Fed’s Bowman Says Bank Regulators Working On Stablecoin Rules

Central Bank

Economic

Summary:

The Federal Reserve's top bank cop plans to tell House lawmakers Tuesday that she will work to establish new rules for banks and stablecoins, as regulators seek to ensure healthy competition between Wall Street, fintechs and crypto firms.

"As a regulator, it is my role to encourage innovation in a responsible manner, and we must continuously improve our ability to supervise the risks to safety and soundness that innovation presents," Bowman said in prepared remarks for a House Financial Services Committee hearing.

She added that new technologies can create a more efficient banking sector that expands access to credit while also leveling the playing field with fintech and digital asset companies.

Bowman also said she will work with other agencies to develop capital and diversification regulations for stablecoin issuers as required by the Genius Act, which requires those issuers to formally register and hold dollar-for-dollar reserves. She underscored the agencies will provide clarity on digital assets and regulatory feedback on proposed new use cases.

Bowman's remarks come amid a clash between banks and crypto firms over the future of digital-asset regulation, including a fight for access to bank charters. For crypto firms, these charters could provide a multitude of benefits, including a stronger degree of legitimacy.

Traditional lenders warn, however, that the result could be an uneven playing field or a hollowing out of the charter system, where firms can operate with the legitimacy of a bank license but without the full responsibilities that have historically come with it.

Bowman's testimony also highlighted her efforts to finalize several bank capital measures, including a long-awaited measure known as Basel III Endgame.

"My approach is to address the calibration of the new framework from the bottom up, rather than reverse engineer changes to achieve pre-determined or preconceived approaches to capital requirements," Bowman said.

Bloomberg News previously reported that the Federal Reserve has shown other US regulators the outlines of a revised Basel III plan that would dramatically relax a Biden-era capital proposal for Wall Street's largest lenders.

Bowman also said the Fed is working to refine the surcharge for big banks in coordination with broader capital framework efforts.

Source: Bloomberg

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James Whitman

Political

● Republicans voted twice not to rein in Trump's Venezuela campaign

● Senior lawmakers say second strike, if true, could be illegal

● Trump says he '100%' believes Hegseth

Some congressional Republicans expressed concern about U.S. military actions off Venezuela's coast and joined Democrats in pledging to look into multiple strikes on one boat, although there was no word on Monday of any briefings or hearings.

White House spokeswoman Karoline Leavitt on Monday confirmed there had been two strikes on one boat in early September, saying they were within the law and authorized by Defense Secretary Pete Hegseth, days after some members of Congress said the second strike to kill survivors might have been illegal.

The boat strikes are the second issue in one week to trigger objections from Republicans, who have otherwise strongly supported virtually all of President Donald Trump's policy initiatives since his second term began in January.

Last week, several Republican lawmakers harshly criticized the White House over its handling of a proposed Ukraine peace plan they said favors Russia.

The latest concerns came after the Washington Post reported on Friday that Hegseth "gave a spoken directive" to kill everyone on board one of the vessels.

HEGSETH HAD DENIED ORDERING SECOND STRIKE

Hegseth had vehemently denied that he ordered a second strike. He called such reports "fabricated, inflammatory and derogatory" on social media. Trump said he would look into the matter, but he believed Hegseth "100%" when he said he had not ordered one.

The two Republican-led congressional committees that oversee the Pentagon said they would look into the reports. On Friday, Republican Senate Armed Services Committee Chairman Roger Wicker of Mississippi and Senator Jack Reed of Rhode Island, the committee's top Democrat, said they would be conducting "vigorous oversight."

Their counterparts on the House of Representatives Armed Services panel, Republican Chairman Mike Rogers of Alabama and ranking Democrat Adam Smith of Washington, said they took the reports seriously and were taking bipartisan action to gather a full accounting.

Leavitt told a White House briefing that Hegseth had spoken to some members of Congress "who might have been concerned" during the weekend.

On Monday, Democratic and Republican congressional leaders said they anticipated bipartisan examinations of the incident. "I'm glad that the relevant committee of jurisdiction, the oversight committee, Armed Services, is going to examine those facts. We'll see where they lead," Republican Senate Majority Leader John Thune of South Dakota told reporters.

AN ILLEGAL ACT?

Some Republicans had joined Democrats in saying that, if the allegation were true, the second strike could be illegal.

"Obviously, if that occurred, that would be very serious, and I agree that that would be an illegal act," Representative Mike Turner of Ohio, a former Intelligence Committee chairman, said on CBS' "Face the Nation" on Sunday.

Republican Senator Rand Paul of Kentucky noted on social media that, "It is not permitted, under the laws and customs of honorable warfare, to order that no quarter be given - to apply lethal force to those who surrender or who are injured, shipwrecked, or otherwise unable to fight."

Paul co-sponsored legislation with Democrats that would have reined in Trump's campaign against Venezuela, but was blocked by members of his own party.

Democratic Senator Brian Schatz of Hawaii suggested on social media that Hegseth should testify in December, before Congress passes the National Defense Authorization Act, or NDAA, a sweeping annual bill setting policy for the Pentagon.

Democrats and a few Republicans had questioned the policy of striking what could be fishing vessels, killing all or most of those on board, rather than stopping them and questioning any passengers.

U.S. troops have carried out at least 21 strikes on alleged drug boats in the Caribbean and Pacific since September, killing at least 83 people as Trump escalates a military buildup against President Nicolas Maduro's government.

In November, Senate Republicans blocked a resolutionthat would have prevented Trump from attacking Venezuelan territory without congressional authorization. Only two of Trump's Republicans joined Democrats in backing the measure, in a show of the party's support for the military buildup in the southern Caribbean.

In October, Senate Republicans blocked a resolution that would have stopped the boat strikes.

Source: Reuters

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Manuel

Cryptocurrency

Vanguard Group, the world’s second-largest asset manager, has decided to allow ETFs and mutual funds that primarily hold cryptocurrencies to be traded on its platform, reversing a longstanding position.

Starting on Tuesday, Vanguard will allow ETFs and mutual funds that primarily hold select cryptocurrencies, including Bitcoin, Ether, XRP, and Solana, to be eligible for trading on its platform. It’s a compromise that belies the firm’s long-standing view that digital assets are too volatile and speculative for serious portfolios and comes despite a more than $1 trillion drawdown in crypto market value since early October.

Persistent demand — retail and institutional — has spurred Vanguard’s about-face. Since their January 2024 debut, spot Bitcoin ETFs have amassed billions in assets. Even after outflows and a decline in Bitcoin’s price, Vanguard’s biggest rival, BlackRock, has about $70 billion in its IBIT ETF alone, down from roughly $100 billion just two months ago.

Vanguard’s shift, which follows a late-September report that the firm was weighing the move, opens access for more than 50 million brokerage customers, who collectively oversee over $11 trillion, to regulated crypto wrappers.

Even with recent price corrections, crypto-linked ETFs remain one of the fastest-growing segments in the history of the US fund industry. Crypto bulls will see Vanguard’s capitulation as psychological fuel: the latest sign that traditional finance can no longer resist the gravitational pull of digital assets.

“Cryptocurrency ETFs and mutual funds have been tested through periods of market volatility, performing as designed while maintaining liquidity,” said Andrew Kadjeski, head of brokerage and investments at Vanguard. “The administrative processes to service these types of funds have matured; and investor preferences continue to evolve.”

The change comes more than a year after Salim Ramji, a former BlackRock executive and longtime blockchain advocate, took over as Vanguard’s chief executive officer. The firm said it will support most crypto ETFs and mutual funds that meet regulatory standards, mirroring its treatment of other non-core asset classes like gold.

Still, the firm won’t be creating its own digital inventory anytime soon and funds tied to memecoins, as described by the Securities and Exchange Commission, will remain excluded.

“While Vanguard has no plans to launch its own crypto products, we serve millions of investors that have diverse needs and risk profiles, and we aim to provide a brokerage trading platform that gives our brokerage clients the ability to invest in products they choose,” Kadjeski said.

Source: Yahoo Finance

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Manuel

Political

Economic

U.S. Commerce Secretary Howard Lutnick on Monday confirmed that the general tariff rate on imports from South Korea, including on autos, would ‌drop to 15% retroactive to November 1 because South Korea has introduced legislation in parliament to ‌implement the country's strategic U.S. investment commitments.

In a statement posted on X, Lutnick said that the move unlocks the "full benefit" of South Korea's trade deal with President Donald Trump.

"In response, the U.S.⁠ will lower certain tariffs ‌under the deal -- including auto tariffs -- to 15%, effective November 1. We are ‍also removing tariffs on airplane parts and will 'un-stack' Korea’s reciprocal rate to match Japan and the EU."

The bilateral trade deal also caps any future national security tariffs on semiconductors and pharmaceuticals at 15%, putting South Korea on ‌an equal footing with key Asian rivals Japan and Taiwan.

The U.S. previously levied a 25% tariff on imports from South Korea, including national security-related autos duties invoked under Section 232 of the Trade Expansion Act of 1962 and "reciprocal" tariffs invoked under the International Emergency Economic Powers Act of ⁠1977.

The U.S. Supreme Court could overturn the IEEPA-based tariffs in coming weeks after casting doubt on the legal basis of them during oral arguments in early November.

The South Korean ruling party's legislation aims to make good ‍on Seoul's agreement ⁠to invest $350 billion into strategic industries in the U.S., including shipbuilding.

"Korea’s commitment to American investment strengthens our economic ⁠partnership and domestic jobs and industry," Lutnick said, adding that he was "grateful ‌for the deep trust between our two nations."

Source: Reuters

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Manuel

Stocks

Bond

U.S. stocks closed modestly lower on Monday, weighed down by a jump in Treasury yields and economic data that showed tariffs remained a drag on the manufacturing sector, as investors looked toward the Federal Reserve's policy announcement next week.

The Institute for Supply Management's survey showed U.S. manufacturing contracted for the ninth straight month in November, as factories dealt with slumping orders and higher prices as the effect from tariffs lingered. Wall Street ends Lower as Yields Climb; Crypto Stocks Drop_1

Wall Street ends Lower as Yields Climb; Crypto Stocks Drop_1

Markets have largely priced in a rate cut from the Fed at the conclusion of its two-day policy meeting on December 10. They are pricing in an 85.4% chance of a 25 basis-point cut, according to CME's FedWatch Tool.

"The market actually is still obviously earnings-driven, we went through earnings season, but now it's the Fed," said Joe Saluzzi, partner, co-founder and head of Equity Market Structure Research and co-head of Equity Trading at Themis Trading in Chatham, New Jersey.

"I see no reason why the uptrend doesn't continue, at least, not as quickly, but maybe more of a grind up to the end of the year."

According to preliminary data, the S&P 500 (.SPX) lost 34.44 points, or 0.50%, to end at 6,814.65 points, while the Nasdaq Composite (.IXIC) lost 88.92 points, or 0.38%, to 23,276.76. The Dow Jones Industrial Average (.DJI) fell 411.46 points, or 0.86%, to 47,304.96. While many policymakers have struck a cautious tone, dovish signals from a few key voting members in recent weeks, along with reports that White House economic adviser Kevin Hassett is a leading contender to succeed Fed Chair Jerome Powell, have heightened expectations for further monetary easing in the months ahead.

Powell is scheduled to speak after the market close but is unlikely to address monetary policy due to the proximity to the central bank's policy meeting.

"I guess they'll look for hints of anything that he could say, but it looks like it's a done deal," said Saluzzi.

Investors are also waiting for a delayed September report on the Personal Consumption Expenditures Price Index, the Fed's preferred inflation gauge, due on Friday.

Despite expectations for a cut, U.S. Treasury yields were higher on Monday following weakness in Japanese and European government bonds in the wake of comments from Bank of Japan Governor Kazuo Ueda, who signaled that conditions were aligning for a possible rate hike. Bond yields move inversely to prices.

The rise in yields weighed on S&P 500 sectors such as real estate (.SPLRCR) and utilities (.SPLRCU), which are seen by many investors as bond proxies.

Coinbase (COIN.O) and U.S.-listed shares of Bitfarms were among the crypto stocks that showed significant weakness, as bitcoin stumbled and dropped below $85,000. The crypto market has lost more than $1 trillion in value since hitting a record of around $4.3 trillion, according to CoinGecko.

Strategy (MSTR.O), the world's largest holder of the cryptocurrency, ended lower after tumbling as much as 12% during the session. It cut its earnings forecast for 2025, citing a weak run in bitcoin.

Big-box retailers were in focus on Cyber Monday, with shoppers expected to spend $14.2 billion online, according to Adobe Analytics. Shares of Walmart (WMT.N) and Target (TGT.N) both advanced modestly.

Synopsys (SNPS.O) jumped after AI chip leader Nvidia (NVDA.O) said it had invested $2 billion in the semiconductor design software provider.

Source: Reuters

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Commodity

Political

Oil prices rose more than 1% on Monday following drone attacks by Ukraine, the closure of Venezuelan airspace by the United States, and OPEC's decision to leave output levels unchanged in the first quarter of 2026.

Brent crude futures settled at $63.17 a barrel, up 79 cents, or 1.27%. U.S. West Texas Intermediate crude finished at $59.32 a barrel, up 77 cents, or 1.32%.

"The market is very nervous at the moment because of possible loss of Russian crude supply," said John Kilduff, partner with Again Capital LLC. "They're watching very closely to see if this Russia-Ukraine deal is going to go off the rails."

Concerns about a possible conflict between the United States and Venezuela run far behind the focus on the war in Ukraine.

"I don't think anyone is too worried about the loss of supply from Venezuela," Kilduff said.

Phil Flynn, senior analyst with Price Futures Group, said Ukraine's attacks combined with OPEC production commitments drove up prices in morning trade in New York.

"Ukrainian drone attacks on Russian shadow fleet as well as a commitment by OPEC to maintain current production levels has the market in an optimistic state," Flynn wrote in a morning note. "This comes as global oil demand continues to rise despite the negativity that we continue to hear on the demand side of the equation."

The Caspian Pipeline Consortium, which carries 1% of global oil, said on Saturday that one of the three mooring points at its Novorossiysk terminal had been damaged, halting operations. But Chevron, a CPC shareholder, said late on Sunday that loadings were continuing at Novorossiysk. Usually, two moorings are engaged in loadings, while one is used as a backup.

The attacks on the CPC export terminal drove oil prices higher, UBS analyst Giovanni Staunovo said.

They came as Ukraine stepped up its military operations in the Black Sea and hit two oil tankers headed for Novorossiysk.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies initially agreed on a pause in early November, slowing a push to regain market share with looming fears of a supply glut.

LSEG senior analyst Anh Pham said the market was reacting positively to the news.

"For some time, the narrative has centered on an oil glut, so OPEC+’s decision to maintain its production target provided some relief and helped stabilize expectations for supply growth in the coming months."

Brent and WTI crude futures settled lower on Friday for the fourth straight month, their longest losing streak since 2023, as expectations for higher global supply weighed on prices.

On Saturday, U.S. President Donald Trump said "the airspace above and surrounding Venezuela" should be considered closed, sparking fresh uncertainty in the oil market, as the South American nation is a major producer.

Source: Reuters

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Manuel

Cryptocurrency

Nearly $1 billion of leveraged crypto positions were liquidated during another sharp drop in prices on Monday that brought fresh momentum to a wide-ranging selloff that has carried into a third month.

Bitcoin slid as much as 8% to $83,824 in New York, bringing its decline for the year to more than 9%. Ether dropped 10% to as low as $2,719, and is down 18% since last December. The market downturn has been even tougher on smaller, less liquid tokens that traders often gravitate toward because of their higher volatility and typical outperformance during rallies. A MarketVector index tracking the bottom half of the largest 100 digital assets is down almost 70% this year.

The crypto market is on shaky ground after a weeks-long selloff that began when some $19 billion in levered bets were wiped out in early October as President Donald Trump whipsawed markets with threats of higher tariffs, data compiled by tracker Coinglass show. That was just days after Bitcoin set an all-time high of $126,251. The automated closing of leveraged positions in crypto, such as the major event on Oct. 10, is sometimes referred to as a liquidation cascade.

Traders use liquidation data to assess leverage in the system, spot risk appetite, and gauge whether a market wipeout has truly cleansed excess speculation. But the numbers they rely on may be incomplete. Industry insiders have said exchanges restrict the full liquidation data they share, making it hard for traders to know how much leverage is truly in the system.

“It’s a risk off start to December,” said Sean McNulty, APAC derivatives trading lead at FalconX. “The biggest concern is the meagre inflows into Bitcoin exchange traded funds and absence of dip buyers. We expect the structural headwinds to continue this month. We are watching $80,000 on Bitcoin as the next key support level.” Crypto Downturn Wipes Out Nearly $1 Billion in Levered Bets_1

Crypto Downturn Wipes Out Nearly $1 Billion in Levered Bets_1

Digital assets also felt the broader macro shifts rippling through global markets, as equity traders in the US start the week on the backfoot. Japanese stocks fell and the yen rose as Bank of Japan Governor Kazuo Ueda sent the clearest hint yet of a rate hike this month.

“As December kicks off, investors are focused on the path forward for global monetary policy,” said Karim Dandashy, an over-the-counter trader at crypto trading firm Flowdesk. “With the Fed now expected to be cutting again after a brief panic last week that saw December odds drop to 30%, and now the BOJ looking more likely to be raising rates to counter the moves we’ve seen in JGBs.”

On Monday, Michael Saylor’s Strategy Inc. said it had created a $1.4 billion reserve to fund future dividend and interest payments, in a bid to temper fears that the Bitcoin accumulator may be forced to sell some of its roughly $56 billion cryptocurrency haul if token prices continue to fall.

The company’s mNAV — a key valuation metric comparing the firm’s enterprise value to the value of its Bitcoin holdings — sat at about 1.11 on Monday, according to its website, spurring investor fears it may soon turn negative. If that were to happen, its CEO Phong Le had suggested last week that the firm could sell some of its Bitcoin. Shares of Strategy tumbled more than 10% on Monday, and are now down around 66% since reaching an all-time high in November 2024.

Meanwhile, US spot Bitcoin ETFs took in a modest $70 million last week, after roughly $4.6 billion in outflows over the past month, Bloomberg data show. Most of the pressure has come from the iShares Bitcoin Trust, where investors have pulled money for five straight weeks, the longest withdrawal streak since the fund launched in January 2024.

The week ahead is set to offer a crucial snapshot of US economic momentum as policymakers weigh the trajectory of interest rates heading into 2026. Data is likely to shape expectations for whether the Federal Reserve continues its rate-cutting cycle. US President Donald Trump on Sunday said he had decided on his pick for the next Fed chair, after making clear he expects his nominee to deliver interest-rate cuts.

Meanwhile, S&P Global Ratings last week downgraded an assessment of the stability of USDT, the world’s largest stablecoin, to its lowest rating, warning that a drop in Bitcoin’s value could leave the token undercollateralized. Further uncertainty came from the People’s Bank of China, which on Saturday issued a warning about the risks of virtual currencies including stablecoins, adding that government agencies should deepen coordination to crack down on illegal activities.

However, Flowdesk’s Dandashy added that there seems to be “a light at the end of the tunnel” as the market enters the end of the year.

“Whether economic data can get in the way of those expectations right now seems to be most important for a year end risk rally,“ he said.