Finance

Despite pockets of strong growth, the China economic investment story has in the last year been overshadowed by longer-term problems and tensions with the U.S.
“We believe property stabilization, a clear exit from deflation, better policy execution and communication would all be necessary for confidence recovery, with stimulus indispensable and good reforms welcome,” Citi analysts said. “The risk is that markets may not be patient enough with reforms.”

CHONGQING, CHINA – JANUARY 02: People visit the 2nd International Light and Shadow Art Festival at the Fine Arts Park on January 2, 2024 in Chongqing, China. The 2nd International Light and Shadow Art Festival runs from December 29 to January 7. (Photo by VCG/VCG via Getty Images)
Vcg | Visual China Group | Getty Images

BEIJING — Despite pockets of strong growth, China’s investment story has been overshadowed in the last year by longer-term problems and tensions with the U.S.
Those uncertainties remain as 2024 kicks off. The country is also navigating new territory as it starts to settle into a lower growth range following the double-digit pace of past decades.

Here’s what investors are looking at for the year ahead:

Will there be stimulus?

For all the geopolitical risks, the attraction of China as a fast-growing market has waned as the economy matures.
Many were disappointed when China’s economy did not rebound as quickly as expected after the end of Covid-19 controls in December 2022. Other than in tourism and certain sectors such as electric cars, sluggish growth was the story for much of 2023, dragged down by real estate troubles and a slump in exports.

Several international investment banks changed their growth forecasts for China multiple times last year. After all the back and forth, the economy is widely expected to have grown by around 5%.
“Policy response is essential to solidify the recovery momentum,” Citi analysts said in a Jan. 3 report.

They expect that as early as January, the People’s Bank of China could reduce rates, such as the reserve requirement ratio — the amount of funds lenders need to hold as reserves. They also project that overall GDP could grow 4.6% this year.
Beijing has announced a slew of incrementally supportive policies. But it’s taken time to see a clear impact.

For the people who are already [invested] in China, and they kind of stuck with it for 2023, it’s this belief that the catalyst is coming.

CIO, Rayliant Global Advisors

“We believe property stabilization, a clear exit from deflation, better policy execution and communication would all be necessary for confidence recovery, with stimulus indispensable and good reforms welcome,” the Citi analysts said. “The risk is that markets may not be patient enough with reforms.”
In mid-December, top Chinese authorities held an annual meeting for discussing economic policy for the year ahead. An official readout did not indicate significant stimulus plans, but listed technological innovation as the first area of work.
Among major upcoming government meetings, Beijing is set to release detailed economic targets during a parliamentary gathering in early March.
“For the people who are already [invested] in China, and they kind of stuck with it for 2023, it’s this belief that the catalyst is coming,” Jason Hsu, chairman and chief investment officer of Rayliant Global Advisors, said in late November.

Read more about China from CNBC Pro

“They’re not really focused on the fundamentals of companies of the markets,” he said. “They’re just betting on purely monetary and fiscal policy to buoy up the economy and the stock market.”
However, it remains to be seen whether China will boost growth in the same way it did previously.
“My framework is China is not going to put up significant stimulus,” Liqian Ren, leader of quantitative investment at WisdomTree, said in late November.
“Even if China has a meeting, even if they come up with a good package, I think a lot of these stimulus are constrained by this framework of trying to upgrade China’s growth,” she said, referring to Beijing’s efforts to promote “high-quality,” rather than debt-driven, growth.

What will happen to real estate?

Real estate is a clear example of a debt-fueled sector, one that has accounted for about a quarter of China’s economy.
The property market slumped after Beijing cracked down on developers’ high reliance on debt for growth in 2020. The industry’s close ties to local government finances, the construction supply chain and household mortgages have raised concerns about spillover to the broader economy.

The pace of decline in demand has slowed and we expect to see somewhat more stability in 2024.

Goldman Sachs

“China’s property downturn has been the biggest drag on its economy since the exit from zero-Covid restrictions in late 2022,” Goldman Sachs analysts said in a Jan. 2 report. “Property sales and construction starts plunged in 2021-22 and continued to decline on net in 2023.”
“However, the pace of decline in demand has slowed and we expect to see somewhat more stability in 2024,” the analysts said.

Commercial housing sales for 2023 as of November fell by 5.2% from a year ago, according to National Bureau of Statistics data accessed via Wind Information. That’s after those sales plunged by 26.7% in 2022.
Although the real estate situation is “gradually stabilizing, it’s hard to see a turning point,” said Ding Wenjie, investment strategist for global capital investment at China Asset Management Co., according to a CNBC translation of her Mandarin language remarks.
She expects policy support will increase in 2024, because authorities have shifted from focusing on preventing risks to pursuing progress, while maintaining stability. Ding was referring to new official language that appeared in the readout of December’s high-level government meeting.

Where are the opportunities?

While it’s clear Beijing would like to reduce the property sector’s contribution to China’s GDP, it’s less certain whether new growth drivers can fill the void.
Machinery, electronics, transport equipment and batteries combined contributed to 17.2% of China’s economy in 2020, Citi analysts said.
That means such areas of manufacturing could offset the drag from real estate, the analysts said. But they pointed out the economic transition can’t happen overnight since it requires addressing a mismatch in labor market skills and adjusting a supply chain that’s been built to support property development.
“Were tech sanctions to become a binding constraint for the new drivers, their potential to make up for the shortfall from property would not materialize,” the report said.

Despite the macro challenges, Beijing has signaled it wants to bolster domestic tech and advanced manufacturing.
Ding from China AMC said sub-sectors of high-end manufacturing could benefit this year due to an upturn in the global tech cycle. Examples include those related to consumer electronics and computers.
She also expects producer prices to return to growth at the end of the second quarter, boosting corporate earnings per share by about 8% to 10% in China. Another area her team is looking at is Chinese companies that are growing their global revenue. More

Federal Reserve Governor Michelle Bowman said Monday interest rate hikes are likely over.
One of the central bank’s staunchest advocates for tight monetary policy, Bowman said she’s not ready to start talking about rate cuts.
“In my view, we are not yet at that point. And important upside inflation risks remain,” she said.

Federal Reserve Bank Governor Michelle Bowman gives her first public remarks as a Federal policymaker at an American Bankers Association conference In San Diego, California, February 11 2019.
Ann Saphir | Reuters

Federal Reserve Governor Michelle Bowman, who had been one of the central bank’s staunchest advocates for tight monetary policy, said Monday she’s adjusted her stance somewhat and indicated that interest rate hikes are likely over.
However, she said she’s not ready to start cutting yet.

In remarks delivered at a private event in South Carolina, Bowman noted the progress made against inflation and said it should continue with short-term rates at their current levels.
“Based on this progress, my view has evolved to consider the possibility that the rate of inflation could decline further with the policy rate held at the current level for some time,” she said. “Should inflation continue to fall closer to our 2 percent goal over time, it will eventually become appropriate to begin the process of lowering our policy rate to prevent policy from becoming overly restrictive.”
“In my view, we are not yet at that point. And important upside inflation risks remain,” she added.
As a governor, Bowman is a permanent voter of the rate-setting Federal Open Market Committee. Prior to this speech, she had repeatedly said additional rate hikes likely would be needed to address inflation.
Her comments come a few weeks after the committee, at its December meeting, voted to hold the benchmark federal funds rate at its current target range of 5.25%-5.5%. In addition, committee members, through their closely followed dot-plot matrix, indicated that the equivalent of three quarter-percentage point rate cuts could come in 2024.

However, minutes released last week from the Dec. 12-13 meeting provided no potential timetable on the reductions, with members indicating a high degree of uncertainty over how conditions might evolve. Inflation is trending down toward the Fed’s target, and by one measure is running below it over the past six months.
Bowman said policymakers will remain attuned to how things develop and are not locked into a policy course.
“I will remain cautious in my approach to considering future changes in the stance of policy,” she said, adding that if the inflation data reverse, “I remain willing to raise the federal funds rate at a future meeting.”
The Fed meets again on Jan. 30-31, with markets expecting the committee to stay put on rates and then begin cutting in March. Market pricing indicates a total of 1.5 percentage points worth of reductions this year, or six cuts, according to the CME Group’s FedWatch tracker. More

Gift cards are a popular gift during the winter holiday season.
Many Americans have at least one unused gift card, worth $187 a person, on average, Bankrate said.
Consumers can sell unused gift cards for cash on certain websites. However, there are some steps consumers should take before transacting, experts said.

Su Arslanoglu | E+ | Getty Images

Are your unused gift cards gathering dust? You may be able to exchange those cards for cash.
Gift cards are among the most popular gifts during the winter holiday season: 44% of consumers planned to give one as a gift in 2023, ranking second only to clothing, 56%, according to the National Retail Federation.

Many Americans don’t use their cards. To that point, 47% of U.S. adults have at least one unused card, according to a 2023 Bankrate survey. Nationwide, those unused balances are worth $23 billion, the report found.
Their average value is $187 a person — a 61% increase from $116 in June 2021, Bankrate found.
However, certain websites let consumers sell their unused cards for money.
“Consumers certainly don’t need to leave these gift cards unused in a drawer somewhere,” said John Breyault, vice president of public policy, telecommunications and fraud at the National Consumers League.

These websites have a few different financial models, which pay consumers less than the face value of their card. Some vendors pay a percentage of a card’s value, with amounts varying by retailer, while others are like an eBay for gift cards, for example, Breyault said.

Examples include Raise.com, CardCash.com and GiftCash.com, said Ted Jenkin, a certified financial planner based in Atlanta and a member of CNBC’s Advisor Council.
One “detriment” of holiday gift cards is that recipients are generally inclined to spend more than a card’s value while shopping, Jenkin said. A $100 card might turn into a $118 total purchase, for example, he said.
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That’s among the reasons retailers heavily market gift cards.
They drive additional sales, Breyault said. The global gift card market is expected to be $2.3 trillion by 2030, up from about $899 billion in 2022, according to Global Industry Analysts.
Recipients can instead trade in a gift card to help pay down household debt or build up an emergency cash reserve, Jenkin said.
Some cards “have very little value and some have a lot more value,” so consumers should do some comparison shopping on websites to scout the best deal, Jenkin added.

How to avoid gift card sale scams

Breyault advised against using Facebook Marketplace or Craigslist to sell — or buy — gift cards. He has seen “a lot of reports” of fraud via these sites whereby consumers have been duped.
For other sites, some due diligence is advised before transacting, Breyault said. For example, check with the Better Business Bureau to see if consumers have lodged complaints about a particular service.
Something as simple as doing a Google search for the name of the site and the word “scam” can also be useful, he said.

Consumers can also look for a customer service phone number for a site and inspect whether it works. A disconnected number or full voicemail inbox is often a red flag, Breyault said.
There are options beyond selling an unused card, too, such as donating gift cards to charity or even regifting them, he added.
Additionally, about a dozen states have laws that require retailers to pay cash back to consumers who have partially used their gift cards. Card balances must fall below a certain financial threshold, and some restrictions may apply. Most states require this for card balances of about $5 or less, while California, the most generous state, does so for cards of $9.99 or less.Don’t miss these stories from CNBC PRO: More

Many economists believe that generative artificial intelligence (AI) is about to transform the global economy. A paper published last year by Ege Erdil and Tamay Besiroglu of Epoch, a research firm, argues that “explosive growth”, with gdp zooming upwards, is “plausible with ai capable of broadly substituting for human labour”. Erik Brynjolfsson of Stanford University has said that he expects ai “to power a productivity boom in the coming years”.For such an economic transformation to take place, companies need to spend big on new software, communications, factories and equipment, enabling AI to slot into their production processes. An investment boom was necessary to allow previous technological breakthroughs, such as the tractor or the personal computer, to spread across the economy. From 1992 to 1999 American nonresidential investment jumped by 3% of gdp, for instance, driven in large part by extra spending on computer technologies. Yet so far there is little sign of an ai splurge. Across the world, capital expenditure by businesses (or “capex”) is remarkably weak.image: The EconomistAfter sluggish growth in the years before the covid-19 pandemic, capex increased as lockdowns lifted (see chart). In early 2022 it was rising at an annualised rate of about 8% a year. A mood of techno-optimism had gripped some businesses, while others sought to firm up supply chains. Capex then slowed later the same year, owing to the effects of geopolitical uncertainty and higher interest rates. On the eve of the release of OpenAI’s GPT-4 in March 2023, global capex spending was growing at an annualised rate of about 3%.Today some companies are once again ramping up capex, to seize what they see as the enormous opportunity in ai. This year forecasters reckon that Microsoft’s spending (including on research and development) will probably rise by close to 20%. Nvidia’s is set to soar by upwards of 30%. “AI will be our biggest investment area in 2024, both in engineering and compute resources,” reported Mark Zuckerberg, Meta’s boss, at the end of last year.Elsewhere, though, plans are more modest. Exclude firms driving the AI revolution, such as Microsoft and Nvidia, and those in the S&P 500 are planning to lift capex by only around 2.5% in 2024—ie, by an amount in line with inflation. Across the economy as a whole, the situation is even bleaker. An American capex “tracker” produced by Goldman Sachs, a bank, offers a picture of businesses’ outlays, as well as hinting at future intentions. It is currently falling by 4%, year on year.Surely, with all the excitement about generative AI’s potential, spending on information technologies is at least soaring? Not quite. In the third quarter of 2023 American firms’ investment in “information-processing equipment and software” fell by 0.4% year on year.image: The EconomistSimilar trends are observable at a global level. According to national-accounts data for the oecd club of mostly rich countries, which go up to the third quarter of 2023, investment spending—including by governments—is growing more slowly than in the pre-pandemic years. A high-frequency measure of global capex from JPMorgan Chase, another bank, points to minimal growth. With weak capex, it is no surprise that there is little sign of productivity improvements, according to a real-time measure derived from surveys of purchasing managers (see chart).An official survey in Japan does point to sharply higher capex growth in the future, after years of sluggishness. Yet this probably reflects factors specific to that country, such as reforms to corporate governance. And in most places outside America the situation is rather less encouraging. A worsening outlook for the economy in Europe does not help. Investment intentions of services companies in the European Union are less than half as ambitious as they were in early 2022. British businesses plan to raise capex by a mere 3% over the next year, compared with 10% when asked in early 2022.These trends suggest one of two things. The first is that generative AI is a busted flush. Big tech firms love the technology, but are going to struggle to find customers for the products and services that they have spent tens of billions of dollars creating. It would not be the first time in recent history that technologists have overestimated demand for new innovations. Think of cryptocurrencies and the metaverse.The second interpretation is less gloomy, and more likely. The adoption of new general-purpose technologies tends to take time. Return to the example of the personal computer. Although Microsoft released a groundbreaking operating system in 1995, American firms only ramped up spending on software in the late 1990s. Analysis by Goldman Sachs suggests that while only 5% of chief executives expect AI to have a “significant impact” on their business within one to two years, 65% think it will have an impact in the next three to five. AI is still likely to change the economy, but with a whimper not a bang. ■ More

Coinbase told CNBC exclusively that it entered into an agreement to buy an unnamed holding company which holds a Mifid II license.
With a Mifid II license, Coinbase will be able to begin offering regulated derivatives, like futures, in the EU, in addition to spot trading in bitcoin and other cryptocurrencies which it already offers.
Derivatives could be a key battleground for Coinbase, accounting for roughly 75% of overall crypto trading volumes.

LONDON, ENGLAND – NOVEMBER 09: In this photo illustration, a flipped version of the Coinbase logo is reflected in a mobile phone screen on November 09, 2021 in London, England. The cryptocurrency exchange platform is to release its quarterly earnings today. (Photo illustration by Leon Neal/Getty Images)
Leon Neal | Getty Images News | Getty Images

Coinbase plans to offer crypto-linked derivatives in the European Union, and it’s planning to acquire a company with a license to do so.
The U.S. cryptocurrency exchange told CNBC exclusively that it entered into an agreement to buy an unnamed holding company which owns a MiFID II license.

MiFID II refers to the EU’s updated rules governing financial instruments. The EU updated the legislation in 2017 to address criticism that it was too focused on stocks and didn’t consider other asset classes, like fixed income, derivatives and currencies.
It’s part of a long-standing ambition by Coinbase to serve professional and institutional customers.
The company, which began 12 years ago, has been seeking to expand its offering to institutions such as hedge funds and high-frequency trading firms over the last several years, looking to benefit from the much higher sizes of transactions done by these kinds of traders.
If and when Coinbase completes the deal, the move would mark the first launch of derivatives trading by the company in the EU.
With a MiFID II license, Coinbase will be able to begin offering regulated derivatives, like futures and options, in the EU. The company already offers spot trading in bitcoin and other cryptocurrencies.

The deal is subject to regulatory approval and Coinbase expects it will close later in 2024.
“This license would help expand access to our derivatives products by allowing Coinbase to offer them to eligible European customers in select countries across the EU,” Coinbase said in a blog post, which was shared exclusively with CNBC on Friday.
“As the industry leader in trusted, compliant products and services, we aim for the highest standards for regulatory compliance, and before operationalizing any license or serving any users, this entity must achieve our Five-point Global Compliance Standard.”

Coinbase said it would look to adhere to rigorous compliance standards that are upheld in the EU, including requirements related to combating money laundering, customer transparency and sanctions.
The company said it is committed to ensuring a five-point global compliance standard, supported by a team of more than 400 professionals with experience at agencies including the FBI and Department of Justice.
“We have a long road ahead before finalizing the acquisition and operationalizing the EU MiFID licensed entity, but this is an exciting step forward in our efforts to expand access to our international derivatives offerings and bring a more global and open financial system to 1 billion people around the world,” Coinbase said in its blog post.

A key battleground

Derivatives could be a crucial battleground for Coinbase. According to the company, derivatives make up 75% of overall crypto trading volumes. Coinbase has a long way to go to compete with its larger rival Binance, which is a massive player in the market for crypto-linked derivatives, as well as firms like Bybit, OKX and Deribit.
According to data from CoinGecko, Binance saw trading volume of more than $56.6 billion in futures contracts in the past 24 hours. That’s seismically larger than the amount of volume done by Coinbase. Its international derivatives exchange did $300 million of futures trading volume in the last 24 hours.
Coinbase does not currently offer crypto derivatives products in the U.K., where they are prohibited. The Financial Conduct Authority banned crypto-linked derivatives in January 2020, saying at the time they are “ill-suited” for retail consumers due to the harm they pose.
Coinbase currently offers trading in bitcoin futures and ether futures in the U.S., and bitcoin futures, ether futures, “nano” ether futures and West Texas Intermediate crude oil futures in markets outside the U.S.
Derivatives are a type of financial instrument that derive their value from the performance of an underlying asset.
Futures are derivatives that allow investors to speculate on what an asset will be worth at a later point in time. They’re generally considered riskier than spot markets in digital assets given the notoriously volatile nature of cryptocurrencies like bitcoin, and the use of leverage, which can significantly amplify gains and losses.

The company made its first move into derivatives in May, with the launch of an international derivatives exchange in Bermuda. And the company debuted crypto derivatives in the U.S. in November after receiving regulatory approval from the National Futures Association.
Coinbase had reportedly considered acquiring FTX Europe, the European entity of the now-collapsed crypto venue, but subsequently shelved the idea, according to reporting from Fortune. CNBC has not been able to independently verify Fortune’s reporting.

Expanding beyond U.S.

The move into derivatives continues Coinbase’s expansion drive in markets outside of the U.S.
Coinbase has been aggressively chasing international expansion in the past year as it faces a tougher time at home. The company is the target of a U.S. Securities and Exchange Commission lawsuit alleging it violated securities laws.
In October, the firm picked Ireland as its primary regulatory base in the EU ahead of an incoming package of crypto laws known as Markets in Crypto-Assets (MiCA), and submitted an application for a single MiCA license, which it hopes to obtain by December. 2024 when the rules are slated to be fully applied.
Coinbase also recently obtained a virtual asset service provider license from France, which gives it permission to offer custody and trading in crypto assets in the country. More

Omar Marques | Lightrocket | Getty Images

Crypto investors are eagerly awaiting an imminent ruling from the U.S. Securities and Exchange Commission that will likely approve the trading of a spot bitcoin exchange-traded fund, more than a decade after initial attempts were rejected. 
13 companies have filed for a spot bitcoin ETF: 

Grayscale Bitcoin Trust
Ark/21Shares Bitcoin Trust
Bitwise Bitcoin ETF Trust
BlackRock Bitcoin ETF Trust
VanEck Bitcoin Trust
WisdomTree Bitcoin Trust
Valkyrie Bitcoin Fund
Invesco Galaxy Bitcoin ETF
Fidelity Wise Origin Bitcoin Trust
Global X Bitcoin Trust
Hashdex Bitcoin ETF
Franklin Templeton Digital Holdings Trust
Pando Asset Spot Bitcoin Trust

How the SEC will proceed

There are two components to the applications:
1) A 19b-4 filing, which is a form used by exchanges to inform the SEC of a proposed rule change. In this case, a rule change is required under the Securities Exchange Act of 1934 because a spot bitcoin ETF is a new product, and the exchanges — NYSE, Nasdaq and Cboe — must provide rules to explain how the product will trade. The SEC must approve the rule changes before the product can trade.  This is the filing that is facing a deadline of Jan. 10 for the Ark/21Shares Bitcoin Trust. 
2) Approval of S-1. This is a filing to register a new security with the SEC, in a document that provides information about the specific security. In this case, each company filing for the spot bitcoin ETF has differences in the way the product might be structured. In the case of the Grayscale Bitcoin Trust, an S-3 filing must be approved, which is a simplified security registration form for businesses that have met other reporting requirements. 
It’s widely anticipated that once the 19b-4 filings are approved, the SEC will separately approve the S-1 applications of all the ETF applicants at once. However, because the applications are different, that is not a slam dunk. The SEC may decide to approve some, but not all, of the S-1s. 
Wide spread in fee 
With 13 companies filing for a bitcoin ETF, all of which are similar products, there is substantial interest in what the fee structure will look like. 

Fidelity’s Wise Origin Bitcoin Fund has announced it will charge 39 basis points, or 0.39%. Invesco’s Galaxy Bitcoin ETF has set its expense ratio at 59 basis points, which are waived for the initial six months and the first $5 billion in assets. Ark/21Shares and Valkyrie will charge 80 basis points. 
Grayscale Bitcoin Trust currently charges 2% but has said it’s committed to lowering the fee once its application to convert to a bitcoin ETF is approved. 
Other applicants have not yet announced their fee structure. 
It is unclear who the main regulator of the crypto industry is
All this happens against the backdrop of SEC Chair Gary Gensler’s long-running fight with the crypto industry. 
Gensler has fought several court battles against major crypto players, including a losing battle against Grayscale Bitcoin Trust, which won a case against the SEC last summer. In that case, the U.S. Court of Appeals for the D.C. Circuit ruled that the SEC had already approved a futures-based bitcoin product and that it failed to explain why it had refused to approve a spot-bitcoin product. The court said, in essence, the futures and the spot market are “like” products. If the SEC approved one, it logically had to approve the other. 
Bitcoin has been ruled to be a commodity, but with the exception of ether, there are no such rulings on other cryptocurrencies. In the absence of clear federal rules, the SEC has taken to regulation by enforcement to demonstrate that many cryptocurrencies are securities, and it therefore has regulatory authority over much of the crypto industry. 
There is an outstanding case against Coinbase, the largest U.S. crypto exchange, where the SEC alleges that the company violated rules requiring it to register as an exchange. In that case, the SEC has alleged that some of the crypto assets traded on Coinbase are securities and fall under the SEC’s purview. 
The SEC sued Binance and its founder Changpeng Zhao last June, alleging that Binance and Zhao “engaged in an extensive web of deception, conflicts of interest, lack of disclosure, and calculated evasion of the law,” according to Gensler.
The case is ongoing, but in November, the U.S. Department of Justice settled different charges against Binance and Zhao, wherein Zhao pleaded guilty to money laundering violations and agreed to pay a $50 million fine and step down from his role as the company’s chief executive. Binance also accepted the appointment of a government monitor to oversee the business. 
ARK Invest’s Cathie Wood will be our guest on “Halftime Report” at 12:35 p.m. Monday, and on “ETF Edge” on Monday at 1:10 p.m.-1:30 p.m. ET on ETFEdge.cnbc.com. More

Coinbase, Crypto.com and Gemini are among cryptocurrency exchanges that are asking U.K. users to fill out risk assessments and questionnaires related to their financial knowledge.
The measures are a response to new rules in the U.K. which require crypto companies to make clear to users the risks involved in trading cryptocurrencies and advertise their services responsibly.
If a customer fails to successfully complete the tasks, they will be prevented from trading with their crypto account.

CEO of cryptocurrency platform Coinbase Brian Armstrong attends a reception at Buckingham Palace, in central London, on November 27, 2023 to mark the conclusion of the Global Investment Summit (GIS). (Photo by Daniel LEAL / POOL / AFP) (Photo by DANIEL LEAL/POOL/AFP via Getty Images)
Daniel Leal | Afp | Getty Images

Coinbase, Crypto.com, Gemini and other cryptocurrency exchanges are warning users in the U.K. that they’ll need to start filling out risk assessments and investment questionnaires aimed at testing their financial knowledge.
It comes ahead of tough new rules on the advertising of digital asset products in the country.

The firms have told users in Britain that, starting Monday, they will be required to complete a declaration about what type of investor they are, and respond to a questionnaire on a range of aspects of financial services and regulation to continue using their respective platforms.
In the customer declaration section, users are asked to select their investor profile: either a high net worth individual earning above £100,000 (roughly $126,700) annually or with a net worth of more than £250,000, or a “restricted investor” who won’t invest more than 10% of their assets. Otherwise, they cannot trade crypto.
The financial questionnaires, which vary from exchange to exchange, require users to respond to numerous queries about what range of products the firms offer, the volatile nature of crypto asset prices and the treatment of crypto as a product by financial regulators.
If a customer fails to complete the tasks successfully, they will be prevented from trading with their crypto account.
Since the passing of the Financial Services and Markets Act, a major package of financial services reforms in the U.K., firms that offer crypto and a certain type of digital currency called stablecoins are now covered by the law and must adhere to the same rules as those that govern traditional financial services.

Since Oct. 8, firms seeking to promote cryptoassets in the U.K. to retail customers must be authorized or registered with the country’s Financial Conduct Authority, or have their marketing approved by an FCA-authorized firm.
Coinbase said the changes were made “to ensure we are meeting UK investor protection standards, which require our users to have the necessary knowledge to make informed investment decisions.”
“This process is also part of Coinbase’s commitment to working collaboratively with local regulators so that we can best serve our users now and in the future,” a Coinbase spokesperson told CNBC via email.
A Crypto.com spokesperson gave similar reasoning for the move, saying its changes were made “primarily to ensure customers understand the risks of investing in cryptocurrency, which is a key component of the important consumer protections being put in place by the FCA.”
“We do not expect this to impact user activity in the UK and as always our customer service team is on hand to help with any queries,” George Tucker, U.K. general manager of Crypto.com, told CNBC via email.
“As an authorised Electronic Money Institution and registered cryptoasset business in the U.K., Crypto.com supports and complies with the FCA’s rules and will continue to work with the regulator as we expand our product offering here,” Tucker added.

Crypto firms in a tight spot

Coinbase CEO Brian Armstrong has been an advocate of the U.K.’s role as a crypto hub, particularly as the exchange faces a tougher time at home with the U.S. Securities and Exchange Commission suing the firm over alleged securities law violations.
In April last year, he told CNBC’s Arjun Kharpal that Coinbase was “looking at other markets” to invest in beyond the U.S. and was “probably going to invest more” in the U.K., given in its push to position itself as a crypto hub.
But the new financial advertising regulations have put some crypto firms in a tight spot.
Some crypto companies have suspended their services in the U.K. in response to the new rules. ByBit, an unregistered crypto firm, stopped services to U.K. customers, while Luno said it is halting some U.K. clients from making crypto investments. PayPal, meanwhile, said it is suspending some cryptocurrency services until it brings its crypto arm into compliance with the new rules.
Binance, which was slapped by U.S. authorities with a $4.3 billion settlement over money laundering charges last year, tried in October to get its marketing authorized in the U.K. with a third-party firm. But it was blocked by the FCA, which at the time said it was doing so to protect consumers. More

Black Americans, the group with the highest jobless percentage in the country, saw their unemployment rate dip to 5.2% last month from 5.8% in November.
Still, that’s higher than the overall unemployment rate, which held at 3.7%.

A networking and hiring event for professionals of color in Minneapolis, MN. 
Michael Siluk | Getty Images

The unemployment rate for Black Americans fell significantly in December, closing out 2023 on a positive note, according to data released Friday by the Department of Labor.
Black Americans, the group with the highest jobless percentage in the country, saw their unemployment rate dip to 5.2% last month from 5.8% in November. Still, that’s higher than the overall unemployment rate, which held at 3.7% last month, as well as the 3.5% jobless rate for white Americans.

When accounting for gender, the unemployment rate for Black men aged 20 and older fell to 4.6%, a big decline from the 6.3% rate in November. Black women’s jobless rate remained unchanged at 4.8% in December.
Experts said that while the December number is a good sign, the monthly data could be too volatile to form a trend yet.
“We would caution against reading too much into large swings in monthly data, but in general, demographic groups, including Black Americans, that had traditionally been slower to experience the benefits of a tight labor market have realized stronger employment and wage gains in the current cycle,” Andrew Patterson, senior international economist at Vanguard, told CNBC. 
The Current Population Survey is “very noisy,” especially when looking at smaller populations, according to Julia Pollak, ZipRecruiter’s chief economist. She noted that the unemployment rate for Black Americans in 2023 ranged between 4.7% in April and 6.0% in June. 

Among Black workers, the labor force participation rate inched lower to 63.4% from 63.7% in the previous month.

Black Americans were hit particularly hard by the business shutdowns in the depths of the Covid-19 pandemic, with the unemployment rate for Black workers peaking at 16.8% in 2020. The overall unemployment rate hit a high of 14.7% in April 2020.
More progress needs to be made for Black workers as they still lag every other demographic group in the U.S.
“The unemployment rate among Black Americans staged a significant drop in December, but remains above the lower level seen last year,” Bankrate senior economic analyst Mark Hamrick said. “Still, it remains at historically low levels and still higher than the jobless rate overall and for Whites, Asians and Hispanics.”
For Hispanic Americans, the unemployment rate rose to 5% in December from 4.6% in November.
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