over 2 years ago • 3 mins
China announced on Friday that any and all crypto-related activities are now illegal in the country – period.
What does this mean?
China’s no fan of cryptocurrencies for a couple of reasons: their anonymity makes them ripe for fraud and other criminal use, and the sheer amount of energy it takes to mine them flies in the face of the country’s new eco-conscious stance. It’s made no secret of its beef with them either, having already banned commercial banks from providing crypto services in May.
But that’s small fry compared to what came on Friday, when it banned every crypto-related activity in the country, from investing to mining. That’s huge: China’s home to a massive proportion of the world’s crypto miners, and the country’s investors received crypto transfers worth $150 million in the first half of the year alone. This crackdown, then, will send both production and use plummeting, which might be why investors sent bitcoin’s price down 8% after the news landed.
Why should I care?
The bigger picture: If you can’t join ‘em, beat ‘em.
A more conspiratorial newsletter might argue this is China’s way of ousting the competition: the country’s central bank has designs on releasing a digital currency of its own, and it’s planning to trial run it next year at the Beijing Winter Olympics. The digital yuan will give the government more insight into exactly where money is going to and from in its financial system, but only if people actually use it…
Zooming out: Regulation, regulation everywhere.
Coinbase had been planning to launch its own new product last week – one that’d let users lend out their crypto and get paid interest in the meantime. It’s all part of the platform’s wider effort to diversify its revenue beyond trading fees, which rely all too heavily on volatility in the market. No such luck: regulators have been on Coinbase’s case so much that America’s biggest crypto platform decided against the launch altogether.
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Nike reported better-than-expected profit late on Thursday, but there’s a problem: the sportswear giant’s supply chain just won’t play ball.
What does this mean?
All these lockdowns have created a conveyor belt of runners, yogis, and crossfitters, and they all want to pursue their newfound passion in the finest Nike gear. Trouble is, most of the company’s Vietnamese factories have been shut down due to coronavirus outbreaks, losing the company around 10 weeks’ worth of production time. Those factories aren’t expected to reopen until October, and even then it’ll take a few months to fully ramp back up. And even then it’ll take twice as long to transport products overseas from Asia as it did before the pandemic. Nike’s keenly aware: the company slashed its revenue outlook for this year and next, which might be why investors initially sent its shares down more than 4%.
Why should I care?
The bigger picture: No discounts for you.
At least Nike’s bottom line is looking pretty healthy: its profit was up 23% from the same time last year, which could be because it was selling fewer of its products via discount-happy wholesale partners and offering fewer markdowns of its own. Nike’s investment in ecommerce likewise seems to be paying off, with revenue in the segment up 29%.
Zooming out: Even Costco’s increasing prices.
Costco’s been having a pretty crap time with production too: the American wholesaler has been limiting the sale of toilet paper and similar products to avoid selling out completely, having struggled to get its hands – and tush, presumably – on the supply it needs. Odds are that’ll impact no one more than shoppers, with Costco estimating that the price of its products will climb by around 4% over the next few quarters.
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