When rock star Taylor Swift was being courted as a celebrity ambassador for crypto exchange FTX, she asked if cryptocurrencies were \u201cunregistered securities.\u201d When no one could answer, she passed on the offer.<\/p>\n
The Securities and Exchange Commission now has a definitive response. Its lawsuits against Binance and Coinbase this week are based on the assumption that most crypto assets belong in that category. (Though, strangely, the biggest cryptocurrency, Bitcoin, is treated as a commodity.)<\/p>\n
The crypto community would prefer it if we called the coins by names like digital tokens, or currencies, or, hey, great investments. Just don\u2019t call them securities. It would appear that the game of cat-and-mouse is now up.<\/p>\n
The arrival of U.S. regulation is a seismic event, and not in the way crypto cheerleaders imagined. Some had argued tighter regulation would help it grow, but the association with legally questionable practices is more likely to scare away institutional investors. Same for the armies of retail investors who dipped their toes into the crypto universe.<\/p>\n
Crypto isn\u2019t dead. Indeed, Cathie Wood is topping up her large Coinbase holding on the dip, betting that the asset class will make a comeback.<\/p>\n
And crypto may still have some practical use in the world. But mostly in places where traditional finance has already failed, such as El Salvador. Operations will likely move further offshore.<\/p>\n
Of course, it\u2019s possible that crypto will one day thrive under U.S. securities rules, but it seems unlikely. Aside from holding some of the big players accountable, compliance will add to the cost of operations. And given the precipitous drop in crypto\u2019s value since the end of 2021, it would seem the potential for vast profits from the ecosystem is diminishing <\/p>\n
The SEC\u2019s move is unlikely to kill digital coins. However, it is also very unlikely that crypto will ever get back together with mainstream finance.<\/p>\n
\u2014Brian Swint<\/em><\/p>\n *** Join MarketWatch real estate reporter Aarthi Swaminathan and real estate agent and investor Rashauna Scott today at noon when they discuss the best way to get started in real estate investing, despite high home prices and mortgage rates approaching 7%, and the latest strategy people are taking on. Sign up here.<\/em><\/p>\n Try your hand at this morning\u2019s Barron\u2019s Daily crossword puzzle and sudoku games. For all games, including a digital jigsaw based on the week\u2019s cover story, click here.<\/em><\/p>\n \n Coinbase Global What\u2019s Next:<\/strong> Sotheby\u2019s is selling 37 works of digital art once owned by the defunct Singapore cryptocurrency hedge fund Three Arrows Capital in a live auction next week in New York. The collection, entitled \u201cGrails,\u201d is expected to bring in $5 million.<\/p>\n \u2014Jack Denton and Liz Moyer<\/em><\/p>\n Eleven House Republicans joined Democrats to block a procedural vote in a rebuke of Speaker Kevin McCarthy (R., Calif.) over the debt ceiling deal he brokered with President Joe Biden. The move torpedoed votes on two Republican-backed bills to prevent the banning of gas stoves, at least for now.<\/p>\n What\u2019s Next:<\/strong> New York Gov. Kathy Hochul\u2019s budget passed last month includes a measure banning gas stoves in new residential buildings up to seven stories tall starting in 2026, with exceptions for commercial and industrial buildings. The restriction doesn\u2019t apply to current residences or commercial spaces.<\/p>\n \u2014Janet H. Cho<\/em><\/em> and <\/em>Liz Moyer<\/em><\/em><\/em><\/p>\n The PGA Tour and the Saudi Arabia-backed upstart LIV Golf unexpectedly announced they are merging into a new, for-profit entity in a deal that also includes DP World Tour, the professional tour in Europe. They said the deal would end pending litigation.<\/p>\n What\u2019s Next:<\/strong> The 2023 LIV Golf schedule will continue as planned, according to a memo Monahan sent to employees and seen by the Journal. Monahan and Al-Rumayyan told CNBC they are confident they could work out remaining details in coming weeks.<\/p>\n \u2014Janet H. Cho and Al Root<\/em><\/em><\/p>\n Chinese exports tumbled sharply in May in a concerning sign for global demand and for the recovery of the world\u2019s second-largest economy.<\/p>\n What\u2019s Next:<\/strong> Despite the OECD\u2019s slightly improved forecast, the export data are a bad indicator for global growth. They may, however, intensify the pressure on China to unveil a stimulus package.<\/p>\n \u2014Callum Keown<\/em><\/p>\n \n Boeing What\u2019s Next:<\/strong> Boeing said in its first-quarter earnings report in April that its 787 program was producing at least three jets a month, with plans to ramp up to five jets a month in late 2023, and 10 jets a month by 2025-26, MarketWatch reported.<\/p>\n \u2014Al Root and Janet H. Cho <\/em><\/em><\/p>\n***<\/h4>\n
Coinbase, Also Facing Charges, Could See Revenue Hit<\/h2>\n
\n has been charged with securities violations by the Securities and Exchange Commission, which could make the U.S. crypto exchange vulnerable to a revenue hit of more than 30%. The SEC accusations challenge core elements of its business, analysts said.<\/p>\n\n
\n Coinbase
\n sank 12% in Tuesday trading after shedding 9% on Monday, when the SEC sued crypto exchange rival Binance and its founder\u2014also for securities violations. Coinbase had received a warning<\/strong> in March that charges could be coming.<\/p>\n<\/li>\n
\n Robinhood Markets
\n rose 1%,
\n Block
\n rose 3.8%, and
\n PayPal
\n 0.8%. Bitcoin rallied 5.5%, to $27,158, while Ethereum rose 4%. Robinhood had $38 million in crypto-related transaction revenue in the first quarter, less than 10% of its total net revenue.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n
GOP\u2019s Plan to Save Gas Stoves Up in Smoke, For Now<\/h2>\n
\n
***<\/h4>\n
PGA Tour Merging with Saudi-Backed LIV Golf, Ending Rivalry<\/h2>\n
\n
\n Topgolf Callaway Brands
\n stock, which Barron\u2019s<\/em> wrote about last month, rose 5.5% on Tuesday. Shares of
\n Acushnet,<\/span>
\n which owns the Titleist brand, climbed 4.5%.<\/p>\n<\/li>\n<\/ul>\n***<\/h4>\n
China\u2019s Exports Tumble as Recovery Falters<\/h2>\n
\n
***<\/h4>\n
Boeing Finds a New Manufacturing Defect in 787 Jets<\/h2>\n
\n has found a manufacturing defect involving its wide-body, twin-aisle Dreamliner 787 jets, a potential setback as the aviation and aerospace company tries to keep up with booming demand for its long-range planes. It may affect about 90 Dreamliners that have been built but not yet delivered.<\/p>\n\n
***<\/h4>\n