Taking aim at bitcoin; CFPB delays prepaid card rule
Receiving Wide Coverage
Not on our watch: Several American banks and lenders are prohibiting customers from using credit cards to buy bitcoin or are reassessing their policies due to concerns about taking on exposure from such purchases. Capital One recently said it would no longer allow customers to buy cryptocurrencies on its cards “due to the limited mainstream acceptance and the elevated risks of fraud, loss and volatility.” Discover adopted such a policy in 2015. Bank of America and Citigroup, which do allow such transactions, are reviewing their policies, while Toronto-Dominion Bank said it won’t process some transactions due to security reasons.
“The moves could put a crimp in an increasingly common way to buy bitcoin,” the Wall Street Journal says, noting that nearly 20% of buyers funded their purchases with a credit card, according to a recent survey.
But authorities in security-conscious Switzerland don’t share such worries. Rather, economics minister Johann Schneider-Ammann said the country wants “to be the crypto-nation.” Four of the 10 largest proposed initial coin offerings have used Switzerland as a base. “The burgeoning ICO industry is burnishing Switzerland’s business friendly reputation and sometimes buccaneering spirit,” the Financial Times notes. “But it has created a dilemma for Swiss politicians and regulators: just how far should they go in encouraging a digital ‘wild west’?”
Wall Street Journal
RIP: William McDonough, the president of the Federal Reserve Bank of New York from 1993 to 2003, died Monday at the age of 83. “His tenure was in some ways a test run for broader challenges his central bank successors have dealt with over the last decade,” the paper says. “He confronted financial sector troubles with public interventions, while overseeing the start of a greater level of transparency and showing a willingness to tackle economic issues that were outside of the Fed’s core mission of keeping prices stable and job growth strong.”
Harassment suit: A former executive at money manager TCW Group is suing the firm and two of its executives charging she was fired last month for filing a sexual harassment complaint against her boss. Sara Tirschwell, a managing director who led the company’s distressed debt group, is suing the firm, CEO David Lippman and her direct supervisor, Jess Ravich. She is seeking at least $30 million in damages.
Tirschwell alleges that Ravich made unwanted sexual advances to her at least seven times and threatened to deprive her of investor access if she refused. She says she was fired nine days after filing a complaint with the firm’s head of human resources.
New York Times
Moral dilemma: World Bank president Jim Yong Kim is looking to embrace Wall Street as the “once powerhouse of global finance [searches] for relevance,” the paper reports. That’s making some World Bank traditionalists uneasy.
Kim’s “vision of the bank as an institution more closely resembling Wall Street poses his biggest challenge,” the paper says. “Dominated by economists from the public sphere, the bank tends to see private sector solutions — those involving the profit motive — as morally questionable.”
Still waiting: The Consumer Financial Protection Bureau said it will delay for one year the implementation of its controversial new rule on prepaid cards and will be more flexible in regulating them to address industry concerns. The rule, which took nearly six years to finalize, has been among the agency’s most criticized.
“Consumer advocates argue the market has been lightly regulated and offers few protections for consumers, particularly those who are victims of fraud,” the paper says. “The industry complained that the rule was too broad and could leave them on the hook for fraudulent losses.”
“We think there is huge potential, but the market is not as disciplined as we want. We want it [the ICO market] to prosper but without compromising standards or the integrity of our financial markets.” — Jörg Gasser, state secretary at the Swiss finance ministry.