CFTC to move on bitcoin; Citi fined in AML case

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Bitcoin on the agenda: The Commodity Futures Trading Commission is scheduled to hold advisory committee meetings later this month to address virtual currencies and related futures.

“Bitcoin has a reputation as the Wild West of financial markets. But the sheriffs are increasingly closing in,” the Wall Street Journal reports. In a video, a reporter “travels the world (sort of) to see how the remarkable rise of cryptocurrencies has drawn a response from regulators.”

Glenn Hutchins, who the Financial Times calls “one of the biggest establishment names to venture into the world of cryptocurrencies” — he co-founded Silver Lake Partners, is co-owner of the Boston Celtics, and sits on the boards of the Federal Reserve Bank of New York and the Economic Club of New York, among others — “is far more excited by the broader cryptocurrency ecosystem than he is by the bitcoin price smashing records.”

“It’s the biggest opportunity I’ve seen because the two most important things are business information and value,” he told the paper. “The underlying companies that I’ve invested in are very serious businesses that are doing very important things, and if they get it right, have the chance to change the way we make payments around the world.”

While most of the financial world has been focused on the volatile price of bitcoin, the price of Ripple, “an upstart virtual currency,” has skyrocketed in recent weeks, pushing its founder into the ranks of Forbes magazine’s richest people — at least for a while. “At one point on Thursday, Chris Larsen, a Ripple co-founder who is also the largest holder of Ripple tokens, was worth more than $59 billion,” ahead of Facebook CEO Mark Zuckerberg, the New York Times reports. Ripple has soared more than 100% in the past week and more than 30,000% in the past year.

“The explosion in Ripple’s value over the past month is the starkest illustration yet of how the mania around Bitcoin has spilled over into a broader universe of virtual currencies,” the paper says.

In charge: Mortimer J. “Tim” Buckley began his new role this week as the CEO of Vanguard, the world’s second largest investment manager, with $5 trillion in assets under management. “Mr. Buckley’s challenge will be to balance investments in technology to improve the customer experience and grow assets with expense controls that keep fund fees low,” the Journal says. Wall Street Journal, Financial Times

Financial Times
Citi fined: The Office of the Comptroller of the Currency fined Citigroup $70 million for failing to fix its anti-money-laundering procedures to comply with the Bank Secrecy Act. It also left in place a 2012 consent order against the bank in which it promised to make the required changes. The original OCC order didn’t include a fine.

The regulatory action against the bank “suggested to some lawyers that the administration of President Donald Trump, despite promises to loosen bank regulation, is drawing distinctions” on “what exactly it is willing to roll back,” the paper comments.

Washington Post
All fixed: Capital One said it resolved technical problems that caused some customers to be double-charged for debit card transactions earlier this week. “The company was vague about the cause and the number of accounts affected,” the paper says, “but a spokesperson said the problem was not due to an external cause, such as a hack.”

“For the industry, it’s a cautionary tale about the unintended consequences of giving customers real-time views of their transactions, the need to communicate effectively with customers when glitches happen, and the importance of devoting sufficient resources to core-software testing and maintenance even as IT resources are shifted to innovative new technologies,” American Banker reports.

Ignoring virtual-currency trading will not make it go away. Nor is it a responsible regulatory strategy.” — J. Christopher Giancarlo, chairman of the Commodity Futures Trading Commission.

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Bitcoin AML Debit cards Tim Buckley CFTC Vanguard Citigroup OCC Capital One