JPMorgan Reveals Global Regulators Favor Tokenized Bank Deposits Over Stablecoins

Commodity

Political

Summary:

The trend highlights a shift in how traditional finance seeks to adapt digital technologies without compromising core regulatory and systemic safeguards.

JPMorgan’s latest research indicates that international regulators are more inclined to support tokenized deposits, particularly those that preserve the existing structure and stability of fiat-based banking systems, The Block reported on July 18.

According to the Wall Street lender, financial regulators outside the United States are showing a growing preference for tokenized bank deposits over stablecoins.

The trend highlights a shift in how traditional finance seeks to adapt digital technologies without compromising core regulatory and systemic safeguards.

The research, led by JPMorgan’s Nikolaos Panigirtzoglou, highlights how central banks and regulators, including the Bank of England, are leaning toward digital instruments issued by commercial banks that remain fully integrated within the existing financial system.

These tokenized deposits operate on blockchain infrastructure while maintaining the foundational protections of traditional deposits, such as access to central bank liquidity, capital buffers, and compliance with anti-money laundering rules.

Stability and control concerns

The version of tokenized deposits attracting the most regulatory support is the non-transferable kind, also known as non-bearer deposits, which are settled between accounts at full face value.

These instruments minimize the risk of price deviation and preserve uniformity across forms of money, a concept often referred to as the “singleness of money.”

In contrast, stablecoins and transferable (bearer-style) digital deposits can be subject to fluctuations in market value due to credit concerns or liquidity mismatches. Additionally, past market failures have raised red flags about the potential volatility of privately issued digital currencies.

While stablecoins remain more widely used in crypto markets due to their ease of transfer and broad liquidity, JPMorgan’s report noted that such assets often keep their backing within the traditional banking system by investing in instruments like short-term government debt.

As such, they do not represent a true exit from the regulated financial framework.

Diverging paths

In regions like the UK, regulators have questioned the viability of allowing commercial banks to issue stablecoins, especially under frameworks that might require them to hold central bank reserves without generating yield.

JPMorgan’s analysis suggested that such conditions would reduce incentives for banks to issue their own stablecoins.

Meanwhile, U.S. policymakers are taking a different stance. The expected passage of the GENIUS Act, a legislative effort led by President Donald Trump, would allow banks to issue stablecoins directly and promote their use in domestic payments.

This signals a more open approach to integrating stablecoins within the broader financial ecosystem.

JPMorgan itself is exploring tokenized solutions through JPMD, a permissioned deposit coin currently being piloted on Base. The lender is also testing the waters with stablecoins behind closed doors.

The bank filed a trademark for the deposit token product in June, pointing to potential applications in settlement, programmable finance, and cross-bank transfers.

Source: Cryptoslate

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Manuel

Commodity

Political

U.S. energy firms this week added oil and natural gas rigs for the first time in 12 weeks, energy services firm Baker Hughes (BKR) said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, rose by seven, its biggest weekly increase since December, to 544 in the week to July 18.

Despite this week's rig increase, Baker Hughes said the total count was still down 42 rigs, or 7% below this time last year.

Baker Hughes said oil rigs fell by two to 422 this week, their lowest since September 2021, while gas rigs rose by nine, the biggest weekly increase since July 2023, to 117, their most since March 2024.

In Texas, the biggest oil and gas-producing state, the rig count fell by two to 253, the lowest since October 2021.

In the Permian basin in West Texas and eastern New Mexico, the biggest U.S. oil-producing shale formation, the rig count fell by two to 263, also the lowest since October 2021.

But in the Haynesville shale in Arkansas, Louisiana and Texas, one of the nation's biggest and fastest-growing gas-producing regions, the rig count rose by three to 41, the most since March 2024.

The oil and gas rig count declined by about 5% in 2024 and 20% in 2023 as lower U.S. oil and gas prices over the past couple of years prompted energy firms to focus more on boosting shareholder returns and paying down debt rather than increasing output.

The independent exploration and production (E&P) companies tracked by U.S. financial services firm TD Cowen said they planned to cut capital expenditures by around 3% in 2025 from levels seen in 2024.

That compares with roughly flat year-over-year spending in 2024, and increases of 27% in 2023, 40% in 2022 and 4% in 2021.

Even though analysts forecast U.S. spot crude prices would decline for a third year in a row in 2025, the U.S. Energy Information Administration (EIA) projected crude output would rise from a record 13.2 million barrels per day (bpd) in 2024 to around 13.4 million bpd in 2025.

On the gas side, the EIA projected a 68% increase in spot gas prices in 2025 would prompt producers to boost drilling activity this year after a 14% price drop in 2024 caused several energy firms to cut output for the first time since the COVID-19 pandemic reduced demand for the fuel in 2020. [NGAS/POLL]

The EIA projected gas output would rise to 105.9 billion cubic feet per day (bcfd) in 2025, up from 103.2 bcfd in 2024 and a record 103.6 bcfd in 2023.

Source: Reuters

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Adam

Economic

The line between arbitrage and market manipulation has long been one of the grayest areas in financial markets — and India’s recent action against high-frequency trading giant Jane Street has brought this murky boundary into sharp focus.

Jane Street disputed the findings from India’s regulator, claiming that its actions were “basic index arbitrage trading.”

Arbitrage, at its core, is like spotting a mismatch and trying to make a profit out of it — and it is perfectly legal. It refers to the simultaneous buying and selling of an asset in different markets to exploit price differences.

Market manipulation, by contrast, is an illegal act designed to deceive or distort the free and fair operation of markets — typically by influencing prices or misleading appearances of supply and demand for unfair advantage.

But when does arbitrage edge into illegality?

According to experts whom CNBC spoke to, the distinction hinges on intent and market impact.

On July 3, India’s Securities and Exchange Board (SEBI) temporarily blocked Jane Street Group from participating in the country’s securities markets, accusing the U.S. high-frequency trading firm of large-scale market manipulation. This includes tactics to manipulate India’s Nifty 50 index in order to profit from sizable positions in index options.

According to SEBI’s 105-page interim order, the firm allegedly bought large volumes of stocks and futures tied to the Nifty Bank Index, which tracks the performance of India’s banking sector, during the early hours of trading. It then placed significant wagers anticipating a decline in the index later in the session.

SEBI added that Jane Street subsequently sold off those earlier purchases, pushing the index lower and increasing the profitability of its options positions. The regulator argued that this was part of a “deliberate strategy to manipulate indices” for the benefit of its larger and more lucrative options bets.

SEBI said that the intensity and sheer scale of the intervention, coupled with the rapid unwinding of positions “without any plausible economic rationale,” was deemed manipulative.

Jane Street informed employees in an internal email that it planned to challenge the ban and would later deposit $567 million into an escrow account on July 14, as directed by SEBI, not before requesting permission to resume trading in the country and the lifting of restrictions.

The key: mens rea

As the legal back-and-forth commences, industry veterans said the difference between legal arbitrage and illegal manipulation isn’t always clear-cut.

The intention behind wrongdoing in trades — known as mens rea, which means “guilty mind” in Latin — is key to determining manipulation, said Pradeep Yadav, finance professor at the University of Oklahoma. He also pointed out that creating an arbitrage opportunity by influencing prices in a less liquid market is what crosses the line into illegality.

“Arbitrage turns into market manipulation when you are creating the arbitrage by manipulating the less liquid side of the market,” he said, explaining that the options market in India is very liquid thanks to the large volume of buyers and sellers. However, the country’s spot and futures markets are less so, which renders it easier to push prices by placing large enough trades.

SEBI’s case hinges on two claims. First, Jane Street intentionally distorted the less liquid cash market to profit on the more liquid options market. Indeed, SEBI, in its interim order against Jane Street, cited an earlier judgement from a case, “Nobody intentionally trades for loss. An intentional trading for loss per se, is not a genuine dealing in securities.”

Second, that its profits came entirely from options, with consistent losses in stocks and futures, suggesting the trades were designed to move prices rather than reflect genuine market views.

“Mens rea is the demonstration of ill intent to manipulate the market… if prices are already misaligned, arbitraging them is fine. But if you’re the one pushing prices out of alignment — especially in less liquid markets — to profit on the other side, then that’s manipulation,” said the professor, who added that in a normal arbitrage situation, the size of one’s stock trade and their options trade would be proportional. The imbalance, in his view, suggested it was not a case of classic arbitrage.

Other experts also emphasized that the fine line between market manipulation and arbitrage lies in intent.

However, V Raghunathan, a former SEBI primary market board member, believes that Jane Street’s actions were within the legal realm. Jane Street thrives in exploiting minute inefficiencies — for example, in ETF pricing versus underlying securities, or between exchanges, he said.

“This kind of arbitrage, while aggressive, is legal and often beneficial to market efficiency,” he told CNBC.

He cited the example of latency arbitrage — where firms profit from tiny time delays in market data across venues — as being criticized as parasitic or predatory, but hardly illegal.

That said, Raghunathan noted that the broader concern is whether Jane Street’s strategies came close to manipulation — in either intent or the letter of the law.

Like other experts whom CNBC spoke to, Raghunathan established market manipulation as deliberately misleading or influencing prices and trading volumes to create artificial trends or unfair advantages, such as pump-and-dump schemes and wash trading.

“In short, unless Jane Street is found to be placing deceptive orders, like spoofing, abusing confidential information, or manipulating prices to create artificial moves — none of which it has been accused of — it would not be considered to have engaged in market manipulation,” he said.

Paul Rowady, director of research at Alphacution Research, said that the lines between manipulation and arbitration also depend on the regulator’s teeth. In the U.S., similar allegations would hinge on whether a firm engaged in spoofing or deception.

“Trading aggressively is not a crime,” he said.

Market watchers also echoed that the Jane Street case spotlights the vulnerabilities of India’s market structure — including liquidity imbalances between spot and options markets — which sophisticated players can legally exploit but which regulators may now seek to tighten.

According to SEBI, a recent study of 9.6 million individual equity derivative traders revealed that 91% lost money last year.

As a former U.S. SEC litigator, Howard Fischer puts it, arbitrage is akin to “looking at one’s neighbor’s house, seeing he keeps stacks of newspapers and lit candles everywhere, and taking out fire insurance on his home.”

“Manipulation is giving him a July 4th present of firecrackers and propane tanks,” Fischer, who is now a partner at law firm Moses & Singer, said.

The distinction lies in intent: arbitrage exploits inefficiencies; manipulation tries to manufacture them.

Source: cnbc

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Devin

Economic

President Trump is reportedly pushing for higher blanket tariffs on imports from the European Union, throwing a wrench in negotiations ahead of an Aug. 1 deadline for sweeping duties to take effect.

The Financial Times reported that Trump wants a minimum of a 15% to 20% tariff on EU goods as part of any deal. Trump has threatened the bloc with 30% duties beginning Aug. 1. That is the date he is also set to impose tariffs on an array of other trading partners, as well as potential levies on copper, pharmaceuticals, and semiconductors.

The EU has left the latest discussions disappointed, according to the report, and considering options in negotiations and in potential retaliation.

"We don’t want a trade war, but we don’t know if the US will leave us a choice," the report quoted a senior EU diplomat as saying.

Earlier this week, Trump said he would soon send letters to over 150 smaller US trade partners, setting blanket tariff rates for that large group.

Trump has already sent letters to over 20 trade partners outlining tariffs on goods imported from their countries. The letters set new baseline tariff levels at 20% to 40% — except for a 50% levy on goods from Brazil in a move that waded into the country's domestic politics.

Last week, Trump announced a 35% tariff on Canadian goods and followed that up with promises of 30% duties on Mexico and the EU. The letters have at times upended months of careful negotiations, with Trump saying he is both open to reaching different deals but also touting his letters as "the deals" themselves.

As markets focus on US talks, here is where things stand with other key partners:

Vietnam: Trump said a deal with Vietnam is "pretty well set." Two weeks ago, Trump said the pact would see the country's imports face a 20% tariff — lower than the 46% Trump threatened in April. In addition, there's a higher 40% tariff "on any transshipping" — when goods shipped from Vietnam originate elsewhere, like China.
India: Trump's tariffs on Brazil have raised the stakes for India, another member of the BRICS coalition. Bloomberg reported that the countries are working toward a framework deal that could see US tariffs on goods from India drop below 20%.

Source: Yahoo Finance

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Adam

Economic

The case for a U.S. interest rate cut remains unresolved as Federal Reserve officials head into their policy meeting later this month, with data showing fresh signs of higher inflation and President Donald Trump intensifying his demands for lower borrowing costs.

Trump appeared near the point of trying to fire Fed Chair Jerome Powell this week, but backed off with a nod to the market disruption that would likely follow, and the U.S. central bank's policy rate outlook remains virtually unchanged despite the drama.

Fed officials haven't mentioned raising rates, but headlines about an imminent Powell firing caused U.S. Treasury yields to jump, not exactly what Trump wants as he yearns for cheaper financing for massive federal deficits.

On Friday the president repeated his criticism of Powell and said the Fed's policy rate should be 1%, a low level typically used by the Fed to boost a weak economy not, as the Fed is currently attempting to do, temper inflation with tight monetary policy.

The Fed is expected to hold its benchmark rate steady in the 4.25%-4.50% range at its July 29-30 meeting, a level policymakers regard as at least moderately restrictive. The Fed last cut rates in December, when policymakers started assessing the possible impact on prices from the import tariffs that Trump quickly began imposing after returning to the White House in January.

Rate cuts are expected to resume later this year, with investors anticipating a quarter-percentage-point reduction in September.

But those odds slipped to nearly 50-50 this week after the Consumer Price Index showed inflation rose to 2.7% in June from 2.4% in the prior month. A trend that saw declining prices for goods is beginning to shift, adding to overall inflation, in a sign businesses may have begun passing some of the tariffs along to consumers.

Fed's rate-cut delay intact as inflation fears override Trump pressure_1

Bar chart showing contributions of different items to overall inflation.

Powell and other Fed officials said they expected price increases to quicken this summer. They have been reluctant to cut rates until it is clear how much inflation is in train, how long it persists, and whether the economy begins to slow enough to ease the pressure on prices.

Fed policymakers will receive two more months of jobs and inflation data before their meeting in September, and investors - and Trump administration officials - will be listening closely to Powell's post-meeting press conference on July 30 for language that leans towards a rate cut then or not.

In the final comments before policymakers begin a "blackout" period on public statements before the next meeting, the focus remained largely on inflation and how June's uptick showed prices rising across an array of largely imported goods.

Trade and tariff issues are now "the key drivers of the U.S. economic outlook," Fed Governor Adriana Kugler said on Thursday, adding that with price pressures building, the central bank needed to keep rates steady "for some time" to hold inflation and inflationary psychology in check.

"I see upward pressure on inflation from trade policies, and I expect additional price increases later in the year," she said. Maintaining tight monetary policy for now "is important to keep longer-run inflation expectations anchored."

Fed Governor Christopher Waller, mentioned as a possible replacement for Powell, disagreed in comments later on Thursday, repeating his call for a rate cut at the meeting in two weeks to account for what he sees as a coming economic slowdown and the likelihood that the impact of tariffs on inflation won't last.

"With inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate," Waller said in prepared remarks for a speech to the Money Marketeers of New York University.

'INFLECTION POINT'

The Fed used a historically rapid escalation of interest rates in 2022 to help contain a surge of inflation in the aftermath of the COVID-19 pandemic.

Fed's rate-cut delay intact as inflation fears override Trump pressure_2

Line graph showing various measures of inflation and the Federal Reserve's policy rate of interest.

By last fall, Fed officials were confident enough that inflation was receding towards the central bank's 2% target that they began to lower rates, delivering three cuts in the final four months of the year.

Trump made criticism of high inflation a centerpiece of his 2024 presidential campaign, pledging that prices would actually fall on his watch while also promising to raise tariffs.

Fed's rate-cut delay intact as inflation fears override Trump pressure_3

Line chart showing months when the CPI index has declined.

As Trump's inauguration arrived, the economy was still growing above trend and the labor market remained tight. Fed officials and staff worried that while tariffs, like any tax, should in theory have only a one-time price impact, those conditions coupled with the recent bout of high inflation could lead to a more persistent problem.

The focus on tariffs as a source of inflation and a reason for delaying rate cuts has been central to Trump's ire at Powell, but U.S. central bankers this week said the CPI data for June showed why they are concerned, with inflation still above target and possibly poised to move higher.

Kugler estimated that coming data will show the Personal Consumption Expenditures Price Index the Fed uses for its inflation target increased 2.5% in June, while the "core" measure excluding food and energy items rose 2.8%, higher than in May.

"We may be at an inflection point," as far as inflation is concerned, Atlanta Fed President Raphael Bostic told Fox Business a day after the CPI release. Nearly half of goods saw price increases that annualize to 5% or more, he said, a ratio he uses to monitor inflation's breadth during the pandemic surge. That was double the share in January.

"The headline number moved away from our target, not towards it ... We've seen the highest increase in prices that we've seen all year," Bostic said. "We are seeing things underlying in the economy that suggest inflation pressures are up ... The price pressures are real."

In economic projections issued in June, Fed officials expected PCE inflation to hit 3% by the end of this year but still anticipated being able to cut rates by half a percentage point.

"It's important to note that it's still early days for the effects of tariffs, which take time to come into full force," New York Fed President John Williams said this week. "Though we are only seeing relatively modest effects of tariffs in the hard aggregate data so far, I expect those effects to increase in coming months."

Source: reuters

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Adam

Economic

The U.S. has doubled down on its plan to impose 30% tariffs on the European Union next month, seeking to ramp up pressure on the bloc to reach a deal.

With less than two weeks to go until U.S. President Donald Trump’s Aug. 1 deadline, the EU continues to negotiate with U.S. trade officials, while drawing up a series of possible countermeasures if a deal is not forthcoming.

For its part, the U.S. said the EU continues to be “very eager” in negotiating a trade agreement, according to White House press secretary Karoline Leavitt.

Speaking at a news conference on Thursday, Leavitt said the EU is exploring “ways to lower their tariff and their non-tariff barriers that we have long said harm our workers and our companies.”

The U.S. president, whose trade war tactics have earned him the TACO nickname, will not accept a postponement of the Aug. 1 deadline, Leavitt said.

TACO stands for “Trump always chickens out” in reference to the president’s tendency to date to announce high import tariffs, only to later delay or lower them.

A four-part strategy

Michal Baranowski, Polish undersecretary of state at the ministry of economic development and technology, said that, as work continues in a bid to reach a deal, the first part of the EU’s strategy is to negotiate with U.S. officials in good faith.

“The second one is, let’s prepare for countermeasures in case we don’t [reach a deal]. And we have countermeasures on both the steel and aluminium tariffs as well as the initial package of 72 billion [euros] for so-called reciprocal tariffs,” Baranowski told CNBC’s “Europe Early Edition” on Friday.

“Point three, we are comparing notes with other countries that are affected by U.S. tariffs, not to necessarily coordinate but to get a sense of where everyone else is, because the other countries negotiating with the U.S. are a bit on the same wagon,” he continued.

“Fourth, we are really strengthening European competitiveness.”

Poland’s Baranowski said the EU represents the “most vital economic relationship” for the U.S., adding that Washington has “as much to gain or to lose from this relationship as Europe.”

His comments come shortly after the EU’s top trade negotiator Maros Sefcovic traveled to Washington for further trade talks.

The prospect of fresh U.S. tariffs represents a major blow to the EU. The 27-nation bloc had been scrambling to secure a preliminary agreement to spare it from receiving a Trump letter dictating a new, across-the-board tariff on its exports to the U.S.

The U.S. and EU have the largest bilateral trade and investment relationship in the world, representing almost 30% of global trade in goods and services, and accounting for 43% of the global gross domestic product (GDP), according to EU figures.

Last year alone, the value of EU-U.S. trade amounted to 1.68 trillion euros ($1.96 trillion), equivalent to roughly 4.6 billion euros of trade per day.

Trump has repeatedly hit out at the EU for what he perceives to be an unfair trading relationship, often citing the EU’s trade surplus with the U.S.

Tit-for-tat auto tariff cuts?

As part of its push to reach a U.S.-EU framework trade deal, the European bloc is said to be planning to offer the U.S. tit-for-tat tariff reductions on cars.

The move, as reported by the Financial Times on Thursday, would see the EU drop its 10% duties on U.S. car exports if the Trump administration reduces its own tariffs on the sector to below 20%.

The European Commission, the EU’s executive arm, declined to comment on the report when contacted by CNBC on Friday.

The U.S. president imposed 25% tariffs on foreign-made vehicles and parts earlier in the year, hitting companies across Europe particularly hard.

Sweden’s Volvo Cars, for instance, on Thursday reported a sharp decline in second-quarter operating profit, saying the result reflects an ongoing challenging environment for the industry. The automaker, which is seen as one of the most exposed European automakers to U.S. tariffs, was the first regional carmaker to release results in what is expected to be a bruising earnings season.

Source: cnbc

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Adam

Stocks

Stocks of battery material makers climbed after the US announced it would impose preliminary anti-dumping duties of 93.5% on graphite imports from China.

Shares of Australian graphite miner Syrah Resources Ltd. surged as much as 38%, while shares of South Korea’s Posco Future M Co. climbed 24%. Novonix Ltd., an Australian-listed company with a graphite production plant in Chattanooga, Tennessee, surged 21%. Gains in these and other Asian stocks tracked earlier jumps in Canadian peers including Nouveau Monde Graphite Inc.

The Commerce Department issued the preliminary determination Thursday, and a final plan should be announced by Dec. 5. The US determined that China, which dominates the processing capacity of graphite, had been unfairly subsidizing the industry.

Graphite is a key raw material in the anodes of electric-vehicle batteries. About two-thirds of the material imported by the US still came from China last year, according to BloombergNEF, even though China strengthened export control on some categories of graphite since 2023. The US has sought to encourage EV makers to be less reliant on Chinese components with subsidy-qualifying measures under its Inflation Reduction Act.

“I think this is going to change behaviors and sourcing strategies of battery manufacturers in the United States,” said Michael O’Kronley, chief executive officer at Novonix. “The cost of graphite imported from China is going to go up. This ruling essentially is going to accelerate some of those discussion we have with manufacturers.”

The new duties will add to existing rates making the effective tariff 160%, according to the American Active Anode Material Producers, the trade group that filed the complaint. China currently dominates the processing capacity of graphite, with the International Energy Agency in a report in May calling the material one of the most exposed to potential supply risks.

“Expectations of IRA benefits coupled with US-China decoupling are boosting investor sentiment and driving up the share prices of related companies,” said Namho Kim, general manager of Timefolio Investment Management in Seoul. “Battery material companies with lower reliance on China will emerge as key beneficiaries.”

Chinese suppliers including Hunan Zhongke Electric Co. and Jiangsu Baichuan High-Tech New Materials Co. traded slightly higher early Friday.

“The US is likely to be promoting the development of its own graphite industry by forcing domestic battery makers to switch suppliers,” said Eugene Hsiao, head of China equity strategy at Macquarie Capital. “Thus upstream suppliers of Chinese graphite anodes are more likely to be impacted.”