Laos welcomes cryptocurrency miners

This is an audio transcript of the FT News Briefing podcast episode: Laos welcomes cryptocurrency miners

Marc Filippino
Good morning from the Financial Times. Today is Friday, September 17th, and this is your FT News Briefing.

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Marc Filippino
The FT has its hands on an unpublished European Central Bank inflation estimate. We’ll tell you what we found. And Myanmar’s shadow government is fighting back against the military junta. Plus, our markets editor Katie Martin is back. Talk with her about the latest developments in the world of crypto.

Katie Martin
You can say what you like about crypto, but if you know what you’re doing, if you can ride the wave up, but also protect yourself on the pretty serious pullbacks, then you can make an absolute shitload of money.

Marc Filippino
I’m Marc Filippino. And here’s the news you need to start your day.

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Marc Filippino
Unpublished documents seen by the FT suggest that the European Central Bank expects to hit its two per cent inflation target by 2025, and it could raise eurozone interest rates in just over two years. That is a year earlier than most economists expected. Right now, the ECB’s key deposit rate is at half per cent below zero. It’s been negative since 2014 and most analysts believed it would stay that way until around 2024. That’s because the ECB has been struggling to boost prices. But last month, eurozone inflation hit a decade high of three per cent. The internal models that FT had access to may likely add to the debate about how quickly central banks should reverse their pandemic stimulus programmes and raise rates.

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Marc Filippino
In Myanmar, supporters of the arrested leader Aung San Suu Kyi have formed a shadow government, and last week it declared war against the military junta, which took power in a coup in February. The junta has killed dozens of people and torched villages in response to escalating guerrilla attacks on government troops and telecom towers. Here’s the FT’s John Reed.

John Reed
I think it’s become pretty clear that peaceful protest has done nothing to reverse the coup or to stop the regime from using horrific violence against civilians. The anti-junta camp are also getting frustrated with the international community’s inability to do anything constructive to resolve this crisis.

Marc Filippino
John, why are the anti-junta forces attacking telecoms towers? What’s the strategy behind that?

John Reed
It was very much symbolic. They were attacking only the towers of one company, which is Mitel, and that’s the joint venture telco between the Myanmar military and the Vietnamese company Viettel. So they were in the PDFs, saw this as an attack on a regime target. And it also I went to the company, I asked Mitel what kind of impact it had on their services, and they told me it knocked out telecoms availability for about 700,000 people. So that’s that’s not nothing.

Marc Filippino
John Reed is the FT’s south-east Asia correspondent.

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Marc Filippino
The cryptocurrency universe seems to be expanding by the week, even as regulators issue warnings of clampdowns. With me to discuss the latest crypto developments is Katie Martin, our markets editor. Welcome back, Katie.

Katie Martin
Hey, Marc. How you doing?

Marc Filippino
I’m good, thanks. So can I ask what’s your favourite crypto news from this week?

Katie Martin
Well, I mean, where do you want me to start?

Marc Filippino
Yeah, there’s been quite a bit.

Katie Martin
(Laughter) There is never a dull moment. There’s always something to keep us on our toes. One of the developments I’ve been writing about recently regards Laos — communist country with like seven million inhabitants. It has authorised mining and trading in crypto. And that’s kind of funny because it comes not long after officials at the central bank and what-not advised people to steer clear of cryptocurrencies. But there’s been some sort of change of heart for whatever reason. Now, one of the really good reasons why Laos could get into crypto mining is that it has a surplus of hydropower. So one of the big criticisms that people levelled against crypto is that it uses up an awful lot of coal in power stations to power up the computers that mine this stuff. And if you can hook it up instead to hydropower, which Laos has in abundance, then you can do it with a much greener footprint, for want of a better word. There’s not a lot of tourism going on at the moment. So this is a good way for the country to use up some of its surplus power. So, yeah, quite a change of heart over there.

Marc Filippino
Now, aside from Laos, more broadly speaking, how are crypto assets performing in comparison to other assets, equities, currencies, things like that?

Katie Martin
Well, if you look at crypto hedge funds, so it’s not that many crypto hedge funds, right? But there are some that specialise in digital assets and in crypto and they are killing it. Absolutely killing it. So they made 24 per cent in August. They’re up 145 per cent so far this year. You can say what you like about crypto, but if you know what you’re doing, if you can ride the wave up, but also protect yourself on the pretty serious pullbacks that you see in the bitcoin price, for example, then you can make an absolute shitload of money. And a lot of the funds are doing this. I mean, what hedge funds are telling us is that there’s plenty of volatility in crypto so you can make money on the way up and on the way down if you know what you’re doing. And there’s also a lot of inefficiency. So you see big differences in prices between different exchanges. And that means if you can play one off against the other, then you can again, it’s an opportunity to make some money. So there is a school of thought that hedge funds that have turned their nose up at crypto might actually find themselves getting more demand to participate in the crypto market if these if these returns are out there.

Marc Filippino
So I wanna talk about an aspect of cryptocurrency that we’ve discussed on the show before, and that’s how it’s become popular with criminals. They use it for money laundering, among other things. What are brokers and banks doing to help crypto exchanges stop criminals?

Katie Martin
So that is precisely what regulators are trying to figure out. They can’t really control what happens on the blockchain and you know, who mines what coin and who sells it to who for how much money. But what they can potentially do is take more control of what you call on and off ramps. So any time that you want to put traditional currencies on to a crypto exchange or get it off again, then that’s the point at which traditional banks and the traditional financial system has a responsibility and answers to regulators. And this is kind of one of the pinch points where regulators could take action if they think that there is bad behaviour. But it’s very difficult for regulators in some jurisdictions and with some companies to really get a handle on what is going on. But certainly they are looking very closely at where crypto intersects with illicit activity, with things that look and smell like money laundering. All of the global authorities have been very vocal about this recently. It’s definitely picking up volume.

Marc Filippino
Katie Martin is our markets editor. Thanks as always, Katie.

Katie Martin
No problem.

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Marc Filippino
Before we go, a word from the investment adviser Roaring Kitty.

Clip of Keith Gill
Well, what up? The game Southeast is a super simple, but it’s often misunderstood everyone. . . .

Marc Filippino
Roaring Kitty is actually Keith Gill. He was an insurance company employee. His job was making educational materials for clients. He was also trading stocks and making videos encouraging people to buy shares in the video game retailer GameStop.

Clip of Keith Gill
And that, like GameStop, isn’t a cigar butt. It’s more of a roach, right? That last hit might not be the prettiest or the cleanest, but it could get the job done, if you know what I mean.

Marc Filippino
And with advice like that, Gill became a star of the amateur trading boom. Some accused him of pumping up the stock price. He was even called to testify before US lawmakers. So who’s paying the price now? Not Gill. Regulators in his home state of Massachusetts fined Gill’s former employer, the insurance company MassMutual, for four million dollars. They said the company failed to oversee Gill and other agents in their use of social media or review excessive trading in their personal accounts. MassMutual did not admit or deny the findings.

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Marc Filippino
You can read more on all of these stories at FT.com. This has been your daily FT News Briefing, make sure you check back next week for the latest business news. The FT News Briefing is produced by Fiona Symon and me, Mark Filippino. Our editor is Jess Smith, with help this week from Peter Barber, Gavin Kallmann, Michael Bruning and Persis Love. Our theme song is by Metaphor Music.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.