Regulation
Chicago Fed President Signals Emergency Rate Cut, Slashes Recession Concerns
Chicago Federal Reserve President Austan Goolsbee hinted on Monday, August 5 that the central bank might react to signs of economic weakness with an emergency rate cut. Goolsbee’s remarks came in light of recent economic data suggesting that current interest rates might be too high. Moreover, the Chicago Fed President also weighed in on the possibility of a U.S. recession.
Chicago Fed President On Emergency Rate Cut
Today, Goolsbee addressed the impact of recent trends in the labor market and manufacturing sector on Federal Reserve policy. He acknowledged that the current economic indicators, including a weaker-than-expected jobs report, might necessitate a reassessment of the Fed’s policy stance. However, he did not commit to any specific actions, leaving the door open for various policy adjustments.
“The Fed’s job is very straightforward, maximize employment, stabilize prices, and maintain financial stability,” Goolsbee stated. He added, “That’s what we’re going to do.” He emphasized that the central bank’s approach would be forward-looking, according to a CNBC interview.
Goolsbee also suggested that any deterioration in economic conditions would prompt a response. “If the conditions collectively start coming in like that on the through line, there’s deterioration on any of those parts, we’re going to fix it,” he added.
This data triggered the Sahm Rule signal, which historically has been an indicator of a potential recession. Despite these signals, Goolsbee was cautious about jumping to conclusions. “Jobs numbers came in weaker than expected, but not looking yet like recession,” he said.
The U.S. Fed has maintained its benchmark interest rate in the range of 5.25% to 5.5% since July 2023, a level not seen in over two decades. Goolsbee noted that this rate might now be considered restrictive, a stance typically justified only if the economy is overheating. He said:
“Should we reduce restrictiveness? I’m not going to bind our hands of what should happen going forward, because we’re still going to get more information. But if we are not overheating, we should not be tightening or restrictive in real terms.”
Also Read: Is A Fed Rate Cut Ahead? Experts Warn It May Escalate Market Bloodbath
Market Expects 50 Bps Cut Today
Goolsbee’s comments come amidst a backdrop of significant market movements. Futures tied to the Dow Jones Industrial Average dropped nearly 1,300 points, or close to 3%, as Treasury yields fell sharply. This decline followed the Federal Reserve’s decision last week to maintain interest rates.
It raises concerns among investors that the central bank might be lagging in its policy adjustments as inflation eases and the economy shows signs of weakness. The Labor Department’s recent report revealed an increase of just 114,000 nonfarm payrolls and a rise in the unemployment rate to 4.3%.
The real fed funds rate, which is the difference between the Fed’s benchmark rate and the inflation rate, has increased as inflation declines. Currently, this rate stands around 2.73%, compared to the Fed’s long-term estimate of 0.5%.
Investors are now anticipating that the Fed will implement an aggressive easing policy starting today with a 50 bps cut. According to 30-day fed funds futures contracts, a 0.5 percentage point rate cut is fully priced in.
Also, projections indicate that the Fed could reduce the funds rate by 1.25 to 1.5 percentage points by the end of the year. While Goolsbee did not specify whether an emergency rate cut would be considered, he indicated that all options remain on the table.
“Everything is always on the table including raises and cuts,” he stated. Furthermore, according to Polymarket, the odds of an emergency rate cut by the U.S. Fed has surged to 55%. On the contrary, market experts like Peter Schiff and Scott Melker caution an expedited downturn in case of an emergency rate cut. It could negatively affect the crypto market and other global stock markets.
Also Read: Breaking: US Fed Calls Emergency Meeting As Japan Markets Collapse
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
Gary Gensler To Step Down As US SEC Chair In January
In a recent development, the US Securities and Exchange Commission (SEC) announced that Gary Gensler will step down from his position next year. This follows calls for Gensler to resign since Donald Trump won the US presidential elections.
Gary Gensler To Step Down As US SEC Chair
The US SEC announced in a press release that Gary Gensler will depart the Agency on January 20, 2025. The US SEC Chair also confirmed this development in an X post. Interestingly, this comes on the same day that Donald Trump will be inaugurated as the 47th president of the United States.
Following the announcement, Gensler also used the opportunity to reflect on his time at the Commission. He remarked that it has been an “honor of a lifetime” to serve alongside those at the SEC. He also thanked President Biden for the opportunity to serve in the position. Gensler has been the US SEC Chair since April 2021. During his time, he has spearheaded several litigations against the crypto industry.
This includes the long-running legal battle with Ripple, which Gensler took over from his predecessor Jay Clayton, which bordered on whether XRP was a security. Up till now, the Agency continues to reiterate this ‘digital asset securities’ claim.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
BitClave Investors Get $4.6M Back In US SEC Settlement Distribution
BitClave investors have started receiving $4.6 million in repayments from the U.S. Securities and Exchange Commission (SEC), following a settlement reached in 2020. The SEC announced on Nov. 20 that payments from the BitClave Fair Fund had been disbursed to eligible investors harmed during the company’s 2017 initial coin offering (ICO).
Pro-XRP lawyer and online commentator “MetaLawMan” criticized the SEC’s stance on digital assets, stating on social media, “Here we go again with ‘digital asset securities.’ Unbelievable.” The lawyer’s statement reflects ongoing industry frustrations over the SEC’s regulatory approach to cryptocurrencies.
BitClave Investors Get $4.6M Back in US SEC Settlement
The US SEC assured the public that $4.6 million was returned to investors who filed the claims and were eligible for the refunds. These funds were agreed upon in 2020 after the SEC accused BitClave of conducting an unregistered ICO.
The company’s initial coin offering (ICO) in 2017 brought in $25.5 million in only 32 seconds and distributed its Consumer Activity Token (CAT) to thousands of buyers. The SEC therefore claimed that the ICO was an unregistered securities transaction because potential investors were induced to invest in the CAT token with an expectation of appreciation of its value.
Under the settlement, BitClave will have to refund the money it raised and also pay $4 million in fines and interest. In between these settlements, John Deaton has accused the regulator of using laws that were set in 1933.
The Fair Fund was therefore created to ensure that the funds are returned to the affected investors. The claims submission period closed in August 2023, and the eligible investors received the information on the claims in March 2024. The Securities and Exchange Commission posted on its social media accounts that the payment has been made, and “the checks are in the mail.”
BitClave Settlement Included Penalties and Token Destruction
In the settlement, BitClave did not accept or reject the accusations made by the SEC but agreed to cough up $29 million. This total consisted of the $25.5 million that was generated in the ICO and the additional $4 million in fines.
Concurrently, the company also committed to burning 1 billion of the catalyst tokens that have not been distributed and to ask exchanges to delist the token.
The Securities and Exchange Commission therefore pointed out that by February 2023, BitClave had only remitted $12m to the Fair Fund, thus leaving questions on the balance of $7.4m. Neither the SEC nor the fund administrator gave further details on the matter, and it is still uncertain as to how the outstanding payment will be collected.
US SEC Maintains Strict Regulatory Stance on Crypto
The US SEC has continued to enforce regulations on crypto companies under the Biden administration, with over 100 enforcement actions taken against the industry. BitClave’s settlement, subsequently, is one of many cases where the regulator has targeted unregistered ICOs and other alleged securities violations.
BitClave’s case, handled under former SEC Chairman Jay Clayton, emphasized the agency’s view that many digital assets fall under securities laws. The CAT white paper described potential value increases, which the regulator argued encouraged speculative investment in an unregistered security.
As the US SEC faces criticism, President-elect Donald Trump has expressed plans to reshape crypto oversight. Trump has promised to remove current SEC Chair Gary Gensler and is reportedly considering creating a new White House position dedicated to cryptocurrency policy.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
Regulation
US SEC Pushes Timeline For Franklin Templeton Crypto Index ETF
The United States Securities and Exchange Commission (US SEC) has further delayed its decision on Franklin Templeton’s Bitcoin and Ethereum index ETF. From the filing made on November 20, 2024, it has been agreed that the decision on the proposal will be made on January 6, 2025 to afford the regulating authority ample time to consider the proposal.
US SEC Extends Review Period for Franklin Templeton Crypto Index ETF
According to the US SEC filing of November 20, 2024, the commission deferred its decision on the Bitcoin and Ethereum index ETF by Franklin Templeton. Therefore, the regulatory body is seeking to extend the review period to January 6, 2025. The extension will help to have more time to consider the application which was filed on September 19, 2024.
The proposal was first published in the Federal Register on October 8, to kick start a thirty-five (35) days review period. As a result, the review was to end on November 22, 2024. Consequently, the review was to expire on November 22, 2024. However, the SEC’s decision to delay indicates a thorough approach to reviewing the fund’s compliance with crypto regulations.
Meanwhile, no public comments on the proposed rule change have been submitted, leaving the US SEC to focus on internal assessments. This delay concurs with the commission’s conservative approach to the products that are connected with cryptocurrencies. The extra time will allow more detailed research of fund’s organization and market risks.
Franklin Templeton Expands Push Into Cryptocurrency ETFs
Franklin Templeton is broadening its efforts in the cryptocurrency space with its proposed Bitcoin and Ethereum index ETF. The asset manager, which oversees $1.5 trillion in assets, has previously launched a spot Bitcoin ETF and a spot Ethereum ETF.
If approved, the latest ETF would add to Franklin Templeton’s portfolio of crypto-focused investment products, further diversifying options for institutional.
In addition, Franklin Templeton has taken a major step in its tokenization efforts, announcing the expansion of its Benji tokenization platform to the Ethereum network. This marks the fifth blockchain integration for the platform this year, following launches on Aptos, Avalanche, Arbitrum, and Coinbase’s Base.
Despite the US SEC overall crypto ETF delays, other market players are moving further with their strategies . Last week, Bitwise submitted a registration statement to transform the Bitwise 10 Crypto Index Fund which now manages $1.3 billion into an ETP. It investments in Bitcoin represent 75% of the fund and Ethereum is 16% of the fund; these two assets sum up to 91%.
Moreover, the filing comes when diversified crypto index funds seem to be gaining popularity among investors. Bitwise’s move will make investing in cryptocurrencies more accessible for retail audiences. When approved, this ETP will also set a paradigm for the expansion of multi-asset crypto based product offerings.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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