Crypto News: Crypto needs to be separated from the real economy

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Crypto contagion risks are growing.
How to defend reproductive healthcare rights.
A global refugee crisis is coming.
Breaking up really can be hard to do.

Last week, the European Central Bank laid out the nightmare scenario that's got financial regulators nervously watching developments (i.e. collapsing prices) in the world of digital currencies: "Although the risks are currently small, they could rise significantly if platforms started to offer services to the real economy, instead of remaining confined to the crypto universe." Overseers are worried that a selloff in the virtual space could infect mainstream markets in an echo of how the unraveling of the US subprime mortgage market triggered the global financial crisis more than a decade ago.

A plunge in market values and a rush for the exits by investors have halved the total assets in the decentralized finance space this month, reducing its size to about $100 billion, notes Lionel Laurent. While that's relatively modest in market terms, "what might a dozen crypto lending blowups look like in the future if the sector keeps growing?" he asks.

Crypto demand is bifurcated, with ECB data showing ownership concentrated among top- and bottom-income households. So those who can least afford to lose their savings are being sucked in along with investors who can gamble a few basis points of their net worth, while middle-income earners are mostly staying on the sidelines. "A race to sell assets to meet crypto redemptions could have huge spillover effects, especially if managed algorithmically via smart contracts," Lionel warns.

The US Supreme Court looks poised to reverse the Roe v. Wade ruling, freeing state governments to outlaw abortion. The examples of Latin America and Ireland may prove instructive for defenders of the rights of women to seek abortions, argues Clara Ferreira Marques.

Campaigners in both regions succeeded by adopting non-emotive language, emphasizing personal stories rather than abstract arguments, and coopting broad swathes of the community, including religious groups, into the discussion. "At a time when US activists must turn an imminent defeat into a call to arms, learning from advocacy elsewhere is a matter of urgency," Clara says. "It's clear that broad-based campaigns, with smart strategies and judicial tactics have worked — and can do so again."

Russia's assault on Ukraine has prompted millions of women and children to flee their home country; violence in Ethiopia, Burkina Faso, Myanmar, Afghanistan and the Democratic Republic of the Congo has scattered even more, albeit less visibly. The United Nations' refugee agency estimates that more than 100 million people around the world have been "forcibly displaced." And the climate crisis combined with surging food prices will propel millions more to cross borders in search of security and safety.

The world will need to find increased capacity for compassion to cope with the coming exodus, says Andreas Kluth. "If we go back far enough, we all have refugees among our forebears," he writes. "We all were, are or will be natives and aliens somewhere, at some time."

The Roman playwright and former slave Publius Terentius reputedly wrote, "Homo sum, humani nihil a mi alienum puto," which translates as, "I am a man, nothing human is alien to me." Let's hope our humanity can overcome our mistrust of others.

HSBC Holdings Plc is under pressure from an activist investor to split its business along geographical lines, but the experience of global insurance company Prudential Plc suggests that breaking up is not always the route to riches, argues Paul J. Davies.

The US Congress is dishonoring America's Afghan allies by delaying green cards for evacuees. — The Editors

Is beleaguered Sri Lanka about to embark upon an enormous fire sale of assets? — Ruth Pollard

NATO should think twice before granting membership to Finland and Sweden. — Emma Ashford

The UK should censure President Kagame over treatment of 'Hotel Rwanda' hero. — Bobby Ghosh

Which side of an EY breakup do you want to be on? — Chris Hughes

Russia comes up with a new bond payment plan to avoid default.

'Top Gun' banks $124 million as Tom Cruise lures back nostalgic moviegoers.

UK's Jubilee bank holiday set to nudge the economy into a contraction.

Man dressed as an old woman in a wheelchair smears cake on the Mona Lisa. (h/t Lionel)

A day in the life of a hedge fund analyst. And a day in the life of an FX salesperson.

From the band that sang "the only notes that matter are the ones that come in wads ..." The Sex Pistols are selling a God Save the Queen commemorative coin. Complete with a bonus NFT, 'natch.

Notes: Please send cake and complaints to Mark Gilbert at magilbert@bloomberg.net.

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