Finance

Congress members draft a bill called 'Keep Big Tech Out of Finance Act’ in order to bar Facebook and other big tech companies from entering the financial service and cryptocurrency market.Over the weekend, a copy of the proposed legislation drafted for discussion by the Democratic majority heading the House Financial Services Committee began circulating the web.The purpose of 'Keep Big Tech Out of Finance Act’ is to prohibit ‘large platform utilities’ from acting as financial institutions.According to the draft bill, a large platform utility is a company that mainly offers an online platform service and has a minimum of $25 billion of annual global revenue. Facebook is an entity that fits the definition.“A large platform utility may not establish, maintain, or operate a digital asset that is intended to be widely used as medium of exchange, unit of account, store of value, or any other similar function, as defined by the Board of Governors of the Federal Reserve System,” the document details.The bill proposes sanctioning the violation of said rules with a $1 million fine per day.Ever since Facebook announced plans to launch its cryptocurrency Libra in 2020, both American and European politicians have been voicing their concerns about the violations of privacy that might arise from such an enterprise.As Bitcoin.com reported at the time, Democratic Congresswoman Maxine Waters said “Facebook is already too big and too powerful, and it has used that power to exploit users’ data without protecting their privacy. We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.”President Trump also expressed his negative opinion on cryptocurrencies in a tweet last week, questioning their lawfulness and stability and emphasizing that the only currency he supports is the US dollar.Facebook’s efforts on the development of Libra were halted in late June by Waters’ request to hold off further work until Congress has had a chance to assess Libra’s features, business plan, and potential risks.The 'Keep Big Tech Out of Finance Act’, which appeared right before the Libra hearings with the Senate Banking Committee on July 16 and the House Financial Services Committee on July 17, seems like an attempt by the congressional authority to forestall taking definitive action on the matter.Reuters predicts pro-innovation Republican members of the House opposing the proposed legislation. Even if the bill is passed in the House of Representatives, getting the Senate to vote for it would still be a challenge, the international news organization reported.

By Ivana V. July 15,2019

On Tuesday, Apple opened the first App Design and Development Center in China with the aim of stimulating the ‘app economy’.In yesterday’s announcement, the iPhone maker informed that the program would include workshops, lectures, labs, guest speakers, one-on-one and networking sessions held on a regular basis. The Accelerator is open to more than 2.5 million developers of Apple’s platforms from Greater China, a region that consists of Hong Kong, Taiwan, and mainland China.“Developers here in China are leading the world with some of the most popular apps on the App Store, and we are proud to be providing this additional support for them,” said Enwei Xie, Apple’s head of developer relations, Greater China. “From education to health to entertainment, the innovation we see here is incredible and we can’t wait to see what these talented developers will come up with next.”Located in Pudong District, Shanghai, the Center will give Chinese developers a chance to work side by side with experts from Apple, perfecting their app development skills. Program participants will also be able to learn about the implementation of the latest Apple technologies and the distribution and marketing of their apps to global customers.Interested developers will have the chance to work on all platforms, including iOS, iPadOS, watchOS, macOS, and tvOS with other members of the app community.Since 2010 when the App Store was launched in China, local developers have made more than 200 billion RMB or roughly 30 billion USD, from app sales and in-app purchases.Fighting for a place in the global market According to Reuters, the launch of the Chinese App Development Center aligns with a period when sales in China and the world have slowed down.Previously, Apple opened a similar Center in Bengaluru, India in 2017. Android devices dominate the smartphone market in both of these Asian countries, with manufacturers like Samsung Electronics and Xiaomi leading the way.In an attempt to increase its share in the Chinese market, Apple launched a number of financing schemes to make iPhones more affordable to customers. In addition to this, Chinese retailers also lowered the prices of certain iPhone models.

By Ivana V. July 11,2019

Libra, Facebook’s new cryptocurrency, is awaiting a hearing before the U.S. Senate Committee on Banking, Housing, and Urban Affairs. The July 16 meeting will be held at 10 a.m. EST, and as of yet, no information about witnesses has been released. The hearing will be broadcast to the public.The goal is to examine “Facebook’s Proposed Digital Currency and Data Privacy Considerations.” Libra’s features, business plan, and potential risks will undergo close scrutiny at the hands of the Congress members, and any further work on Libra will likely be delayed.Facebook characterized Libra as a “global currency and financial infrastructure,” a digital asset powered by Facebook’s new version of blockchain. Facebook claims its ambition with Libra comes down to reaching 1.7 billion people worldwide who still don’t have access to a bank account.Still, the Banking Committee has met Facebook’s seemingly altruistic plan with caution. In an open letter they published last month, the Committee demanded answers about Facebook’s work on Libra: how it works, and whether Facebook sought any input from market watchdogs and regulators before putting it in motion.Even before Facebook went public with its vision for a global cryptocurrency, it sparked the interest of the Congress with its social media monopoly. Together with Google, Facebook controls 82% of the digital advertising market. This monopolization has triggered an antitrust investigation that will dig deep into Facebook’s Google’s, and Amazon’s anti-competitive behavior. Currently, banks and financial institutions have limited access to personal information and data. If Facebook, a company which holds more personal data than most governments, establishes Libra, it will significantly diminish other organizations’ chances at the consumer payment market. Facebook’s Libra project threatens to increase its monopolistic efforts to the financial market exponentially, in keeping with Facebook’s monopolistic business style.Still, killing off payment market competitors is not the officials’ only concern. Privacy has become a burning issue after a series of data theft and data leakage controversies, and the Cambridge Analytica scandal. Its insight into consumer purchasing habits and patterns is unprecedented; if Facebook successfully mints its own coin, the public would get a chance to witness the greatest anti-competitive trust case in history.Following today’s news on U.S. Senate Committee on Banking, Housing, and Urban Affairs hearing, committee member and 2020 presidential candidate Sen. Elizabeth Warren tweeted: “Facebook has too much power and a terrible track record when it comes to protecting our private information. We need to hold them accountable—not give them the chance to access even more user data. #BreakUpBigTech.”

By Andrea June 25,2019

After unveiling their new cryptocurrency project on Tuesday, Facebook is experiencing pushback from both U.S. and European lawmakers. The launch is facing heavy scrutiny and some of the officials calling for it to be put on indefinite hold. Facebook has recently announced the release of Libra, a blockchain project that will involve a consortium of big companies such as Visa, MasterCard, PayPal, Uber, and Spotify. The currency is meant to enable cheap and easy payments all around the world, and it will be marketed primarily to developing countries. As soon as the tech giant published its white paper on Libra, politicians were quick to voice their concerns. Maxine Waters, the Democratic congresswoman and House Financial Services Committee Chairwoman gave a press statement that was picked up by multiple news outlets: “With the announcement that it plans to create a cryptocurrency, Facebook is continuing its unchecked expansion and extending its reach into the lives of its users."She continued with a demand for Facebook to put project Libra on hold: "Given the company's troubled past, I am requesting that Facebook agree to a moratorium on any movement forward on developing a cryptocurrency until Congress and regulators have the opportunity to examine these issues and take action.”After the statement, a Facebook spokesperson was asked for comment. "We look forward to responding to lawmakers' questions as this process moves forward," they stated, implying that the company doesn’t plan to cease the development. Given Facebook’s history of scandal and the antitrust investigation they are currently being subjected to, both Republican and Democratic officials are reluctant to give the company free reign and allow them even more power to control the market. In Europe, government representatives are similarly opposed to the idea. “It can’t and it must not happen,” the French Finance Minister, Bruno Le Maire, claimed in an interview for Bloomberg. A German member of the European Parliament also stated that Facebook is at risk of becoming a “shadow bank” and that they “must not be allowed to operate in a regulatory nirvana when introducing virtual currencies.”U.S. Senator Sherrod Brown is also concerned about Facebook becoming too big and too powerful to control. He stated: “We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight. I'm calling on our financial watchdogs to scrutinize this closely to ensure users are protected." The social media company has had numerous issues in the past. Several privacy concerns were raised, the latest one related to a huge data leak that leaked millions of user records on cloud servers. With this new cryptocurrency, there are many concerns that Facebook will exploit users’ data without protecting their privacy.

By Julija A. June 19,2019

Amazon recently responded to Alexandria Ocasio-Cortez’s earlier claim that they pay “starvation wages” to their workers in a tweet which claims that they pay a $15 minimum along with full benefits from day one. “AOC is just wrong,” they asserted in a tweet on Monday, also pointing out that they are lobbying to raise the federal minimum wage. Ocasio-Cortez has criticized Amazon on Twitter and in interviews on multiple occasions, and her Sunday interview for ABC was particularly scathing. She stated that Jeff Bezos’s “being a billionaire is predicated on paying people starvation wages and stripping them of their ability to access health care,” adding that she doesn’t care whether Bezos is a millionaire or not, and that “his ability to be a billionaire is predicated on the fact that his workers are taking food stamps.” Amazon’s senior vice president of global corporate affairs, Jay Carney, also responded in a tweet, saying that Amazon workers get top-tier benefits, get paid more than 42% of Americans, and that AOC should focus on raising the federal minimum wage instead of going after Amazon. AOC was quick to respond, and replied to Amazon’s tweets several hours later: “If a person is working 40h/week & is paid so little that they need gov help to make ends meet, it’s not the person that’s a weight on our system – it’s the company,” she said. “People need to be paid a living wage. We stand up to co’s that rely on food stamps to make up for their low wages.” She also responded to Amazon’s claim that they pay a $15 minimum “since day one,” pointing out that Amazon’s Ohio employees had to resort to food stamps and that paying employees so little that they need to apply for government assistance just to feed themselves is the definition of “starvation wages.” It’s also interesting to note that Amazon only increased their minimum wage to $15 in November last year, after facing heavy criticism for their pay disparity. Alexandria Ocasio-Cortez’s spokesperson, Cobin Trent, also made a statement: “Amazon built a nearly trillion-dollar company on the backs of the American people,” he claimed. “They have a business model that relies on the American taxpayer. Amazon has made billions using our roads, bridges, postal service, airports, and internet – all built with the tax dollars of hardworking Americans. You would think a company that relies so heavily on taxpayer innovations would be more willing to contribute to our society, but you’d be wrong. Amazon pays zero federal income tax, has extorted our cities and states for tax breaks and their employees often rely on government subsidies to get by. It is time for Amazon to do right by their employees. It is time for Amazon to do right by the American people.”

By Julija A. June 18,2019

Congress set the federal minimum wage at $7.25 per hour in 2009. Next Sunday will mark the 10th anniversary of that date - and there have been no adjustments for rising living costs in all that time. It is the longest period without a minimum-wage hike in American history. Assuming a 40-hour work week with no paid time off, a worker will earn $15,080 per year under the federal minimum wage. The Massachusetts Institute of Technology’s Living Wage calculator determines the minimum amount families must earn in different cities and states in order to meet “minimum standards of living.” According to MIT calculations, a single mother of two earning $7.25 per hour would have to work 138 hours per week to earn a living wage. Just for the sake of comparison, the living wage floor in 1970 was $1.60. This left a pre-tax surplus of 35% after basic expenditures. In 2015, the minimum wage leaves a 6% deficit between minimum wage and minimum living. Most American states have adopted a state-specific minimum wage to match the higher cost of living, but in 21 states the minimum wage matches the federal directive. This isn’t enough to live on, even in rural areas with a very low cost of living. Democrats have proposed to raise the minimum wage gradually to $15 by 2024. Opponents argue that raising the minimum wage benefits only young people with entry-level jobs, but according to data, it would actually raise wages for 40 million Americans with an average age of 35. Conservatives argue that increasing wages would affect small businesses, slowing job growth. However, research has disproved this theory several times. Not only would increasing the minimum wage improve worker retention, productivity, and customer service, it would also put more money into consumer’s pockets, boosting the overall economy. Companies such as Walmart and Amazon have already stated their support for the Democratic legislation, but it’s not just the big players that have taken a stand. Businesses for a Fair Minimum Wage, a consortium of more than 800 companies, is working to raise awareness and increase the federal minimum wage by 2024. Most of these companies are small businesses.

By Julija A. June 17,2019

Bitcoin has finally crossed the $9,000 threshold after reaching $9,300 on Sunday. The price of bitcoin fell sharply in May while the market suffered from so-called “bull exhaustion”, but it quickly climbed back up. BTC/USD peaked at $9381 at 05:55 UTC.BTC was last traded at $9,250, representing 6.4% gains on the day. The cryptocurrency is up by 8% on a month-to-date basis. Once the high hit, people all over the world started trading—more than $19 billion worth of bitcoin has been exchanged, according to data. The digital currency is up by 22% in the last 30 days, and up by 142% since the beginning of the year. BTC’s all-time high reached $19,000 back in 2017. Investors are applying bullish strategies with bitcoin due to Facebook’s upcoming launch of a whole new cryptocurrency. The new coin will reportedly allow users to make purchases in the Facebook store, and there are over one-hundred companies backing Facebook’s new blockchain. Companies seem to be eager to invest in cryptocurrencies, and Facebook’s involvement in the crypto space is encouraging them to take greater strides. The industry has long been plagued by talk of illegal activity and regulatory scrutiny, but now that tech giants are behind the idea, the practice is given an air of legitimacy. Facebook’s move is likely to increase their engagement and revenue, but it’s also possible that it will encourage other people to pay more attention to virtual currencies.For example, litecoin is up 2.3 percent on a 24-hour basis. Rthereum’s ether token, XRP and bitcoin cash are up 4%, and EOS is the best performing cryptocurrency of the past 24 hours with 7.4% gains. There’s a possibility that BTC will rise toward the next major resistance at $10,000. Some indicators include the bitcoin’s 50- and 100-candle moving averages on the three-day chart appearing set to generate a bullish crossover. If anything, this is a good sign of bull market momentum. Similar circumstances unraveled in 2015, when the same cross marked the onset of a long-term bull market. Another factor which could have contributed to the increased value of BTC is Binance’s announcement that it would stop serving its US customers in September. Binance Coin is a popular stablecoin that is often used for trading in other currencies, and it seems that its selloff correlates with the rise of BTC’s price. Virtual currencies are entering a new era of success, and all that’s left is to see how quickly they become accepted as a part of everyday life.

By Julija A. June 17,2019

The social media giant is recruiting financial companies and eCommerce firms to back up the launch of Facebook’s mysterious blockchain plan called “project Libra.”According to the Wall Street Journal’s report, the project is getting support from companies such as PayPal, Visa, MasterCard, Uber, and other major players, though it’s still unknown what role these businesses will play. After several indirect clues that the plan has finally been set in motion, Facebook has made it public that it intends to unveil its cryptocurrency next week and launch it next year. Allegedly, each of the partner firms invested $10 million into the project and created a governing body called the Libra Association. The Libra Association will not have direct control over the new cryptocurrency, and neither will Facebook. They plan to enlist around 100 organizations to act as “nodes” in the network in order to limit any single company’s control over the value of the currency. Facebook intends to market the currency primarily to developing countries, where traditional financial institutions are unreliable, and charge extortionate fees for cross-border remittance. Caitlin Long, a Forbes writer and blockchain advocate, claims that the new “cryptocurrency will be a powerful force for good in developing countries.” Given that third world countries often have unstable fiat currencies, Facebook could provide a store-of-value that is more reliable than the government-backed currencies. The Facebook coin will be tied to several currencies and low-risk securities instead of just the U.S. dollar, and the company plans to provide a physical structure (in the form of ATM terminals), to make it easier for users to exchange the cryptocoin for fiat currencies. Given the fact that Facebook is currently the target of an undergoing antitrust investigation, it’s possible that the social media firm is soliciting help from various tech and financial companies in an attempt to appease antitrust regulators. Despite the involvement of these companies in the cryptocurrency plans, they won’t be a direct part of the blockchain themselves without a bigger investment. To earn a place in the ledger, they will have to pay more than the initial $10 million. Facebook has also been working with financial authorities across the board to avoid further regulatory scrutiny, and they plan to incorporate anti-fraud systems and identity verification. It is still unclear how the coin will be used, but many experts believe that Facebook plans to allow users to purchase discounted goods from retailers, and transfer value directly from Facebook to retailers, cutting out banks and credit card companies from the process. The rumors are heating up, but we’ll have to wait until June 18 when the official announcement should paint a clearer picture of the situation.

By Julija A. June 14,2019

The alleged attacks on two tankers in the Strait of Hormuz that occurred on Thursday morning spiked the oil-stock prices.The two vessels that suffered explosions belonged to Japan and Norway. The Japanese tanker was transporting 25,000 tons of methanol from Saudi Arabia to Singapore at the moment it caught fire. The Norwegian-owned tanker sailing under the Marshall Islands flag was carrying 75,000 tons of naphtha, a flammable petroleum product, from a UAE port to Taiwan when it got hit by an unknown object.The effect of the events on major indexesThe U.S. reacted immediately, sending U.S. Navy rescue teams to the location and accusing Iran of the aggression. With heightened tensions between the U.S. and Iran, oil futures surged. The Wallstreet’s S&P 500 Index rose by 0.4% with oil companies leading the way. The Nasdaq Composite Index ended the day with an increase of 0.6%. Dow Jones Industrial Average was up by 0.4% too.Both West Texas Intermediate, the U.S. oil benchmark and Brent Crude, the global oil producer, went up by 4.5% yesterday. The Europe Stoxx 600 oil and gas sector stocks grew by 0.2%.Market analysts’ view of the situationSam Stovall, chief investment strategist of U.S. equity strategy at CFRA doesn’t foresee the Strait of Hormuz being closed as a result of these alleged tanker attacks, though he is not surprised they are influencing oil prices.“The market seems to be ignoring China trade and geopolitical issues and focusing on the strong economy, rising productivity, and low unemployment,” he told MarketWatch."Two opposite forces are in the game for oil traders: the global economic slowdown and rising stockpiles pressure the oil prices downwards, while the ongoing tensions in the Middle East push the prices upwards," said Ipek Ozkardeskaya, senior market analyst at London Capital Group to Business Insider on Friday morning.Other Stocks that Budged YesterdayWhen the Stock Market closed on Thursday, June 12, Target Corp. increased by 0.1% after the company said it would raise its quarterly dividend by 3.1% to 66 cents a share. Tyson Foods Inc. shares saw an increment of 0.8%. The rise in stock prices was motivated by an announcement that the company is entering the alternative protein market with a new plant-based meat product under the Raised and Rooted brand.RH shares swelled by 16% following the retail company’s earnings report, which surpassed the shareholders' expectations. The retailer formerly known as Restoration Hardware expressed its confidence in mitigating the negative effects of the U.S.-China trade war, saying it had taken several measures to secure its financial goals.DryShips Inc. stocks soared by 23% after the bulk shipping company disclosed it received a buyout offer from SPII Holdings INC.Shares of Fiverr International Ltd. went through the roof, jumping 90% to $39.90 per share after the software company made its public debut on Thursday morning. The company, which operates as a bridge between freelancers and companies seeking their services, had estimated its shares at $21 for its initial public offering.

By Ivana V. June 14,2019

A U.S. commodities regulator has issued a warning against the devastating and lasting consequences climate change could have on global markets. Rostin Behnam, a commissioner at the Commodity Futures Trading Commission (CFTC), claims that climate change could affect every aspect of the U.S. economy. By highlighting the risk, Behnam is positioning himself in direct opposition with President Trump, whose administration has mostly denied or ignored statements made by climate scientists. “The impacts of climate change affect every aspect of the American economy – from production agriculture to commercial manufacturing and the financing of every step in each process,” Benham said at the meeting of the CFTC’s market risk advisory committee.At the meeting, the regulator cited a $160 billion global cost related to natural disasters in 2018, a record high that paints a very bleak picture of the world we live in today. In the U.S. Midwest alone, the increase in temperature has led to catastrophic tornadoes and floods. The country has also experienced reduced crop yields, which resulted in volatile markets and chaos in commercial manufacturing. Rostin Benham also stated that climate change could cause a mortgage meltdown, similar to the one in 2008. With natural disasters so widespread and probable, insurance companies will be faced with higher concentrations of risk and won’t be able to collect enough premiums to support payouts or sustain themselves in the long run. This could negatively impact the stability of the financial system by causing a domino effect and spreading to other industries. It’s important to point out that the commissioner was appointed by President Trump in 2017. The law of vacancy states that a Democrat must fill the position, which puts Benham in a unique position to push towards climate change awareness and warn businesses about the impending consequences. The damage must be mitigated if the commodity and financial markets are to survive. Commercial banks, farmers, and insurance companies are at a particularly high risk at the moment, and steps must be taken to preserve the health of the economy. President Trump will be forced to talk about the issue when he addresses farm states during the 2020 reelection campaign, which puts him in an awkward position, given the fact that natural disasters have already caused damage in these states. Financial regulators have also decided to pay greater attention to the effects of climate change. The Network for Greening the Financial System, recently formed by a group of central banks, has taken the initiative to “manage risks and mobilize capital for green and low-carbon investments,” according to their website. The country must prepare for the dangers that global warming poses to the economy. Without adequate systems that can minimize the damage, the whole world could be faced with appalling financial consequences.

By Julija A. June 13,2019

Hong Kong stocks dropped on Wednesday as a consequence of political protests against an extradition bill that has been shaking the city-state since Sunday. The Hang Seng index lowered by 1.7% as the stock market closed on June 12. Property companies Wharf Real Estate Investment and New World Development were hit the hardest, falling by 5.4% and 4.2% respectively. The controversial bill which would allow Hong Kong residents to be extradited to mainland China, Taiwan and Macau was scheduled for debate by lawmakers in a Legislative Council on Wednesday morning. However, tens of thousands of protesters blocked key roads leading to the government offices located in the financial district, thus preventing the debate from taking place. The meeting was later postponed by the officials.The once-British colony was returned to China in 1997 when it was granted a semiautonomous legal system by Beijing for the next 50. Both its citizens and foreign companies enjoyed the freedoms the city-state allowed, but the proposed bill threatens to limit them and chase foreign capital away. The largest demonstrations in the last 30 year could have dire consequences on the Hong Kong economy, critics warn. "People loved Hong Kong because it was China, but it wasn't China. If Hong Kong is going to become more like China, of course, they're going to be looking elsewhere including Singapore” said Richard Harris, the CEO of Port Shelter Investment Management to CNN.Asian analysts have a more optimistic take on the situation—they predict the protests will affect the market similarly to how the 2014 pro-democracy demonstrations did. The chief economist of GE Oriental Financial Group, Francis Lun believes the stock market will be shaken but he doesn’t expect it to crash.Even though protesters are growing in numbers daily, Carrie Lam, Chief executive of Hong Kong, is determined to move forward with the extradition bill. In a statement issued on Sunday, April 29, Lam said the proposed law is designed to close the loopholes in Hong Kong’s legislative system that allows fugitives from mainland China to seek protection in the city.

By Ivana V. June 13,2019