Bloomberg
“Bitcoin Tumbles as PBOC Declares Initial Coin Offerings Illegal.”
China’s central bank said initial coin offerings are illegal and asked all related fundraising activity to be halted immediately, issuing the strongest regulatory challenge so far to the burgeoning market for digital token sales.
The People’s Bank of China said on its website Monday that it had completed investigations into ICOs, and will strictly punish offerings in the future while penalizing legal violations in ones already completed. The regulator said that those who have already raised money must provide refunds, though it didn’t specify how the money would be paid back to investors.
ICOs are digital token sales that have seen unchecked growth over the past year, raising $1.6 billion. They have been deemed a threat to China’s financial market stability as authorities struggle to tame financing channels that sprawl beyond the traditional banking system. Widely seen as a way to sidestep venture capital funds and investment banks, they have also increasingly captured the attention of central banks that see in the fledgling trend a threat to their reign. Bitcoin tumbled 7.2 percent, the most since July on a closing basis, to $4,530.73. The ethereum cryptocurrency was down more than 6 percent Monday, according to data from Coindesk.
A cross between crowdfunding and an initial public offering, ICOs involve the sale of virtual coins mostly based on the ethereum blockchain, similar to the technology that underpins bitcoin. But unlike a traditional IPO in which buyers get shares, getting behind a startup’s ICO nets virtual tokens — like mini-cryptocurrencies — unique to the issuing company or its network. That means they grow in value only if the startup’s business or network proves viable, attracting more people and boosting liquidity.
Reuters
“U.S. gasoline prices tumble as Harvey subsides.”
Benchmark U.S. gasoline prices slumped on Monday to pre-Hurricane Harvey levels as oil refineries and pipelines in the U.S. Gulf Coast slowly resumed activity, easing supply concerns.
U.S. West Texas Intermediate (WTI) Clc1 crude futures, however, were up 34 cents at $47.63 barrel as U.S. demand, hit by reduced refinery activity since Harvey made landfall on Aug. 25, recovered. NYMEX gasoline futures RBc1 were down 3.2 percent at $1.6916 a gallon, levels last seen on Aug. 25, the day Harvey struck, crippling production and causing widespread flooding. Still, damage to the oil infrastructure in the Gulf Coast hub by Harvey appeared less extensive than some had feared.
A number of major refineries, which convert crude oil into refined products such as gasoline and jet fuel, as well as distribution pipelines, were gradually resuming operations on Monday.
And while the U.S. government tapped its strategic oil reserves for the first time in five years last week, the head of the International Energy Agency (IEA) said the global energy watchdog still sees no need for a coordinated international release of oil stocks after Harvey. Texas Governor Greg Abbott estimated damage at $150 billion to $180 billion, calling it more costly than Hurricanes Katrina or Sandy, which hit New Orleans in 2005 and New York in 2012 respectively.
Bloomberg
“Stocks Fall as Korea Tensions Flare; Dollar Drops: Markets Wrap.”
Stocks fell and gold and the yen climbed as geopolitical tensions flared up again, with U.S. President Donald Trump weighing new economic sanctions that could target China after a nuclear test Sunday by North Korea. The dollar dropped for a third day.
The Stoxx Europe 600 Index declined, with all but two industry sectors in the red, after a report that Pyongyang is preparing to launch an intercontinental ballistic missile heightened investors’ unease. S&P index futures also fell, while most European government bonds advanced and the yen and Swiss franc led currency gains. The euro strengthened even as economists expect European Central Bank President Mario Draghi to express concern Thursday about the currency’s rise. Industrial metals including copper and nickel extended a rally.
The White House warned any nation doing business with Kim Jong Un’s regime would be met with economic sanctions and trade embargoes, and his defense chief said the U.S. has “many military options.” North Korea said Sunday it successfully tested a hydrogen bomb with “unprecedentedly big power.” The test, the first since Trump took office, is a new hurdle for markets that have proven resilient to recent bouts of tension on the Korean peninsula.
New York Times
“North Korea Nuclear Test Puts Pressure on China and Undercuts Xi.”
It was supposed to be Xi Jinping’s moment to bask in global prestige, as the Chinese president hosted the leaders of some of the world’s most dynamic economies at a summit meeting just weeks before a Communist Party leadership conference.
But just hours before Mr. Xi was set to address the carefully choreographed meeting on Sunday, North Korea’s leader, Kim Jong-un, detonated his sixth nuclear bomb.
While some Chinese analysts say North Korea should be made to pay a price for its contempt of China, the North’s ally and major trading partner, they were not optimistic that Sunday’s test would change Mr. Xi’s determination to remain above the fray and not get his hands sullied trying to force Mr. Kim to change his ways. Even the North’s claim that the weapon detonated was a hydrogen bomb that could be mounted on an intercontinental ballistic missile would probably not sway Mr. Xi, they said.
China’s Foreign Ministry did express “strong condemnation” of the test. But despite the North’s repeated incitements, the Chinese leadership is likely to stick to its position that a nuclear-armed North Korea is less dangerous to China than the possibility of a political collapse in the North, Mr. Cheng said. That could result in a unified Korean Peninsula under the control of the United States and its ally, South Korea. Another major concern for the Chinese government is the fears of residents in the northeast of the country about nuclear contamination from North Korea’s test site at Punggye-ri, not far from the Chinese border.