Citi to launch crypto vehicle; ING finance chief resigns

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One step forward, two back
Citigroup is preparing to launch a "Digital Asset Receipt" backed by cryptocurrencies, according to a report in Business Insider. The DARs would be similar to American Depository Receipts (ADRs), which allow American investors to own foreign stocks that are not traded on U.S. exchanges. They would also be similar to exchange-traded funds, in which investors do not actually own the underlying asset held by the ETF. While Citi would issue the DARs, the underlying cryptocurrency assets would be held by a custodian.

The new vehicle "is expected to offer legitimacy to the fledgling asset class as well as provide investors with a new way of tracking an investment within a familiar system." Bloomberg News, CryptoCoinsNews here and here

Still, all is not well in crypto land. Prices of various cryptocurrencies plunged Monday after the Securities and Exchange Commission announced that it had suspended trading in two exchange-traded notes — one that tracks bitcoin, the other ether — for at least 10 days while it looked into whether the notes qualify as ETFs or not. The market cap of all digital assets outstanding has now shrunk to $196 billion from the peak of more than $800 billion in January.

Meanwhile, Chain, a startup that is working with Nasdaq to build a blockchain-based trading platform, is merging with Stellar, another cryptocurrency startup, "a sign that efforts to plug the technology behind bitcoin into the traditional markets are proving harder than expected."

Unexpected consequences
The global financial crisis "exposed an economy that had been a charade — one that most Americans didn't understand or appreciate," DealBook editor Andrew Ross Sorkin writes in his lookback piece. "The use of debt had masked the real problems underneath the surface: a significant decrease in worker participation, automation that would take jobs and stagnant wage growth. It is hardly a stretch to suggest that President Trump's election was a direct result of the financial crisis."

Warren Buffett invested in Goldman Sachs and Bank of America during the crisis but took a pass on Lehman Brothers (which went bankrupt) and AIG (which was bailed out by the federal government). He explains why in this Wall Street Journal video.

The Washington Post answers 10 common questions about the crisis and its long-term impact.

Financial Times

Taking the fall
ING's chief financial officer Koos Timmermans resigned "after being singled out as responsible for the compliance failings" that allowed customers to launder money at the Dutch bank, leading to a record €775 million fine by Dutch prosecutors. "His resignation comes amid growing concern about a string of high-profile scandals that have exposed weaknesses in Europe's defenses against criminal cross-border money flows and prompted the EU to promise tougher regulatory powers in the area."

What took so long?
Citigroup's decision last week to consolidate its corporate and investment banking division with its capital markets originations unit came after its main Wall Street competitors had done the same thing a long time ago. What took Citi so long? "It's better to do the right thing a bit slow than the wrong thing too soon," said Tyler Dickson, the new co-head of the newly-created Banking, Capital Markets and Advisory division.

Quotable

"I still think it's an open question whether [we're] up to the task of handling the failure of a large, multinational bank. In principle, the rules are there, but until we've actually tried it [we don't know]." — Charles Bean, professor at the London School of Economics and former deputy governor for monetary policy at the Bank of England.

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