Feds look into the ether; pressure grows on Deutsche chairman

Wall Street Journal

Digital analysis: Federal regulators are looking into whether cryptocurrencies — other than bitcoin — should be regulated as securities. The agencies are focusing on ether, the second most valuable digital currency after bitcoin, with a market value of $67 billion. The discussion “turns on whether the creators of virtual currencies other than bitcoin exert significant influence over their value, in the same way a company’s stock price depends on its managers and their strategy, performance and investments,” the paper reports. Bitcoin is considered a commodity by the Commodity Futures Trading Commission and therefore not regulated by the Securities and Exchange Commission.

Bloomberg Creative Photos/Bloomberg

Working together: JPMorgan Chase CEO Jamie Dimon discusses how “business can solve big problems” in an op-ed. “What makes work fulfilling and exciting for me is the role businesses can play in solving big problems,” he writes. “I believe public-private partnerships lead to efficient and lasting solutions, and I see this same conviction in leaders across American industry and government — especially in cities — as we work to shape the intersection of business, policy and society. With a growing economy and a tightening labor market, public and private institutions should join forces to ensure that the next generation has the skills to succeed.”

Financial Times

How safe is the cloud?: International financial regulators are starting to worry about security in the cloud as financial institutions move more customer account data to online storage services. In addition to “cyber risk, regulators are worried about concentrating so much information in the hands of Amazon, Google and Microsoft — the three big companies that dominate cloud provision — without the same level of supervisory oversight as banks,” the paper reports.

In the U.S., the Office of the Comptroller of the Currency is looking at banks’ relationships with their third-party vendors, including cloud providers, while the Bank of England is considering analyzing what would happen if banks’ access to the cloud was interrupted.

Uneasy lies the head ... : Paul Achleitner, who has presided over a major management turnover and strategy change at Deutsche Bank, including the recent ouster of CEO John Cryan, may be next in line to get the boot. Glass Lewis, an adviser to big investors, says Achleitner, who was appointed chairman six years ago, during which time he has overseen three CEO changes, may be responsible for much of the turmoil.

Deutsche shareholders “should consider whether Mr. Achleitner's continued presence on the supervisory board will be a help or a hindrance to the new management team” and “carefully consider” a proposal to remove him at the bank’s annual meeting on May 24.

Too small to survive: So-called challenger banks were created in order to foster competition in the U.K.’s banking industry following the financial crisis, but it seems their biggest challenge these days is staying competitive. These “small and mid-sized banks are bracing themselves for a fresh wave of consolidation as rising costs, increased competition and a sluggish economy” make it tough to compete against the giants, and it’s “almost inevitable” that some will have to join forces.

Elsewhere

Los Angeles Times: Banks and credit card issuers are said to be considering tracking gun purchases by flagging them at the point-of-sale with special code, according to a story in Monday’s Wall Street Journal. “In tracking purchases by individual buyers, would the banks be going too far?” Los Angeles Times editorial writer Scott Martelle asks. “Creating a gun-specific category would let banks track who uses credit cards to buy guns. Left unexplored is why they would want to do that, and whether it could lay the groundwork for banks to go beyond refusing to work with gunmakers to barring use of their credit cards to buy firearms. That raises the issue of whether we want banks to decide what legal goods people may buy. Does the end here justify the means?”

Quotable

“Given regulators’ increasing concerns about operational resilience, they are bound to scrutinize systemically important firms’ use of the cloud.” — David Strachan, a former regulator at Deloitte.