Today on “The Breakdown,” NLW briefly covers yesterday’s bitcoin price crash and why it was driven by market structure more than news. The main topic focuses on revelations from Coinbase that after months of engagement around its upcoming Lend product, the SEC is now threatening to sue. NLW examines the controversy from five dimensions:
The argument for and against lending as a security The SEC’s pattern of regulation by litigation How the SEC is rewarding bad actors by punishing compliance The concerning surveillance implications of one of the SEC’s requests Why these strong-arm tactics are doomed Should Coinbase take the battle to court?
Fox host LOSES IT, melts down in feud with Texas Democrat
BREAKING: A Fox host just lost it in a total meltdown while interviewing a Texas Democrat.
Call me crazy but I think FOX News deliberately “weakens” the mic of Democrats when they’re on the air just so they can talk over them easier.
Exxon oil lobbyist in sting video identifies 11 senators ‘crucial’ to its lobbying
A senior official with U.S. oil and gas giant ExxonMobil was captured on video revealing the identities of 11 senators “crucial” to its lobbying on Capitol Hill, including a host of Democrats.
The footage was obtained by Unearthed, an investigative unit of environmental group Greenpeace UK, which posed as headhunters to obtain the information from Exxon lobbyist Keith McCoy.
Among the senators listed as allies, McCoy calls Joe Manchin the “kingmaker” on energy issues because of his status as a Democrat representing West Virginia, a key natural gas-producing state. McCoy says he speaks with Manchin’s staff every week. Manchin is also chairman of the Energy and Natural Resources Committee.
BIDEN CAN’T PLEASE ANYONE WITH MOVES ON PIPELINES
McCoy also named Sens. John Barrasso of Wyoming, the top GOP member of the Energy Committee, and Shelley Moore Capito of West Virginia, the Republican ranking member of the Environment and Public Works Committee.
Other lobbying targets of Exxon include centrist Democrats Sens. Kyrsten Sinema of Arizona and Jon Tester of Montana.
McCoy also singles out Sen. Chris Coons, a Delaware Democrat, as an important contact because of his close relationship with President Joe Biden.
Other Exxon contacts are up for reelection in 2022, McCoy notes: Maggie Hassan of New Hampshire and Mark Kelly of Arizona.
McCoy also name-checks traditional Republican allies John Cornyn of Texas, Steve Daines of Montana, and Marco Rubio of Florida.
In the leaked video, McCoy also suggested that Exxon is only publicly supporting a carbon tax to appear to be environmentally friendly with little consequence because it sees the policy as politically impossible to pass and thus unlikely to affect the company. Exxon is one of many large oil and gas companies and their lobby groups that have endorsed the concept of a carbon tax as preferable to mandates and regulations.
“I will tell you, there is not an appetite for a carbon tax. It is a non-starter. Nobody is going to propose a tax on all Americans,” McCoy said. “And the cynical side of me says, ‘Yeah, we kind of know that. But it gives us a talking point. We can say, ‘Well, what is ExxonMobil for? Well, we’re for a carbon tax.’”
Among other revelations, McCoy acknowledges Exxon “aggressively” fought against climate science in the past to protect its oil and gas business and joined “shadow groups” to push back against the science underpinning global warming.
“We were looking out for our investments. We were looking out for our shareholders,” McCoy said.
And he claims that Exxon lobbied Congress to limit climate provisions in infrastructure negotiations over Biden’s American Jobs Plan and to focus on roads and bridges.
“If you lower that threshold, you stick to highways and bridges, then a lot of the negative stuff starts to come out,” McCoy said. “Why would you put in something on emissions reductions on climate change to oil refineries in a highway bill?”
Exxon CEO Darren Woods issued a statement Wednesday afternoon condemning the lobbyist’s comments and apologizing for them, specifically those “regarding interactions with elected officials.”
Woods stressed Exxon’s “firm commitment” to supporting carbon pricing to address climate change.
CLICK HERE TO READ MORE FROM THE WASHINGTON EXAMINER
McCoy posted his own apologetic statement declaring himself “deeply embarrassed” and saying his comments “clearly do not represent ExxonMobil’s positions on important public policy issues.”
Bitcoin Must Be Accepted By World Bank, According To Charter
The World Bank has poured cold water on El Salvador’s adoption of bitcoin as legal tender, saying it cannot support the move due to “environmental and transparency” concerns.
But the developmental body may soon be forced to accept bitcoin payments from countries that have embraced the cryptocurrency.
Its founding document, the 1944 Articles of Agreement, outlines the procedures and principles by which the World Bank pledges to engage with sovereign governments. A central theme in the document is its commitment to accept payments from member states in local currencies.
Section 12 of Article V defines acceptable “forms of holdings of currency” as follows:
- The Bank shall accept from any member, in place of any part of the member’s currency, paid in to the Bank under Article II, Section 7 (i), or to meet amortization payments on loans made with such currency, and not needed by the Bank in its operations, notes or similar obligations issued by the Government of the member or the depository designated by such member, which shall be non-negotiable, non-interest-bearing and payable at their par value on demand by credit to the account of the Bank in the designated depository.
So, as well as allowing payments in “the member’s currency”, the charter allows central banks to pay with “notes or similar obligations” backed by their reserves.
These are effectively IOUs from governments. They can be backed by dollars. They can be backed by precious metals (the US Federal Reserve guaranteed its notes with gold until 1934, and with silver until the 1960s). Or they can be backed by bitcoin; perhaps, in El Salvador’s case, the $150m bitcoin fund being established by Banco de Desarrollo de El Salvador, the national development bank.
Things gets more awkward. Section 9 of Article II states that holdings paid into the bank by members should be continually re-valued (presumably against a “real” benchmark like USD). If the local currency has appreciated, it says, the World Bank should do the decent thing and hands the gains back:
- Whenever the par value of a member’s currency is increased, the Bank shall return to such member within a reasonable time an amount of that member’s currency equal to the increase in the value of the amount of such currency
Conversely, if the local currency has depreciated, the member gets margin called and has to “pay to the Bank within a reasonable time an additional amount of its own currency sufficient to maintain the value”. Or, put another way: when bitcoin starts tanking, the World Bank starts stacking. Nice.
All of this depends, of course, on whether or not the body will respect El Salvador’s sovereign right to choose its own currency.
That’s not a foregone conclusion. Reuters asked them about that yesterday and got a decidedly arsey response. “We are committed to helping El Salvador in numerous ways, including for currency transparency and regulatory processes,” a spokesperson waffled. “While the government did approach us for assistance on bitcoin, this is not something the World Bank can support given the environmental and transparency shortcomings.”
The World Bank, by the way, has invested more than $12bn in fossil fuel projects over the past six years, representing at least 6% of its total investment portfolio. It also accepts gold payments from members, despite gold mines emitting on average 0.8 tonnes of CO2 for every ounce of gold produced.
Still, they’re worried about bitcoin’s carbon footprint. So they’ll be happy to know that, by some estimates, 76% of bitcoin miners are already using renewable energy.
Oh yes, and every transaction ever made on the bitcoin network is recorded on an immutable digital ledger that is fully visible to all market participants. That makes it, by far, the most transparent monetary network that has ever existed. No funny business allowed.
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