FT : Chechen ‘wild card’ Ramzan Kadyrov joins Russian war effort

Chechen ‘wild card’ Ramzan Kadyrov joins Russian war effort
Forces loyal to the Caucasian warlord-leader have been an integral part of the Kremlin’s military plan from the start

Russia’s faltering war effort in Ukraine has a new face.

Garbed in combat fatigues, arm stretched out over a military map in a darkened room, Chechnya’s warlord-leader Ramzan Kadyrov announced via his Telegram channel on Sunday that he had personally joined the Russian campaign.

A loyalist of Russian president Vladimir Putin and deft user of social media, Kadyrov posted videos on Sunday that appeared to show him commanding a Chechen special forces division, with his right-hand man Adam Delimkhanov leading another unit and other fighters forcing Ukrainian prisoners of war to shout Chechen slogans.

“The other day we were about 20km from you Kyiv Nazis and now we are even closer,” he wrote — claiming to be close to Hostomel airport, just north of Ukraine’s capital. “You can relax for a minute, because you won’t have to look for us — we’ll find you. Oh, you don’t have long left. It’s better you surrender and stand alongside us [ . . .] or your end will be at hand.”

The Financial Times was not able to independently confirm the authenticity of the videos. Dmitry Peskov, Putin’s spokesperson, on Monday said the Kremlin had “no data” on whether Kadyrov actually was in Ukraine.

A satellite image of damaged buildings and burning fuel storage tanks at Hostomel airport north of Kyiv on March 11. Ramzan Kadyrov has claimed Chechen military forces have been active near the airport © Satellite image/Maxar Technoloies/AFP
Chechen forces have, however, been an integral part of the Kremlin’s military plan from the start. Western intelligence officials told the FT that Chechen hit squads were key to the failed plan to assassinate Ukraine’s political leadership in the first 48 hours of the invasion. For the past three weeks, at least three Chechen tactical formations have been fighting in the country.

Though the units have had mixed success in operations around the country, with Chechen forces near Kyiv repeatedly held back by Ukrainians, Kadyrov’s apparent personal entry this weekend is a signal that the 45-year-old intends Chechens to play a greater role in Russia’s conflict.

Nearly three weeks into the war, Moscow’s invasion has been a military debacle, and efforts are under way to try to regain the initiative and rally Russian forces, which continue to suffer heavy losses, despite their vastly superior firepower and numbers.

Kadyrov’s arrival — and the foregrounding of his Chechen troops in media coverage as a result — may play as much of a psychological role in helping Moscow’s campaign as it will in boosting Russian firepower.

“The Chechens have established a reputation as tough and brutal fighters,” said Emil Aslan, a Caucasian specialist and professor in the department of security studies at Charles University in Prague. “Deploying Chechen fighters has a big psychological impact.”

An increased Chechen presence is unlikely to do anything to address the fundamental problems with Russia’s campaign to date, analysts said. Until the Kremlin is better able to co-ordinate and mass its forces, the stalemate on the ground is likely to persist, regardless of where it replenishes its frontline fighters from. Besides Chechens, Russian authorities have said they are ready to welcome fighters from Syria, and the Central African Republic, where Russian forces have been themselves active in recent years.


The thickly bearded Kadyrov has run his mostly Muslim republic in the Caucasus Mountains as a personal fiefdom since his warlord father Akhmat-Khadzhi was assassinated in 2004. He commands the Kadyrovtsy, a 25,000-strong militia that has been credibly accused of widespread abduction, torture and extrajudicial killings. Its fighters helped to crush the second of two Chechen separatist wars in 2009, helped suppress a domestic Islamist insurgency while fighting on the side of separatist forces in eastern Ukraine and regime troops in Syria.

“These are fighters who have been used by Kadyrov to go after insurgents in Chechnya and also after the families of insurgents,” said Aslan. “If the Russians are serious about taking over Ukraine, and choking resistance, then having these ‘dirty’ warriors gives them cover to do things and say ‘it was these crazy savage people from the Caucasus.’”

Kadyrov claims 10,000 Chechens are being deployed to fight in Ukraine — and has threatened to bring as many as 70,000 to the fight. But most analysts believe the current number is likely to be far smaller, perhaps between 3,500 and 7,000, and fighting a distant war for the Kremlin may have less appeal for some Kadyrovtsy. Nevertheless, they represent a considerable fighting force for the Kremlin to draw upon.

“They represent a body of pretty determined fighters,” said Jack Watling, research fellow for land warfare at the UK’s Royal United Services Institute, who said Kadyrov’s forces had several advantages over regular Russian troops deployed to fight. “They are much more motivated fighters, available at a time when the Russians are desperately short of manpower.” They are also fighters more habituated to brutality, he said.

Moreover, thanks to years of generous funding from Moscow to prop up Kadyrov, they are also better equipped than most Russian soldiers.

With Russia forced to shift to besieging major cities, Chechen fighters in particular may be a valuable potential vanguard. The three units reported to be in Ukraine are the “Akhmad Kadyrov” Special Motorised Regiment of the National Guard, Rosgvardiya’s 249th Separate Special Motorised Battalion “Yug”, and the Defense Ministry’s Special Battalion “Vostok”.

But the line between reputation and reality is also a thin one. Chechens have not had to deal with a conventional adversary, as equally motivated as they are, for a very long time, said Watling. “This is a fight for which they lack experience.”

Indeed, some question whether Kadyrov’s grizzled image has much martial substance behind it. In late February he addressed 12,000 Kadyrovtsy at a rally in the Chechen capital Grozny to promise support for Putin’s war. He looked every inch the Caucasian strongman, except his chunky combat boots were from Prada’s 2019 season, retailing for just over $1,500.

According to Ukrainian defence reports, Chechen fighters have had mixed successes in Ukraine, and have been beaten back north of Kyiv.

Russia’s conventional army is likely to be wary of them, according to western officials and analysts. Russia analysts and western officials said Kadyrov considered himself answerable to Putin alone, not the Kremlin’s generals or Russia’s powerful intelligence apparatus. Many in Russia’s senior echelons recall that Kadyrov’s father originally fought against them in the first Chechen war, only swapping sides in 2000.

“Kadyrov and the Chechens are a wild card for the Russian armed forces as they do not control Kadyrov,” said one European defence official.

FT : Banks on alert for Russian reprisal cyber attacks on Swift

Banks on alert for Russian reprisal cyber attacks on Swift
Payments messaging system could be targeted as pinch point of global transactions network

Big banks fear that Swift faces a growing threat of Russian cyber attacks after seven of the country’s lenders were kicked off the global payments messaging system over the weekend.

VTB, Russia’s second-biggest bank, and Promsvyazbank, which finances Russia’s war machine, were among the lenders removed on Saturday from Swift as part of the west’s sanctions campaign against Moscow in response to its invasion of Ukraine.

Senior executives responsible for cyber security at several banks told the Financial Times that the threat to Swift, which enables banks to send trillions in payments across borders every day, could escalate if more Russia’s lenders are expelled from the system.

Sberbank, Russia’s biggest bank, and Gazprombank have so far been kept on Swift as they facilitate much of the west’s payments for Russian oil and gas.

The executives are concerned that Swift could be a more attractive target than individual banks as it is a pinch point in the global financial network.

“There are lots of concerns about Swift,” said a financial regulator that supervises some of the banks. “Banks seem to be comfortable with their own cyber security levels, but a hit to Swift would be very detrimental to the whole banking system.”

Although banks have become increasingly concerned about Swift as a potential target, so far Russia’s cyber attacks have targeted only Ukrainian government departments and infrastructure.

Executives with oversight of cyber defence within their banks told the FT they had put their teams on alert for potential reprisal attacks.

Swift plays a crucial role in global banking, with more than 11,000 financial institutions using the system, which facilitates trillions of dollars worth of transactions every day.

“During warfare, it’s the most effective place to hit — it’s the nucleus of the global banking system, the node that connects everything,” said one senior bank executive.

An executive overseeing cyber security at another lender said the threat level from Russian attacks had “risen considerably” in recent weeks.

“We model for cyber attacks on institutions like the Fed, but we think a hit on Swift is more likely in retaliation for Russian banks being kicked off it,” he added. “That would have huge consequences for the global banking network.”

Swift, a Brussels-based organisation that is owned by its members and overseen by the G10 central banks, has previously reported attacks on its network by cyber criminals.

In 2016, hackers robbed $81mn from the Bangladesh central bank in one of the biggest bank heists in history through exploiting vulnerabilities in other banks on Swift. The hackers used malware to impersonate other banks on the system and send payment requests.

Analysts said the tactics resembled those used by hackers targeting Sony Pictures Entertainment in 2014, which the FBI blamed on North Korea.

In response, Swift started a new regime of mandatory controls for member banks and stepped up its monitoring of them.

It also launched a programme to help its members improve their cyber defences and share information on attacks with each other to protect the network.

In a statement, Swift said that all its services were operating as normal.

“Swift takes security very seriously and we have a strong control environment in place for physical and cyber security,” it added. “Like banks, market infrastructures and other financial institutions, we continuously monitor the threat landscape and adapt responses accordingly.”

>>> US After Hours Summary: COUP -28.1% falls sharply on earnings/guidance; WING

After Hours Summary: COUP -28.1% falls sharply on earnings/guidance; WING +3.5% gets a new CEO; ANAB -11.9% and EXEL -4.5% fall on clinical data

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: GTLB +8.6%, WPRT +5.8%, MTN +0.2%

Companies trading higher in after hours in reaction to news: ATSG +4.3% (places second order with Boeing for the conversion of four 767-300 aircraft), LOTZ +3.7% (launches mobile app), WING +3.5% (CEO resigns to become CEO at Salad and Go; WING promotes COO as new CEO), TLYS +1.4% (authorizes new 2 mln share repurchase program), LAUR +1.3% (increases share repurchase program by $50 mln to $650 mln), SMLR +1.1% (authorizes up to $20 mln for stock repurchases), SSSS +1.1% (expands share repurchase program by $15 mln), AVD +0.8% (increases dividend), NLSN +0.4% (WindAcre discloses 9.61% stake)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: COUP -28.1% (also achieves Moderate Authorization from the Federal Risk Authorization Mgmt Program), EVLV -13%, DLO -1.3%, NOAH -0.1%

Companies trading lower in after hours in reaction to news: ANAB -11.9% (reports top-line data from Phase 2 ACORN trial; imsidolimab treatment did not demonstrate improvement over placebo), EXEL -4.5% (announces final overall survival results from Phase 3 COSMIC-312 trial), ATTO -4.1% (exploring options including a sale, according to Bloomberg), CIR -2.4% (co is reviewing third-party inquiries regarding strategic alternatives; also requests 15-day extension to file 10-K), PCTY -2% (promotes Toby Williams to Co-CEO, names Ryan Glenn as CFO, effective immediately), OLN -1.1% (to temporarily curtail epoxy production at facility in Germany), SAND -0.6% (provides asset update), MAX -0.1% (authorizes new $5 mln share repurchase program), IDT -0.1% (acquires Leaf Global Fintech)

(ZH) "Suffocating" Impact From Higher Rates Will Force The Fed To Ease Much Soon

"Suffocating" Impact From Higher Rates Will Force The Fed To Ease Much Sooner Than Expected

Back in December, when we first showed that the market had begun pricing in rate cuts as the forward OIS curve inverted, many laughed: after all, such a dire (for the Fed) outcome - one which suggested that the Fed's tightening would lead to a hard landing, was seen as anathema by the majority who believed (erroneously) that the Fed would keep hiking and hiking and hiking... and the US economy would just somehow take it without imploding.
Well, fast forward to today when nobody is laughing any more.
First, as we noted on Sunday, in one of his multiple "market dislocation" charts, DB's Jim Reid showed a chart of of two-year forward OIS rates (the same chart we pointed to back in December) which are now at their lowest in a decade. As Reid explained, "markets are now pricing the Fed funds rate to be 36bps higher from 2023-2024 than 2025- 2026. Markets are expecting the Fed to have to quickly cut rates shortly after the hiking cycle begins, which looks like a hard landing."
Second, as Nomura's Charie McElligott writes in his daily note as he previews what the Fed will do on Wednesday, as Powell scrambles to contain runaway inflation (UBS' economist Paul Donovan said this morning that "there is little a central bank can do about commodity prices—Fed Chair Powell can hardly dig an oil well in the middle of Washington D.C") "the market expects the hiking cycle to be completed by early / mid ’23 (with the July ’23 – Dec ’23 spread @ -2bps), while a full-blown inversion in EDZ3-Z4 (Dec ’23 – Dec ’24) shows that the Fed’s guidance will turn outright dovish towards easing in ’24 (-20bps priced…i.e. 80% odds of a Fed CUT in that window)." Spoiler alert: the easing will begin in 2023, if not late 2022, but we'll cross that bridge (soon enough).
Some more details from the CME note:
  • I continue to believe that with March done-and-dusted at 25bps, May is absolutely a very high probability of a 50bps move for the Fed, which would then comfortably get us to 5 hikes by end Summer and 7 hikes through the Dec meeting (where market-implieds are already moving / leading the Fed to)
  • A front-loaded FOMC hiking cycle would ultimately be the right outcome for the Economy, as it “rips off the bandaid” and gets us to “Neutral” policy rate fast—critically, giving the Fed future optionality across two opposing scenarios moving-forward:
    • The first scenario would be to “buy time,” in order to see if inflation “relief” organically appears in 2H22 (i.e. supply chain issues easing in-time, or “demand destruction” from higher prices), which would allow the Fed to accordingly slow tightening efforts and avoid “overtightening policy error” by going fast then pausing, theoretically improving the odds that the economy could be managed back into a goldilocks “soft landing”
    • The second scenario would be “if you’re gonna break it, break it fast” move in the case that there is no pull-back in inflation, as the latest Commodities disruption catalysts (Russia sanctions effectively removing their supply from a western world that is “short” them, along with Ukraine infrastructure destruction; new wave of COVID in China seeing lockdowns which further disrupt global shipping / supply chain) only extend the inflation shocks—which perversely then requires global Central Banks to actually seek to “hike us into a recession” so that a growth crash works to destroy demand and regain control over inflation
  • And despite these seemingly polar opposite scenarios listed above, the market has already made up its mind as to what it means: EDM3-Z3 shows us that the market expects the hiking cycle to be completed by early / mid ’23 (with the July ’23 – Dec ’23 spread @ -2bps), while a full-blown inversion in EDZ3-Z4 (Dec ’23 – Dec ’24) shows that the Fed’s guidance will turn outright DOVISH towards EASING in ’24 (-20bps priced…i.e. 80% odds of a Fed CUT in that window)
Finally, we go to Bloomberg's Simon White who today published the most scathing assessment of just how cornered Powell finds himself, and how brief the upcoming rate hike cycle will be, and how the economy is already suffocating from higher rates... even though the Fed hasn't even hiked once yet, and only concluded QE last week:
Suffocating Impact From Higher Rates to Cause Early Fed Pullback
The Fed is almost certain to hike rates this week for the first time since 2018. Focus will be on how hawkish or dovish the move is. Regardless, higher rates are already having a throttling effect across the U.S. economy, and growth in the U.S. is set to slow sharply this year. Fed hike expectations continue to look too ambitious.
The move in longer-term yields has thus far been relatively contained given the degree of Fed tightening priced in. But the flatness in the yield curve is incommensurate with the degree of uncertainty captured by the rapid rise in inflation and inflation volatility.
GDP is a lagging indicator, and we are already beginning to see the lagged effect from higher rates have a pervasive impact across the U.S. economy. With U.S. 10y rates touching 2.10% and making a 30-month high, that effect will only intensify in the coming months.
Consumption remains the biggest component of GDP, accounting for about 67% of annual output. Normally, growth in consumption is driven by credit, but stimulus checks and other fiscal transfers drove personal incomes significantly higher during the pandemic, fueling a mini-boom in consumption.
Now that disposable-income growth is beginning to fade, an extension of credit will be necessary to maintain the prevailing rate of consumption. However, rising rates are causing lending standards to tighten and banks are becoming less willing to extend consumer loans. Consumption will face growing headwinds as credit is squeezed.
Along with consumption, inventories have been the other main driver of GDP growth in recent quarters. Lockdowns caused widespread factory shutdowns, while demand for goods remained undiminished. Inventories were quickly depleted. As lockdowns eased, firms embarked on an inventory boom. This was seen around the world, with global inventory-to-sales ratios reaching 20-year highs. Now that the demand/supply imbalance is less extreme, the impulse from restocking is set to fade.
At the same time, tighter credit conditions will further hamper the growth contribution from restocking as inventories become more costly to finance. Widening credit spreads point to the end of the current restocking cycle, and GDP losing a significant support.
Housing, too, is facing mounting headwinds from higher rates. The housing market in the US is beginning to look as overvalued as it was in 2005, prior to the housing crisis. The dynamics are different this time -- this is a supply-led rise in prices rather than a credit-driven demand one -- but once again rising rates are having a deadening impact.
The 30-year mortgage rate has risen over 100bps over the last year, taking the rate to 4.33%. Rises in mortgage rates typically precede falls in building permits, an excellent leading indicator for the housing market overall. Annual growth in building permits has already collapsed from 35% a year ago to only 3% at the end of last year. The malaise in residential fixed investment is soon set to drag non-residential investment lower too. Both sectors together account for almost 20% of GDP.
GDP should continue to slow this year as the impact of higher yields filters through the economy, bringing into question whether Fed rate hike and balance-sheet contraction expectations will be met.
Of course, this is all according to plan: as we said more than a month ago in another view that roundly mocked at the time and has now become consensus, the Fed is now desperate to start a "soft" recession (in order to create the demand destruction needed to send commodity prices lower) but without also crashing the market.
Alas, as recent events in the stock market have demonstrated vividly, the Fed is finding it impossible to have a "gentle" recession, one which does not crash stocks as well. The question is what the Fed will do then.

>>> US Close Dow +0.00% S&P -0.74% Nasdaq -2.04% Russell -1.92% VIX 31.77 +3.32%

Closing Stock Market Summary

The S&P 500 lost 0.7% on Monday, as the negative impact to growth stocks following another rise Treasury yields outweighed the benefit of weaker oil prices ($102.82, -6.28, -5.8%). The Nasdaq Composite (-2.0%) and Russell 2000 (-1.9%) both fell about 2%, while the Dow Jones Industrial Average finished flat. 

Declining issues outpaced advancing issues by roughly a 3:1 margin at the NYSE and Nasdaq. The S&P 500 information technology (-1.9%), communication services (-1.8%), and consumer discretionary (-1.8%) sectors, which contain the mega-caps, were among the laggards next to the energy sector (-2.9%). 

Conversely, the financials sector (+1.3%) followed rates to the top of the leaderboard. The health care (+0.7%), consumer staples (+0.6%), and industrials (+0.3%) sectors posted more modest gains. A handful of stocks within these sectors were responsible for the relative outperformance of the Dow. 

Early on, the market appreciated the decline in oil prices, which briefly fell below $100.00 per barrel after Russia and Ukraine reported progress in ceasefire negotiations. Russia's military actions suggested otherwise, but to be fair, both sides paused today's talks to go over technical language tomorrow.

The S&P 500 was up 1.0% intraday even as Treasury yields were on the rise. The higher rates were catalyzed overnight after China locked down Shenzhen, a major technology hub, due to a COVID-19 outbreak. The potential for increased supply disruptions fed into inflation expectations, and in turn, rate-hike expectations. 

The growth stocks, unfortunately, coughed up gains and led the market lower as Treasury yields refused to let up. The 2-yr yield settled higher by nine basis points to 1.84%, and the 10-yr yield settled higher by 14 basis points to 2.14%. The U.S. Dollar Index was roughly unchanged at 99.09.

Selling interest picked up as the S&P 500 was unable to hold onto the psychological 4200 level. Apple (AAPL 150.62, -4.11, -2.7%) was a particular drag, breaking below its 200-day moving average (153.74) amid news that Foxconn halted production at an iPhone factory because of the Chinese lockdown. 

Uber (UBER 29.27, -1.49, -4.8%), meanwhile, announced a fuel surcharge for customers, exacerbating concerns that inflation will slow down consumer spending. UBER shares fell 5%. 

Investors did not receive any economic data on Monday. Looking ahead, investors will receive the Producer Price Index for February and the Empire State Manufacturing Survey for March on Tuesday. 

  • Dow Jones Industrial Average -9.3% YTD
  • S&P 500 -12.4% YTD
  • Russell 2000 -13.5% YTD
  • Nasdaq Composite -19.6% YTD

FT : Telecom Italia: company break-up brings KKR back in play

Telecom Italia: company break-up brings KKR back in play
Private equity group made its offer in November — a lot has happened since then

It is difficult to see KKR doing badly out of its involvement with Telecom Italia, whatever the outcome.

Italy’s largest telecoms operator says it is at last considering the private equity fund’s non-binding €0.505 a share offer. Made in November, this valued the group at €33bn including net debts. A lot has happened since, including the appointment of chief executive Pietro Labriola. His plan to split the company in two, announced in March, is strikingly similar to KKR’s own proposals. 

This would involve breaking the company into broadband infrastructure and service network companies. The split would appease regulators, streamline financing and raise the valuation for the infrastructure business.

That is good in theory. But TI’s record of under delivery and its long line of previous chief executives leaves a lot in doubt. KKR might be able to do a better job at executing the plan. TI’s €0.30 share price show that investors doubt a deal will be struck with KKR — or that it would be at a price below the original approach.

The new broadband infrastructure company had revenues of €5.2bn last year. These include revenues from FiberCop, the last mile broadband network of which KKR acquired a two-fifths stake for €1.8bn in 2020. The new broadband company will be able to capture growth from rising broadband prices with a greater share of that going to FiberCop as fibre rollout continues. 

On the 8.7 times ebitda multiple KKR paid for its FiberCop stake, the broadband company would be worth just over €19bn on this year’s earnings. Assuming leverage of 7 times, a buyout at that price might see KKR making a 1.9 times return on its investment. The annualised return over six years would then be 16 per cent.

A break-up would also pave the way for an eventual tie-up with smaller rival fibre network Open Fiber. That would satisfy the desire of Italian politicians for a single broadband network, albeit several years away at least. It would also allow KKR to net healthy returns on its 2020 investment without the headache of owning a political football.

(ZH) EU Parliament Votes Against A Proof-Of-Work Ban: What This Means For Crypto

EU Parliament Votes Against A Proof-Of-Work Ban: What This Means For Crypto

Update: Yesterday, when cryptos suddenly tumbled amid the market's delayed realization that the EU was set to vote on Monday on a new regulatory framework for crypto assets which could accelerate passage of a measure banning "proof of work" mining, which industry executives said could "practically ban key digital currencies including Bitcoin and Ethereum in Europe", we said (see below) that the good news for crypto bulls is that "a small majority of committee members may vote against the measure." If so, we added, "the selloff on Sunday night is merely the latest successful attempt at shaking out the weak holders."
That's precisely what happened because moments ago, the EU Parliament voted against a proof-of-work ban.
Crypto pundit Patrick Hansen has more details in a tweetstorm:
* * *
BREAKING: The ECON committee of the EU Parliament just voted against the de-facto POW-ban: 32 against, 24 in favor.
Big relief & political success for the bitcoin & crypto community in the EU. Will share a breakdown of the vote and what’s next here in this thread.
A majority of MEPs from the EPP, ECR, Renew & ID voted against it, while a minority of MEPs from Greens, Socialists and Democrats (S&D), and European United Left (GUE) mainly voted in favor. Instead, this alternative amendment from Stefan Berger was supported.
What does that mean for POW? Mining will in all likelihood no longer be addressed within this MICA regulation, but added to the EU sustainable finance taxonomy. Here is a recap of this suggestion:
MiCA regulates financial instruments and financial service providers. It makes way more sense to address any concerns around the sustainability of mining technology separately.
Whats next? The MiCA draft will be negotiated in the so-called “trilogues” between the EU Commission/Parliament/Council. After their final agreement (couple of months) the law will enter into force. However, companies will have a 6m transition period to comply with the requirements.
Any chances left for the POW-ban? The groups that lost the vote have one last option. They could veto a fast-track procedure of MiCA through the trilogues & bring the discussion to the plenary of the Parliament. They need 1/10 of the votes of the EP to do so, which they have.
That would bring the discussion around POW into the high-level policy arena. As we can’t predict how that would play out, it should be prevented. Even if it doesn’t change the vote on POW, it would unnecessarily delay the regulation for at least a couple of months.
And even outside of this MiCA regulation, the discussion around POW-regulation is far from over. It will come back in the context of the sustainability taxonomy or in the upcoming data center regulation: So there is loads of work left in the months and years ahead.
But today is a big political success for crypto in the EU. Congrats to @DrStefanBerger for this political success and for his support for the crypto community. And thanks and congrats to everyone who contributed to making our concerns and voices heard. The crypto community in the EU has clearly become a political force! Looking forward to keep pushing Europe to embrace crypto.
* * *
With Bitcoin and ether trading near session highs following the news, a move facilitated by Elon Musk stating overnight that "I still own & won’t sell my Bitcoin, Ethereum or Doge fwiw", those who bought cryptos yesterday are now well in the money.
* * *
Earlier:
Cryptocurrencies stumbled on Sunday evening after trading rangebound for the past two days, following a delayed market realization, and reaction, that on Monday, the European parliamentary committee will vote on a new regulatory framework for crypto assets, which according to Bloomberg could accelerate passage of a measure that industry executives say could "practically ban key digital currencies including Bitcoin and Ethereum in Europe."
Crypto-assets issued and/or traded in the EU “shall be subject to minimum environmental sustainability standards and set up and maintain a phased rollout plan to ensure compliance” with those requirements, according to the final draft for the Markets in Crypto Assets (MiCA) law, the EU’s sweeping legislative package for governing digital assets, that was seen by Bloomberg News. The Economic and Monetary Affairs Committee will vote on the bill on Monday, and in an unexpected twist, the draft law contains a late addition that looks to limit the use of cryptocurrencies powered by an energy-intensive computing process known as proof-of-work.
Commenting ahead of the vote, Jake Chervinsky, head of policy the Blockchain Association said that "the MiCA situation is worse for crypto than anything in the USA. Tomorrow, the European Parliament votes on "environmental sustainability standards" that look like a pretext for a Bitcoin ban."
As Bloomberg points out, the reference to minimum sustainability as well as rollout requirements, appear to be last-minute changes introduced to curb, or ban, the use of digital currencies working on a so-called “proof-of-work” consensus mechanism, for instance Bitcoin and Ethereum (at least until the rollout of Ethereum 2.0 which is proof of stake). An earlier draft didn’t mention a proof-of-work protocol concept, EU parlamentarian and crypto-expert Stefan Berger of Germany’s Christian Democratic Party said in a Tweet early last week.
CoinDesk reported yesterday that the provision in question requires all crypto assets to be subject to the EU’s “minimum environmental sustainability standards with respect to their consensus mechanism used for validating transactions, before being issued, offered or admitted to trading in the Union."
For cryptocurrencies like bitcoin and ether, that are already being traded in the EU, the rule proposes a phase-out plan to shift their consensus mechanism from proof-of-work to other methods that use less energy, like proof-of-stake. Although there are plans to move ethereum to a proof-of-stake consensus mechanism, i.e., Ethereum 2.0, such an option is not available for bitcoin.
Proof of work is one of the main consensus mechanism governing the Bitcoin blockchain. Energy-intensive Bitcoin miners contribute computer power to the network, which secures and processes the blockchain, and are rewarded in Bitcoin for their contribution.
A previous version of the law proposed the prohibition of proof-of-work crypto in the EU starting in January 2025. The provision was later dropped following criticism from crypto advocates, before the modified version made it back into the latest draft.
Stefan Berger, the EU parliamentarian charged with overseeing the content and progress of the MiCA framework, has been trying to reach a compromise over restricting proof-of-work. Berger also said at the time that he does not feel MiCA is the place for settling technological or energy-related rules because the framework’s goal is to regulate crypto as assets. Once parliament decides on the draft, it will move on to a trilogue, which is a formal round of negotiations between the European commission, council and parliament.
“The Greens and Socialists, as you can imagine, are criticizing the proof-of-work concept and criticizing the energy use, saying that bitcoin needs more energy than the Netherlands,” Berger said in an interview with CoinDesk in February, referring to the political parties pushing the energy argument.
Furious over whether the new, tougher draft law would be a de-facto ban of Bitcoin, industry executives took their concerns to Twitter on Saturday.
“We at Ledger will always defend freedom and self-custody, particularly in our backyard. We are calling on you all to contact your Member of European Parliament and let them know that you oppose a Bitcoin ban in Europe,” Chief Executive Pascal Gaulthier of Ledger, one of the world’s largest crypto wallet providers said on his Twitter account.
Microstrategy CEO Michael Saylor chimed in that "the only settled method to create digital property is via Proof-of-Work. Non-energy based crypto approaches like Proof-of-Stake must be deemed to be securities until proven otherwise. Banning digital property would be a trillion dollar mistake."
“Since there is no way #bitcoin can & will implement a rollout plan out of POW, it would affect #BTC as well,” said Patrick Hansen, head of strategy for crypto wallet firm Unstoppable Finance, on Twitter.
“Extremely high stakes vote in the EU. That such a proposal made it this far is extraordinarily concerning and unlikely to stand up to practical reality,” said Jeremy Allaire, founder of Circle Pay, on Twitter.
The good news for crypto bulls is that according to CoinDesk, which cites people familiar with the matter that although the vote remains a close call, a small majority of committee members may vote against the measure. If so, the selloff on Sunday night is merely the latest successful attempt at shaking out the weak holders.

(ZH) Stocks Extend Losses After Barclays Suspends Sales/Issuance Of Equity, Oil

Stocks Extend Losses After Barclays Suspends Sales/Issuance Of Equity, Oil Volatility ETNs

Apparently unrelated to any Ukraine issues, Barclays has announced the suspension, until further notice, of any further sales from inventory and any further issuances of iPath Pure Beta Crude Oil ETN (ticker OIL) and iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX)
According to a press releases, the suspension is because “Barclays does not currently have sufficient issuance capacity to support further sales from inventory and any further issuances of the ETNs”
US equities were already in freefall but accelerated lower after the headlines hit...
And VXX was bid aggressively...
As Vance Harwood explains, the bid for both ETNs is because of this suspension, OIL/VXX may start trading significantly above their asset-based IV price. It will likely become very difficult to short these products & without shares to short, Authorized Participants can't do arbitrage operations they typical run to drive price down to IV Price.