeon Capital, says Volcker likely would have opposed bitcoin and other digital assets built by independent developers, since he believed that central banks should have strong control over the monetary system – to help society achieve goals like stable prices

A digital dollar, on the other hand, is something Volcker likely would have gone for, Bove says, since he probably would have wanted the Fed to keep up with the new technology

Of course, some critics of these central bank digital currencies say they just might provide a new way for governments to spy on their own citizens

And Jimmy Song, with crypto-focused venture capital firm Blockchain Capital, says he thinks a digital dollar isn’t terribly different from the monetary system that Volcker oversaw; basically just a technological upgrade

Song says a digital dollar wouldn’t do anything to change the underlying problem that central banks exercise too much control over the economy

Volcker, based on his career, probably wouldn’t have seen that as a problem

Join us again on Friday, for the next Daily Markets from CoinDesk

Thanks for listening, and if you have any thoughts or comments on the Daily Markets show so far send an email to podcasts@coindesk.com

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