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US Fed Vice Chairwoman Brainard Doesn’t Like What She’s Seeing in Crypto

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One of the top officials at the Federal Reserve made it abundantly clear that the central bank – which is also a powerful financial watchdog – is paying careful attention to the flaws showing up as the crypto sector founders.

“Recent volatility has exposed serious vulnerabilities in the crypto financial system,” Fed Vice Chairwoman Lael Brainard said in a speech in London on Friday, which offered a laundry list of the failings of the digital assets sector. Brainard has been leading the Fed’s work on a potential digital dollar and has been minding the store on crypto policy discussions until the central bank appoints its permanent vice chair for supervision.

Brainard said the Fed has been “closely monitoring recent events where risks in the system have crystallized and many crypto investors have suffered losses,” according to a copy of the speech. And she suggests an answer: “Strong regulatory guardrails will help enable investors and developers to build a resilient digital native financial infrastructure.”

The vice chairwoman contends that the shortcomings of crypto are basically the same as traditional finance, and the sector needs to meet the same safety standards before it gets large enough to become a threat to the rest of the financial system.

“We have seen crypto trading platforms and crypto lending firms not only engage in activities similar to those in traditional finance without comparable regulatory compliance, but also combine activities that are required to be separated in traditional financial markets,” she said at the Bank of England event. “For example, some platforms combine market infrastructure and client facilitation with risk-taking businesses like asset creation, proprietary trading, venture capital and lending.”

TerraUSD’s meltdown has drawn the attention of the Fed and other regulators, and Brainard equated it with other financial runs throughout history.

“New technology and financial engineering cannot by themselves convert risky assets into safe ones,” she said. Brainard argued that stresses throughout the industry have revealed that crypto platforms suffer from classic vulnerabilities and contagions, “illustrated by the freeze on withdrawals at some crypto lending platforms and exchanges and the bankruptcy of a prominent crypto hedge fund.” Last week, hedge fund Three Arrows Capital filed for Chapter 15 bankruptcy in the Southern District of New York federal court.

She suggested that all this reinforces the idea that a central bank digital currency from the U.S. “may be an advantage for future financial stability.” Such a government token could have profound implications for the private stablecoin market.

The Senate is soon expected to confirm Michael Barr, President Joe Biden’s pick to be the next Fed vice chairman for supervision, who will lead the central bank’s regulatory and financial-supervision efforts, including how the U.S. will oversee stablecoins. Barr is widely seen as a consumer advocate who will promote tough regulation. He served for a time on the advisory board of crypto firm Ripple, and so he is familiar with the industry.

Camomile Shumba contributed to this report.

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BofA Securities maintains Amazon.com at ‘buy’ with a price target of $154.00

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Six people in critical condition, one still missing after Paris blast – prosecutor

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© Reuters. French firefighters and rescue forces work after several buildings on fire following a gas explosion in the fifth arrondissement of Paris, France, June 21, 2023. REUTERS/Gonzalo Fuentes

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PARIS (Reuters) – Six people remained in a critical condition and one person was believed still missing on Thursday, one day after a blast ripped through a street near Paris’ historic Latin Quarter, the city’s public prosecution office said. “These figures may still change,” prosecutor Maylis De Roeck told Reuters in a text message, adding that around 50 people had been injured in the blast, which set buildings ablaze and caused the front of one to collapse onto the street. Of two people initially believed missing, one has been found in hospital and is being taken care of, the prosecutor said, adding: “Searches are ongoing to find the second person.” Authorities have not yet said what caused the explosion, which witnesses said had followed a strong smell of gas at the site. The explosion led to scenes of chaos and destruction in the historic Rue Saint Jacques, which runs from the Notre-Dame de Paris Cathedral to the Sorbonne University, just as people were heading home from work. It also destroyed the facade of a building housing the Paris American Academy design school popular with foreign students. Florence Berthout, mayor of the Paris district where the blast occurred, said 12 students who should have been in the academy’s classrooms at the time had fortunately gone to visit an exhibition with their teacher.
“Otherwise the (death toll) could have been absolutely horrific,” Berthout told BFM TV. She said three children who had been passing by at the time were among the injured, although their lives were not in danger.

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4 big analyst cuts: Alcoa & DigitalOcean shares drop on downgrades

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Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Alcoa, DigitalOcean, Teleflex, and Xcel Energy.InvestingPro subscribers got this news in rapid fire. Never be left in the dust again.Alcoa stock drops on Morgan Stanley downgrade Alcoa (NYSE:) shares fell more than 3% pre-market today after Morgan Stanley downgraded the company to Underweight from Equalweight and cut its price target to $33.00 from $43.00, as reported in real time on InvestingPro.The firm sees a significant decline in consensus estimates, and as negative earnings revisions materialize, it believes the stock will face downward pressure and underperform.The analyst’s estimates for EBITDA in Q2, 2023, and 2024 are substantially lower than the consensus. The stock is currently trading above its historical average. The firm said its downward revisions in earnings estimates and price target are attributed to the company’s high operating leverage to aluminum prices.DigitalOcean stock plunges on downgradePiper Sandler downgraded DigitalOcean (NYSE:) to Underweight from Neutral with a price target of $35.00. As a result, shares plunged more than 5% pre-market today.The company reported its last month, with revenue beating the consensus estimate, while EPS coming in worse than expected. Furthermore, the company provided a strong outlook, which was above the Street estimates.2 more downgradesTeleflex (NYSE:) shares fell more than 3% yesterday after Needham downgraded the company to Hold from Buy, noting that UroLift expectations may still be too high.According to Needham, their checks indicate that urologists are reducing their use of UroLift due to its retreatment rates, reimbursement cuts, and increasing use of competing procedures. This is also supported by their Google Trends data analysis, which indicates decreasing search interest in UroLift.BMO Capital downgraded Xcel Energy (NASDAQ:) to Market Perform from Outperform and cut its price target to $64.00 from $69.00 to reflect the lower-than-expected terms of the company’s regulatory settlement in Colorado.Amid whipsaw markets and a slew of critical headlines, seize on the right timing to protect your profits: Always be the first to know with InvestingPro.Start your free 7-day trial now.

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