Regulation
European Central Bank Braces For Two More Rate Cuts, Is US Fed Next?
The European Central Bank (ECB) is preparing for two more rate cuts, as revealed by ECB policymaker Yannis Stournaras. Hence, netizens are speculating whether the U.S. Federal Reserve would mirror a similar move in September. As of the latest update, the Federal Open Market Committee (FOMC) decided to keep rates steady.
European Central Bank To Cut Interest Rates
The ECB rate cut prediction, shared in an interview with the German financial newsletter Platow Brief, reflects the central bank’s concerns over a weakening euro zone economy. This could potentially drag inflation below its 2% target.
Stournaras serves as the head of the Bank of Greece and is considered one of the more dovish members of the ECB’s Governing Council. He highlighted the lower-than-expected economic growth and its implications for inflation. “The renewed signs of weak economic activity and the high level of uncertainty will very likely dampen inflation more than had been expected,” he stated, according to a Bloomberg report.
The statement suggests a significant risk of inflation falling below the ECB’s target in the medium term. Despite a slight uptick in euro zone inflation for July and growth for the second quarter, traders anticipate that the ECB will resume lowering borrowing costs by September or October.
Furthermore, this outlook is reinforced by ongoing surveys pointing to a deceleration in economic activity. Stournaras supported this expectation. However, he noted that forthcoming data, particularly on wages, and the ECB’s new economic projections, will be critical in shaping future decisions.
“I still expect two rate cuts this year if disinflation continues as expected,” he remarked. This underscores the delicate balance the ECB must maintain. Earlier, European Central Bank cut interest rates by 25 basis points on July 6, 2024.
US Fed To Mirror Move?
The ECB’s approach contrasts with recent developments at the US Federal Reserve. The Fed has opted to maintain its key interest rate within the range of 5.25% to 5.5%. This decision was driven by their urge to meet the 2% inflation target. U.S. Fed Chair Jerome Powell has indicated that a rate cut in September remains a possibility amid favorable inflation data.
“We never use our tools to support or oppose a political party, a politician, or any political outcome,” Powell emphasized. Meanwhile, recent U.S. job data presents a mixed picture of the economic arena. According to the data released on August 1, Initial jobless claims rose by 14,000 to 249,000 for the week ending July 27.
Whilst, continuing claims increased by 33,000 to 1,877,000 for the week ending July 20. These figures suggest a cooling labor market, which could influence the U.S. Fed’s decision-making process. If the job market continues to show signs of weakness, it might boost the case for a rate cut in the near term.
Meanwhile, across the Atlantic, the Bank of England recently cut interest rates by 25 basis points, moving them from 5.25% to 5.0%. This decision followed a narrow vote margin of 5:4. It marks the first such interest rate cut since the COVID-19 pandemic began in 2020.
Bank of England Governor Andrew Bailey cited eased inflationary pressures as the rationale for the rate cut. “Inflationary pressures have eased enough that we’ve been able to cut interest rates today,” he noted. However, Bailey also stressed the need for caution in further rate reductions to maintain low and stable inflation.
Potential Impact On Bitcoin, Gold & Stocks
The potential for rate cuts by major central banks carries significant implications for various markets. In the crypto sector, the prospect of increased liquidity is seen as a positive development. Bitcoin, which currently trades around $64,700, saw a slight decrease of 2% but remains sensitive to changes in monetary policy.
Lower interest rates can enhance the appeal of cryptocurrencies as alternative investments, driving more capital into the domain. Also, the latest US job data could further impact the crypto market. For context, weakening labor market might prompt the Fed to lower rates. It potentially leads to increased liquidity and investment in riskier assets, including the cryptocurrency market.
Investors often view digital currencies as a hedge against traditional financial instability, and increased liquidity could encourage this sentiment. Gold, traditionally viewed as a hedge against inflation, could also experience increased demand if central banks proceed with rate cuts.
Reduced interest rates typically lower the opportunity cost of holding non-yielding assets like gold. This makes such assets more attractive to investors seeking stability in uncertain economic times. However, the stock market’s response to anticipated rate cuts may be mixed.
Reduced borrowing costs can boost corporate profits and investor sentiment toward the stock market. However, the reasons for the rate cuts, such as weak economic growth and uncertainty, may negatively impact market enthusiasm.
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
“Crypto Dad” Chris Giancarlo Emerges Top For White House Crypto Czar Role
Chris Giancarlo, widely known as “Crypto Dad,” has emerged as the leading candidate for a newly proposed role of crypto czar in the White House under President-elect Donald Trump’s administration. The potential appointment underscores a strategic effort to advance crypto regulations and foster blockchain innovation in the United States.
This proposed position would be the first of its kind in the White House, aiming to bring clarity to the growing $3 trillion digital asset market. Chris Giancarlo, the former Chair of the Commodity Futures Trading Commission (CFTC), is known for his progressive approach to digital currencies and blockchain technologies.
Chris Giancarlo Leads Race for White House Crypto Czar Role Under Donald Trump
According to a Fox Business report, Chris Giancarlo is the top contender for the position of White House crypto czar, a role being considered by the Trump transition team to streamline crypto regulations and foster blockchain development.
As CFTC Chair from 2017 to 2019, Chris Giancarlo oversaw critical advancements in the digital asset space. This includes the launch of the first Bitcoin futures. He later co-founded the Digital Dollar Project, a nonprofit initiative exploring the potential of a U.S. central bank digital currency (CBDC). Giancarlo’s regulatory expertise and understanding of digital innovation position him as a key figure in shaping the future of the crypto sector.
The Trump administration aims to utilize this position to address industry concerns over the Biden administration’s perceived heavy-handed enforcement. The crypto czar would also collaborate with federal agencies to establish a framework for the $180 billion stablecoin market and enhance the overall regulatory landscape for blockchain and digital currencies.
Trump’s Strategic Approach to Digital Asset Policy
President-elect Donald Trump has expressed plans to make the U.S. a global leader in cryptocurrency and blockchain innovation. Part of this strategy includes appointing a crypto czar to advance policies to support the industry’s growth.
Trump has also proposed the establishment of a presidential crypto advisory council to address ongoing regulatory challenges. This initiative aims to align federal policies with industry needs, fostering a competitive environment for blockchain businesses. The council will explore the creation of a Bitcoin reserve as part of the administration’s broader crypto policy agenda.
The transition comes as current SEC Chair Gary Gensler announced his resignation effective January 20, 2025, coinciding with Trump’s inauguration. Gensler faced criticism during his tenure for his enforcement-driven approach to crypto regulations.
Amid speculation, Chris Giancarlo clarified that he is not pursuing the SEC Chair role. Giancarlo said in a recent statement,
“I’ve already cleaned up earlier Gary Gensler mess at the CFTC and don’t want to have to do it again.”
His focus remains on advancing crypto-friendly policies through a potential new role. According to the report, the “Crypto Dad” stated,
“I would be honored to be considered for the role.”
The creation of the crypto czar position could mark a pivotal moment in the evolution of U.S. crypto policy. With Chris Giancarlo leading the race, the industry anticipates advancements in crypto regulations under the new administration.
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
UK to unveil crypto and stablecoin regulatory framework early next year
- The UK will introduce unified crypto regulations, including stablecoins, in early 2025.
- New rules aim to simplify oversight and avoid restrictive staking classifications.
- Labour government aims to compete with EU’s MiCA rules and US pro-crypto policies.
The United Kingdom is set to introduce a comprehensive regulatory framework for cryptocurrencies, stablecoins, and crypto staking services in early 2025, marking a pivotal shift in its approach to digital assets.
The announcement was made by the Economic Secretary to the Treasury Tulip Siddiq at City & Financial Global’s Tokenisation Summit in London on November 21.
Initially slated for December 2024, the regulatory rollout was delayed due to the change in government following the election of Prime Minister Keir Starmer’s Labour administration in July 2024.
The upcoming UK crypto regulatory framework
The upcoming framework consolidates regulations for crypto assets into a single, overarching regime, a decision Siddiq described as “simpler and more logical.”
The framework aims to provide clarity in a rapidly growing sector that has faced uncertainty in the UK.
Stablecoins will receive distinct treatment under these regulations, as their functionality does not align with existing payment services rules.
Siddiq highlighted that staking services would also avoid being designated as “collective investment schemes,” a classification that could impose burdensome restrictions.
UK aims to align with the global crypto regulatory landscape
The UK government’s renewed focus on digital asset regulation comes as it seeks to align with global developments. The European Union’s Markets in Crypto-Assets (MiCA) regulations will be fully enforced by the end of 2024, offering regulatory certainty that has positioned Europe as an attractive market for the crypto industry.
Meanwhile, the US, under President Donald Trump’s administration, has adopted a markedly pro-crypto stance, including the establishment of a White House “crypto czar” and SEC Chair Gary Gensler’s planned departure in January 2024.
The Labour government has shown its intent to catch up with international competition. In September 2024, it introduced a bill recognizing NFTs, cryptocurrencies, and carbon credits as property.
The new regulatory push reflects the UK’s ambition to regain credibility as a crypto hub while addressing criticisms of the Financial Conduct Authority’s perceived stringent oversight.
By delivering a robust, streamlined framework, the Labour government aims to bolster the UK’s standing in the multibillion-dollar crypto industry.
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.
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