Finance

France’s AMF watchdog gave Coinbase virtual asset service provider (VASP) approval, which is effectively a green light for the company to operate crypto services in the country.
French President Emmanuel Macron is seeking to make the country a hub for technologies like AI and crypto, committing billions of euros in subsidies and state funding.
Coinbase is making a big move into Europe as it faces a tougher time stateside.

POLAND – 2023/08/01: In this photo illustration, a Coinbase logo displayed on a smartphone with stock server lights in the background. (Photo Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images)
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Cryptocurrency exchange Coinbase secured registration with the French markets regulator, a company spokesperson confirmed Thursday, paving the way for the firm to expand its services in another key European market.
France’s AMF watchdog gave Coinbase a virtual asset service provider (VASP) approval, which is effectively a green light for the company to operate digital currency services in France.

The VASP registration will allow Coinbase to offer custody of digital assets, buying or selling digital assets in legal tender, trading of digital assets against other digital assets, and operating a digital asset trading platform, the company said in a statement Thursday.
French regulators, like others in Europe, have been playing catch-up with the emergence of new technologies like crypto and blockchain, balancing their potential in improving payment systems and trading while also looking to ensure consumers are protected.
The European Union has been working to introduce its Markets in Crypto Assets (MiCA) regulation, which would create a harmonized framework for crypto companies to operate in a regulated way in the bloc.
Under MiCA, rather than having to secure registration in every EU market, crypto companies will eventually be able to use their VASP license in one country and “passport” into other countries to offer their services across the EU.

The VASP registration represents a big move from U.S.-based Coinbase to expand in Europe, which comes at a crucial time with the exchange facing a more uncertain regulatory environment in its home country.

U.S. regulators have taken harsh actions against crypto companies lately. In November, the U.S. Department of Justice reached a settlement with crypto giant Binance which saw the company pay more than $4 billion while its CEO stepped down, pleading guilty to a felony charge that he failed to take steps to prevent money laundering at the firm.
The Securities and Exchange Commission, meanwhile, has led an aggressive campaign against the sector, targeting crypto companies with strict enforcement actions, including lawsuits against both Coinbase and rival Binance that allege the firms are engaged in illegal dealings of securities.
The SEC views several crypto tokens as being securities, a classification which would require them to seek registration with the watchdog. That would require copious transparency from companies and token issuers themselves, including financial disclosures and other paperwork.
Coinbase has fired back at the SEC, saying it has worked to ensure it is in compliance with financial regulations. The company is calling for new rules specifically for crypto in the U.S. to end what it has called “regulation by enforcement,” where the regulator is hitting companies with penalties in individual cases rather than setting clear rules for the road.
France has been positioning itself as a leader in technology lately, touting its prowess in technologies such as artificial intelligence and cloud computing, as part of President Emmanuel Macron’s bid to make the country a global tech hub.
The country has committed 34 billion euros ($36.5 billion) of investments, including subsidies and state funding, over five years as part of its “France 2030” plan, which aims to make the country a leader in and so-called “Web3,” among other things.
The country is home to Ledger, one of the biggest providers of crypto custody services, last valued at $1.4 billion. Separately, the likes of Circle, Binance and Crypto.com have all made Paris their European base. Only recently, Circle, which issues the popular stablecoin USD Coin, received its own French VASP license by the AMF.
France is seeing increased crypto adoption even as prices have taken a tumble in the wake of multiple bankruptcies and collapses.
According to data firm Toluna, 10% of French adults currently own crypto assets while 24% plan to buy, sell, or trade crypto in the next 12 months. More

The U.K. and Switzerland on Thursday will sign a post-Brexit financial services deal designed to bring two of Europe’s largest banking centers closer together.
British Finance Minister Jeremy Hunt is meeting with his Swiss counterpart in Bern to sign the mutual recognition agreement.
The U.K. Treasury said Wednesday that the deal was a win for post-Brexit Britain that would improve cross-border market access for a range of financial services.

The U.K. and Switzerland are deepening the ties between their financial services sectors with a new post-Brexit deal.
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LONDON — The U.K. and Switzerland on Thursday will sign a post-Brexit financial services deal designed to bring two of Europe’s largest banking centers closer together.
British Finance Minister Jeremy Hunt is meeting with his Swiss counterpart, Karin Keller-Sutter, in Bern to sign the mutual recognition agreement, which they are expected to say will ease business ties between financial firms and wealthy individuals in the two markets.

The U.K. Treasury said Wednesday that the deal was a win for post-Brexit Britain that would improve cross-border market access for a range of financial services sold by banks, insurers and asset managers.
“The Bern Financial Services Agreement is only possible due to new freedoms granted to the UK following its exit from the EU,” the Treasury said, according to the FT. “The agreement will enhance the U.K. and Switzerland’s already thriving financial services relationship,” it added.
The details of the agreement have yet to be formally announced. However, some commentators said it would likely mark an improvement on the equivalence framework Britain had with Switzerland while in the European Union.

David Henig, U.K. director at independent think-tank the European Centre for International Political Economy, said the deal was “broadly good news” which would leverage Britain’s heft in the financial services sector.
U.K. Prime Minister Rishi Sunak initially launched talks with Switzerland in 2020, when he was finance minister, claiming that the accord would demonstrate the countries’ shared vision of an “open, global and free” economy.
The current Conservative government in Britain has long positioned signing new trade deals as a key benefit of Brexit. In June, Britain signed a deal to join an 11-nation Asia-Pacific free-trade bloc that includes Australia, Singapore, Japan and Canada, marking its third new trade deal since formally exiting the bloc on Jan. 31, 2020. More

Citigroup has decided to close its global distressed-debt group, sources told CNBC.
The bank is exiting businesses with poor returns as part of CEO Jane Fraser’s overhaul.

A trader works underneath a monitor displaying Citigroup Inc. signage on the floor of the New York Stock Exchange (NYSE) in New York, U.S., on June 3, 2016.
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Citigroup is shuttering another Wall Street business as CEO Jane Fraser pushes ahead with her overhaul of the bank, CNBC has learned.
The company decided to close its global distressed-debt group, according to people with direct knowledge of the move.

Citigroup is exiting businesses with poor returns to bolster the bank’s odds of hitting Fraser’s performance targets. Fraser announced the latest overhaul of the third biggest U.S. bank by assets in September, and has since moved to trim executives and pare back businesses. Internally, the effort is known as Project Bora Bora.
Last week, the bank announced it was closing its municipal-bond trading operations, a once-thriving business with about 100 employees that had fallen on hard times.
The distressed-debt group, which trades the bonds and other securities of companies in or approaching bankruptcy, employs about 40 people, said the people, who declined to be identified speaking about strategic moves.
Citigroup didn’t immediately comment for this piece. More

Consumers are on pace to buy about $360 billion of annuities in 2023, beating last year’s record of $311 billion, according to LIMRA.
Higher interest rates and anxiety about the stock market and economy were the primary drivers.
There’s a mismatch between the types of annuities consumers are buying and the ones financial planners generally recommend.

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What are annuities?

Annuities are issued by insurance companies. Consumers generally hand over a lump sum of money in exchange for an income stream for life, similar to a pension or Social Security.
Financial planners sometimes recommend them to guard against the risk of outliving one’s savings — though some kinds are much better at doing so than others, they said.
“There are all different types of annuities, and to me, the majority are not necessarily good,” said Carolyn McClanahan, a certified financial planner based in Jacksonville, Florida, and a member of CNBC’s Advisor Council.

Why annuity sales spiked in 2023

In 2023, the U.S. Federal Reserve raised its benchmark interest rate to the highest level in 22 years. That nudged up the returns and income that consumers could get from annuities, thereby making them more attractive, said Todd Giesing, head of annuity research at LIMRA.
While the stock market has bounced back from a dismal 2022, there’s “still a lot of uneasiness with investors,” who are grappling with unknowns like the trajectory of inflation and the economy, Giesing said.

Such malaise pushed consumers to seek out relative safety, in fixed-rate deferred annuities, for example. They’re like certificates of deposit in annuity form, protecting principal while delivering a fixed return over a few years.
Fixed-rate deferred annuities currently pay average rates around 4.5% — triple the 1.5% just two years ago, Giesing said. They constituted the bulk of overall annuity sales this year, at an estimated $140 billion.

What kind of annuities financial advisors recommend

There’s somewhat of a mismatch between the types of annuities that consumers buy and the ones typically recommended by financial advisors.
Generally, planners use annuities to hedge against longevity risk — the risk of living so long that one outlasts their retirement savings.
An annuity might help cover any shortfall in funding for basic necessities like food and housing, after accounting for guaranteed income streams like Social Security and pensions.

There are all different types of annuities, and to me the majority are not necessarily good.

Carolyn McClanahan
certified financial planner based in Jacksonville, Florida

McClanahan, founder of Life Planning Partners, generally uses single premium immediate annuities — also known as SPIAs — with clients.
These annuities are the simplest, she said. Generally, a buyer hands over a lump sum to an insurer, which immediately starts paying a fixed monthly sum to the buyer for the rest of their life.
The “sweetest time” to buy a SPIA is when people are in their late 70s or early 80s, when it becomes clearer that a healthy retiree may have the potential to live a long time and run out of money, McClanahan said.
Paul Auslander, a CFP and director of financial planning at ProVise Management Group in Clearwater, Florida, doesn’t use many annuities with clients. When he does, he generally opts for SPIAs over other annuities to generate an income stream.

Deferred-income annuities, or DIAs, generally work the same way. However, they don’t start paying right away: People might buy them in their 60s, for example, and the annuity will pay a set monthly amount in the future, perhaps in one’s 70s or 80s. The income stream is generally larger than with a SPIA but carries additional uncertainty around when one might need that money.
In the year through Sept. 30, consumers bought $9.7 billion of SPIAs and $2.8 billion of DIAs, according to LIMRA.
By comparison, they bought $71 billion of indexed annuities and $39 billion of variable annuities. Such annuities are often more complex and carry higher fees than SPIAs and DIAs, according to financial advisors. Insurance agents may also have an incentive to sell more of them to consumers because they often carry higher commissions, advisors said.

One potential downside of SPIAs and DIAs is that buyers generally can’t get their money back once they hand it over to an insurer.
Conversely, indexed and variable annuities carry so-called income riders that can offer both a future income stream and liquidity if buyers need to access their money early. However, they generally carry relatively high costs and strict rules about access, which have financial penalties if breached, planners said.
“All these bells and whistles are really hard to understand,” McClanahan said. “If you can’t explain it in two pages, then is it really a good thing?”
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Economists polled by Reuters had expected a decline in the headline consumer price index to 4.4%, after the 4.6% annual reading of October surprised to the downside by dropping to a two-year low.
The Office for National Statistics said the largest downward contributions came from transport, recreation and culture, and food and non-alcoholic beverages.

LONDON, UK – Sept. 2021: People seen dining outdoors in Soho in London in September 2021.
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LONDON — U.K. inflation fell by more than expected in to hit 3.9% in November, in the lowest annual reading since September 2021.
Economists polled by Reuters had expected a modest decline in the headline consumer price index to 4.4%, after the 4.6% annual reading of October surprised to the downside by dropping to a two-year low.

Month-on-month, headline CPI fell by 0.2%, compared to a consensus forecast of a 0.1% increase.
Core CPI — which excludes volatile food, energy, alcohol and tobacco prices — came in at an annual 5.1%, well below a 5.6% forecast.
The surprisingly large falls prompted a spike in bets that the Bank of England will cut interest rates in 2024, which manifested in a sharp fall in British bond yields.
The U.K. 10-year gilt yield sunk to an eight-month low, dropping 11 basis points to around 3.54%. Yields move inversely to prices. Meanwhile, the U.K.’s FTSE 100 was the only major European stock index in positive territory on Wednesday, climbing 0.8% by mid-morning trade.
The Office for National Statistics said the largest downward contributions came from transport, recreation and culture, and food and non-alcoholic beverages.

The Bank of England last week maintained a hawkish tone as it kept its main interest rate unchanged at 5.25%. The Monetary Policy Committee reiterated that policy is “likely to need to be restrictive for an extended period of time.”

The central bank ended a run of 14 straight interest rate hikes in September, as policymakers looked to wrestle inflation back down towards the Bank’s 2% target from a 41-year high of 11.1% in October 2022.
U.K. Finance Minister Jeremy Hunt cheered the Wednesday figures and said the country was “starting to remove inflationary pressures from the economy.”
“Alongside the business tax cuts announced in the Autumn Statement this means we are back on the path to healthy, sustainable growth,” he said in a statement.
“But many families are still struggling with high prices so we will continue to prioritise measures that help with cost of living pressures.”
Significant fall ‘undermines’ Bank of England caution
The Bank of England has repeatedly pushed back against market expectations for significant cuts to interest rates in 2024, noting last week that “key indicators of U.K. inflation persistence remain elevated.”
Suren Thiru, economics director at ICAEW, said the “startling” fall in inflation recorded on Wesdnesday will reassure households that there is a “light at the end of the tunnel,” with easing core CPI figures showing that underlying price pressures are relenting.
“The likely squeeze on wages from rising unemployment and a stagnating economy should help to continue to keep them on a downward trajectory,” he said by email.

“These inflation numbers suggest that the Bank of England is too pessimistic in its rhetoric over when interest rates could start falling. A deteriorating economy could push the Bank to start loosening policy by the Autumn, particularly if inflationary pressures continuing easing.”
A ‘glimmer of relief’
Richard Carter, head of fixed interest research at Quilter Cheviot, said the latest inflation print adds to a sense of “cautious optimism” in the U.K. relative to the cost of living crisis and bond market chaos of last year.
Despite the drop in CPI, he noted that the broader economic picture remains “complex, marred by stagnation and subdued growth prospects.”
The U.K. economy contracted by 0.3% month-on-month in October, after flatlining in the third quarter.
“This stagnation, leaving the output no higher than it was in January, paints a picture of an economy struggling to rebound from a series of unprecedented challenges,” Carter said over email, while acknowledging that the pace at which inflation is slowing offers a “glimmer of relief” for households.
“The pressures are manifold – from the cost of living crisis, volatile energy markets, Brexit aftershocks, to enduring productivity issues. These factors have collectively dampened economic prospects and consumer confidence.” More