SEC rejects another bitcoin ETF; Mixed day for Wells

Receiving Wide Coverage ...

Mixed bag for Wells: It was another busy day for Wells Fargo. In what can be construed as a positive development, the bank reached a tentative $110 million agreement to resolve a class action suit brought by consumers for whom the bank opened accounts without their permission.

"This agreement is another step in our journey to make things right with customers and rebuild trust," CEO Tim Sloan said in a statement announcing the tentative settlement.

On a more negative note, Wells received a "needs to improve" Community Reinvestment Act rating from the Office of the Comptroller of the Currency, which cited an "extensive and pervasive pattern" of abuses against customers. The CRA rating is the bank's lowest since 1994. Sloan said the bank was "disappointed with this rating given Wells Fargo's strong track record of lending to, investing in and providing service to low- and moderate-income communities," adding the bank is committed to addressing the regulator's concerns. Wall Street Journal, Financial Times, New York Times, American Banker

I, Robot: Even the stock pickers at the world's biggest asset manager need investment help from robots. On Tuesday BlackRock, which manages more than $5 trillion in client assets, said it will replace some of its human investment managers with computer programs in an effort to lower costs and boost performance, which has lagged its peers. The New York Times called the move "the most explicit action by a major fund management firm in reaction to the exodus of investors from actively managed stock funds to cheaper funds that track every variety of index and investment theme." Wall Street Journal, Financial Times, New York Times

Wall Street Journal

Strike two: The Securities and Exchange Commission delivered another blow to legitimizing bitcoin as an investment vehicle. On Tuesday the agency rejected a proposal by SolidX Management to create an exchange-traded fund based on the digital currency that would have been listed on an affiliate of the New York Stock Exchange. Earlier this month, the agency denied a similar proposal by Cameron and Tyler Winklevoss to create a bitcoin-backed ETF that would have traded on the Bats BZX Exchange. The SEC is concerned about the lack of transparency of the largely unregulated currency.

Andrew Harrer/Bloomberg

But bitcoin proponents are not giving up. Some are exploring creating a U.S. futures contract to trade the electronic currency. "Once bitcoin futures are in the market, that paves the way for new vehicles and more liquidity that ultimately paves the way for an ETF," said Chris Burniske, an analyst at ARK Investment Management, which invests in bitcoin.

Financial Times

Growing: Mobile card payments company Square is planning to expand into Europe. First stop: The United Kingdom, which the paper describes as "one of the most developed, but crowded, fintech markets in the region."

"The U.K. has a much more modern approach to payments, and we love the spirit of entrepreneurship here," said CEO and founder Jack Dorsey, who is also CEO of Twitter. "There's over five million small businesses and only around half accept credit cards today, so we are really excited about the opportunity and bringing more and more businesses to electronic payments."

Elsewhere

Blockchain pilot: The executive branch of the European Union wants to create a blockchain "proof-of-concept" focused on regulation, CoinDesk reports. According to a draft communication from the European Commission, "the pilot would center on improving knowledge and awareness of the technology among the EU's regulatory community," the website said.

Quotable ...

"The findings reflect an extensive and pervasive pattern and practice of violations across multiple lines of business. Bank management instituted policies, procedures and performance standards that contributed to the violations." — The Office of the Comptroller of the Currency on Wells Fargo