From corn and crypto- POLITICO

With the help of Steve Heuser, Constantine Cacaes and Derek Robertson

If you still see the crypto boom as a novelty for day traders, or maybe those cousins ​​you only encounter during the holidays are there the fight against brewing in a small Washington controlling agency it shows how much this can change the world of traditional finance.

Sam Bankman-FriedThe billionaire, founder of the global cryptocurrency exchange FTX, wants to allow American retail investors to bet with high credit on futures and other digital derivatives – and make these bets not only during normal trading hours, but all the time, 24/7.

While crypto margin trading is widely available outside the U.S., FTX’s attempt to persuade the Commodity Futures Trading Commission to approve these products for domestic traders has sparked a wave of opposition.

The confrontation comes not only from the players you expect to be resilient to change – traditional financial centers such as the owners of the NYSE and Chicago’s shopping pits – but also major cryptocurrencies concerned that FTX will gain a big advantage in the first person. from launching a new type of high-risk trade.

Bankman-Fried’s ambitions have already been the subject of a three-hour hearing by the House Committee on Agriculture. Later this week the CFTC takes over round table throughout the day where FTX and its opponents will perform.

“We are amazed at the amount of tension – the attention – she has received,” Bankman-Fried said. in an interview. “Some people may view this in terms of, you know, what’s important to their business.”

Argument for / against the new platform will seem familiar to anyone who has watched the growth of new exchanges and trading systems in traditional finance. The FTX says its plan is to reduce market inefficiencies by bringing the speed and urgency of cryptocurrency trading to the hectic market models that have long ruled financial derivatives – think soybean futures or contracts for orange juice from Trade Places – and eliminate the need for financial intermediaries that slow down transactions and increase the value of trade.

Proponents of the derivatives market argue that this will actually increase risk and increase the rate at which things can go wrong, as the same intermediaries play an important role in absorbing price shocks and maintaining the positions of farmers, commodity traders and financial institutions that expect on them. trades to insure their positions.

“This proposal is dangerous,” said the CEO of CME Group Terry Duffywho heads one of the world’s largest derivatives exchange operators, said during a hearing on the House Agriculture Committee in May.

There are also concerns about how this could push FTX to eventually move from bitcoin to more traditional futures markets such as energy contracts and or pork perch. Although Bankman-Fried says he has no plans to move beyond cryptocurrency trading to other, more traditional derivatives, there is reason to believe his three-year company has an entire industry.

The company recently launched a beta program that will allow its customers to buy traditional stocks and exchange-traded funds, and the president of FTX.US Brett Harrison told The Wall Street Journal that long-term plans include the creation of “all financial services applications” that may include other asset classes – including futures contracts.

Read the full story here.

The digital future is a big presence in Davos this yearwith panel after panel about crypto, AI and metaverse.

But what does this really mean for the leaders involved in the event, which is largely a celebration of (very analogous) traditional power?

One disturbing answer to the question came on the sidebar The war in Ukraine and geopolitics.

Brad SmithMicrosoft’s president said his company has a completely different view of the war than usual.

On the one hand, he proposes to postpone the start of the Russian attack to February 23, the day before the “official” date of the February 24 invasion. It was then that Microsoft saw Russia launch a sudden full-scale attack on Ukrainian institutions – many of which Microsoft was already working on. Smith counted 300 coordinated Russian cyberattacks aimed at the Ukrainian government and Ukrainian banks. The company watched (and defended) attacks not in Kiev, but from Seattle.

Smith also suggested a worrying opinion for people in the West who see the war as mostly Russian. They absolutely have. They simply concentrated all their assets on Ukraine itself, so they did not engage in cyber attacks on, say, the rest of Europe or other NATO countries. ” – Steve Heuser

After all, 63.575% of the world’s varieties are going to Davos, Switzerland, many are dissatisfied with cryptocurrencies. Managing Director of the International Monetary Fund Kristalina Georgieva aimed at a major player on the block: “Bitcoin can be called a coin, but it’s not money,” she said. according to Fortune. Christine Lagardethe president of the European Central Bank, agreed, said the founder of the World Economic Forum Klaus Schwab that “cryptocurrencies are not currencies at all”.

This is the first half of each quote. The second half shows why Georgieva and Lagarde are very protesting. “A prerequisite for something to be called money is to be a stable storehouse of value,” Georgieva continued. Lagarde suggested that cryptocurrencies are “speculative assets whose value changes dramatically over time, and they present themselves as currencies rather than”.

You don’t need to be a particular fan of cryptocurrencies to see that Lagarde and Georgieva are engaged in a bit of magical thinking. Great if the money is stable. But the Zimbabwean dollar is arguably the currency (losing about half of its value from 2007 to 2008), as were the Yugoslav dinar (313,000,000 percent of monthly inflation in the early 1990s) and the German mark in the 1920s. 30,000 percent monthly inflation).

No need to resort to the worst cases of hyperinflation to make sure that staying the same over time is hardly a prerequisite for being a currency. Even the nearly 10 percent annual inflation now felt by the U.S. dollar is a pretty vivid reminder that currencies, even the most resilient, are painfully changing in value. And like George Soros clearly shown 30 years ago many opportunities to make money by speculating on conventional currencies.

The instability of bitcoin and other cryptocurrencies poses a real problem for those who will use them as a medium of exchange. But that doesn’t make them “no money”. – Constantine Cacaes

If you’re the richest man in the world, you get used to making demands.

That doesn’t mean they always make sense: in response to Elon MuskResearchers from the University of Indiana are looking for evidence that less than 5 percent of Twitter users are bots before it completes its purchase of the platform. Kai-Cheng Yang and Philip Menzerwrote an article for Conversation briefly titled “How Many Bots on Twitter? The question is difficult to answer and inadmissible. “

Ian and Menzer argue that while Twitter may have a large number of accounts that are not tied to individuals, it is almost impossible to determine the true number – and that even if someone did, eliminating them would only put an end to such problems. like misinformation, fraud and conflicts in which people accuse them.

I called Young to ask him about researching him and Menzer and about how he sees it fits into the overall effort to make our digital life more real and less, well … bad.

The good news? Twitter is much more user-friendly than most social networks in sharing his accounts with external researchers, giving Young and his colleagues a great set to work with. Bad news? All the data in the world may not be enough to fix what is wrong with us.

“I don’t believe there is one simple solution,” Ian said. “People think that if you just delete all the bots, delete all the spam, delete all the fake accounts, it will get better. I don’t think so … You need to think more: why do people like to share and believe in misinformation? Why do people hate each other so much? ”

However, Ian does not believe that the research of him and his colleagues is futile: the more information we have about where, how and why the worst content is distributed on a platform like Twitter, the better equipped politicians can do something about it.

“The first step is to know there’s a problem,” Ian said. “We are now conducting this study not only to track bots, but also other invalid or bad behaviors to first consider them … as soon as we can detect these actors and their behavior and politicians will begin to recognize that this is a problem, we will be able to start a conversation about how to come to a decision. ” – Derek Robertson

Stay in touch with the whole team: Ben Schreckinger ([email protected]); Derek Robertson ([email protected]); Constantine Cacaes ([email protected]); and Heidi Vogt ([email protected]).

If you have been sent this newsletter, you can register here. And read our mission here.