Banking

Coinbase adds Goldman executive; HSBC eschews cryptocurrencies

Receiving Wide Coverage …

Policy pro

Faryar Shirzad, co-head of government affairs at Goldman Sachs, “has joined Coinbase as its new chief policy officer, bolstering the cryptocurrency exchange’s connections in Washington as U.S. regulators voice concerns over lax rules in the crypto sector,” the Financial Times reported. “The position is a new role for Coinbase, the company said.”

“Shirzad’s hiring comes at a delicate moment for Coinbase. Last month, the company completed its listing on Nasdaq in a stock market debut that valued it at around $75 billion, amid a surge in the price of bitcoin and other cryptocurrencies. At the time the listing was viewed as a landmark moment for digital currencies and validation for the industry. However, Coinbase’s share price has fallen by around a third since then as crypto prices tumbled.”

Coinbase is also “facing competition from a new breed of upstarts that look less like the New York Stock Exchange and more like Napster,” The Wall Street Journal reported. “Decentralized exchanges are peer-to-peer networks for swapping digital tokens. Unlike conventional crypto exchanges, DEXes don’t require users to hand their digital tokens to the exchange to be able to trade.”

“There is no central authority on a decentralized exchange to decide who is allowed to trade, or what tokens can be traded. DEXes generally don’t have safeguards against money laundering, or ‘know your customer’ measures in which an exchange confirms the identity of traders using the platform. That could raise red flags for government authorities, especially as DEXes gain popularity.”

Financial Times

Buyer beware

“Buy now, pay later” plans from companies like Klarna and Affirm are the hottest thing in consumer credit, “but the concept has more subtle downsides,” the FT warns. “There are often interest charges on anything beyond very short-term credit. There may be stiff penalties for missed payments. And fees to retailers mean costs may be passed on indirectly. Particularly pernicious is the pattern of never paying straight away for even the tiniest item, habituating a whole generation to masses of small credit purchases.”

At the same time, the business “is largely unregulated. BNPL companies remain immature. For investors, that means untested risks. Credit losses for BNPL are low at the moment, but customers who need to routinely defer payments may also be the first to default when recession hits. For BNPL users and investors alike, the message should be the same: buyer beware.”

Elsewhere

One step closer

Goldman Sachs said media lawyer Kimberley Harris “would become its newest board member, a move that means nearly half of the Wall Street bank’s board of directors will be women,” Reuters reported. “On Goldman’s own board, Harris’ appointment means that six of 13 directors are women. By comparison, JPMorgan Chase’s board has 10 directors, including four women, and Bank of America’s board has 16 directors, including six women.”

“Her appointment comes as banks face growing calls to add diverse and women candidates to their top rungs of leadership. Harris is NBCUniversal Media’s general counsel and an executive vice president at the Comcast Corporation.”

No crypto for us

HSBC “has no plans to launch a cryptocurrency trading desk or offer the digital coins as an investment to customers, because they are too volatile and lack transparency, CEO Noel Quinn told Reuters. “Given the volatility, we are not into Bitcoin as an asset class. If our clients want to be there, then of course they are, but we are not promoting it as an asset class within our wealth management business,” he said.

“However, Quinn said that he was a believer in central bank digital currencies (CBDCs), which several countries including the United States and China are working on.” “CBDCs can facilitate international transactions in e-wallets more simply, they take out friction costs and they are likely to operate in a transparent manner and have strong attributes of stored value,” Quinn said.



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