Deep Dive
Why is the cryptocurrency industry hoping for better relations with banks under the Trump administration?
The crypto industry depends on traditional banks to run their companies, but many banks have distanced themselves after the 2022 FTX collapse. They hope for new regulators who will champion crypto assets and change policies that discourage banks from working with crypto firms.
What is the current state of the relationship between banks and the crypto industry?
The relationship is still shaky. After the FTX collapse, banks became more wary of crypto clients, and regulators have not changed their stance, leading to vague or opaque account closures for crypto firms.
How do banks typically communicate their refusal to do business with crypto firms?
Banks often provide no clear messaging or send vague letters explaining account closures, leaving crypto firms in the dark about the reasons behind the decisions.
What role can regulators play in improving the crypto-bank relationship?
Regulators can decategorize certain crypto customers as higher risk, which could encourage banks to engage with the industry again. This would require a shift in regulatory stance.
Is Congress also looking into the issue of banks refusing to work with crypto firms?
Yes, there has been renewed attention from Congress, with crypto insiders briefing congressional staffers on their experiences of being debanked. Whether this leads to hearings or investigations remains to be seen.
What is the significance of the failed Kroger-Albertsons merger for their advertising businesses?
The merger would have created a larger ad sales network, making them a stronger competitor to Walmart. Without the merger, both companies will struggle to compete effectively in the growing retail media market.
How does advertising work in supermarkets like Kroger and Albertsons?
Supermarkets collect customer data and sell it to advertisers to target ads on their websites, in-store displays, and other platforms. This is known as retail media networks.
What are the new travel requirements for Americans visiting the UK and the EU?
Starting January 8th, travelers to the UK must fill out an online authorization form costing £10 for a two-year validity. EU travelers will face biometric checks, including face and fingerprint scans, as part of a new digital registration system.
Shownotes Transcript
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A restructuring of entertainment giant Warner Bros. Discovery could better position it for deal-making down the road. And people involved in cryptocurrency are hoping that the incoming Trump administration will help them finally get bank accounts.
While they want themselves to be an alternate banking infrastructure, they themselves still depend on traditional banks on running their companies. Plus, interested in working 80 hours a week for no pay? That's what the new Department of Government Efficiency is promising applicants. And it's got people saying, sign me up. It's Thursday, December 12th. I'm Alex Osola for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.
We're starting off this evening with some business news. Warner Bros. Discovery said it's restructuring into two operating divisions, one focused on the legacy cable TV business and the other on streaming and studios. The proposed reorganization comes as the company seeks to persuade Wall Street that it's set up to compete with other entertainment industry giants and deep-pocketed streaming rivals.
Ever since Warner emerged from a blockbuster merger in April 2022, there's been speculation in the media world that it would eventually be an acquisition target or combine with another company to build scale. Warner said it expects the new structure to be in place by the middle of 2025.
Producer prices in the U.S., a measure of the prices businesses receive for their goods and services, rose by 0.4 percent in November from a month earlier, a bigger increase than economists were expecting. The Labor Department said the rise was driven by a jump in goods prices. The PPI increased 3 percent from a year earlier. It's the largest year-over-year increase since February 2023.
In U.S. markets today, stock indexes declined in lackluster trading after the latest inflation reading left intact the case for another interest rate cut. The Dow and the S&P 500 were down about half a percent, while the Nasdaq fell about 0.7 percent. Inflation played a starring role in the election, and President-elect Donald Trump has said that he will cool things off.
Despite his pledges, economists worry that some of his plans, like those on tariffs and immigration, might do just the opposite. Any rise in inflation, even a small one, could matter a lot to consumers who are still angry about higher prices. So what can Trump, or indeed any president, do about inflation? Wall Street Journal economics reporter Justin Lehart told our Your Money Briefing podcast that taking meaningful action isn't straightforward.
It's really tricky. Presidents have in the past tried to attack inflation. The results have really been mixed. When it comes down to it, what economists would say would really help cool inflation are things that take a long time to take hold.
You could have less regulation that takes time to make its way into the economy. You could improve the skills of the U.S. workforce. That takes even longer, right? That's educating workers. You could set up things that create incentives to make firms more efficient, to improve productivity, to develop technologies. Again, these are really...
long-term solutions, not things that you can really get done in the space of just four years. You can hear more about that story in tomorrow's episode of Your Money Briefing. Coming up, why the crypto industry is hoping that the Trump administration could give them a new in with banks. That's after the break. If your business needs a new application, then developers will have to write code, a lot of code. If an application needs to be modernized,
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Crypto is hoping for a fresh start with the banking industry. After the 2022 collapse of firms like FTX, many banks backed away from crypto companies. But banking is a big issue for crypto, and so people inside it are looking ahead to the Trump administration.
They're hoping for new regulators who champion crypto assets at banks and a change to the policy that urges banks to consider a client's reputation. The question is, will banks engage? Angel Au-Young covers finance at The Wall Street Journal. Angel, what does the relationship between the banking industry and crypto look like right now? Right now, the status of the relationships between the banks and the crypto industry is it's still on shaky ground.
In 2022, after the collapses of FTX and various other crypto lenders, that really led to the government putting pressure on banks to be more wary of crypto clients or taking on crypto assets. And according to sources and insiders in the industry, that message really hasn't changed from the government. So when banks refuse to do business with a crypto firm, what exactly does that look like? Do they say in big red letters, no thanks?
The messaging is not as loud as that. From what I've been told by folks who have actually experienced this, there wasn't a message that was because your assets come from cryptocurrency or because you run a crypto firm, we're going to shut down your accounts.
They either got no messaging or they were just sent a letter with a very vague reason as to why their accounts are being closed. It was all very opaque, according to the folks who actually experienced this. What levers can regulators actually pull here?
So in 2022, after the collapses of FTX and the crypto lenders, what regulators essentially did was just issue formal public statements that categorized certain customers as higher risk customers.
So in this situation, if there really is an issue of the crypto industry being targeted of debanking policies, the regulators could basically decaterize certain customers as higher risk.
And how about Congress? Are they looking at this issue too? Yes, they are. In the last couple of weeks, there's been a lot of renewed attention on this issue based on public statements that folks like venture investor Marc Andreessen made on the Joe Rogan podcast, messages on X that Elon Musk and other crypto founders have posted. So there's been enough attention and enough of a pressure campaign from these insiders to
to grab the attention of certain congressional leaders. From what we understand, there have been crypto founders, crypto CEOs who have been invited to D.C. to basically brief congressional staffers on their experiences of being debanked because of the industry that they operate in. Whether or not this is going to lead to an investigation, to an actual hearing, it's still too early to tell. But we do know that
congressional staffers are being debriefed. This issue of debanking is one issue that the insiders want them to address. The crypto industry has also been asking for a set of regulations for years now. Right now, there is a bill that lays out a specific form of crypto regulation that has passed the House,
has not reached the Senate for a vote. And the Biden administration had previously said that they were against that bill. And this bill is industry-backed. And we've got a new crypto and AI czar in David Sachs. And he has publicly said that this is a piece of legislation that he supports. So that is another item that crypto insiders will want the Trump administration to push forward. That was Wall Street Journal finance reporter Angel Au-Yang.
As we mentioned in the last couple of days, the proposed merger of America's two biggest supermarket operators, Kroger and Albertsons, ended in acrimony this week. A judge blocked the deal on antitrust grounds, and the next day, Albertsons sued Kroger for allegedly not fulfilling its contractual obligations. It's not only the company's grocery business that will be affected. It's also their advertising businesses.
Patrick Coffey, who covers marketing and advertising for The Wall Street Journal, is here to tell us more. Patrick, how does advertising work in supermarkets like Kroger and Albertsons? Well, Alex, in recent years, we've had an explosion of what's called retail media networks. And essentially, any company that can collect data from its own customers can then pull and sell that data to advertisers. You think of a grocery store like Kroger, for example. They
They have all kinds of information about who shops in their physical stores, who shops on their websites. In the case of Walmart, like who watches things on their streaming platform. And they can then sell that data to advertisers in order to help them target ads on their websites
in their physical store in the form of like digital display ads targeted to people as they walk by, and then on other sites around the web. How important is this really to the businesses of these supermarkets? Well, it's a very small percentage of their overall revenue, but it's also one of the fastest growing parts of their business. The costs are much lower and the profit margin is much higher than groceries, which growth has pretty much been flat.
Kroger, for example, predicts 20 percent annual growth for their ad sales platform this year. So now that this merger isn't going to happen, what does it mean potentially for the supermarket's ability to compete, especially with rivals like Walmart and Amazon? One of the motivations behind the proposed merger was to make them a larger ad sales network.
As one of the experts told me, combined, the company would have been a formidable competitor to Walmart Connect, which is Walmart's ad sales platform. And now neither one of them comes anywhere close. That was Wall Street Journal reporter Patrick Coffey. Hopeful candidates have begun applying for what seems to be a pretty unappealing job. It's 80 hours a week and no pay.
That's what Elon Musk and Vivek Ramaswamy's new Department of Government Efficiency, or DOGE, is promising those joining the new initiative. President-elect Donald Trump announced its creation last month with the goal of cutting federal spending and bureaucracy. WSJ reporter Joseph D'Avila spoke with some of the people vying for a spot on the new team to understand why they want in. DOGE is drawing a pretty wide applicant pool. Entrepreneurs, people who did startups, entrepreneurs.
who came from corporate backgrounds where they're executives nearing retirement, or they're at a point in their career where they can afford to not get paid for an extended period of time. A lot of folks talked about getting less money spent by the federal government, getting spending more under control, and working on simplifying regulations. This is a big kind of motivating factor where folks feel like they
They have a skill set that they could use to help out in this area. Some of them come from looking at it at a sort of patriotic duty to help the nation get better with this big, ambitious project. Neither the DogeX account nor the Trump transition team returned requests for comment.
Finally, Americans planning to visit Europe next year will have to jump through some new hoops to do so. Starting on January 8th, travelers to the UK will need to fill out an online authorization form ahead of their trip. The application costs £10, or a little under $13, and is good for two years.
And those headed to more than 25 countries in the European Union, including Italy, France and Spain, will also face new regulations. Travelers will have their faces and fingerprints scanned and logged into a new digital registration system. The new requirements will likely begin next year.
And that's what's news for this Thursday afternoon. Today's show was produced by Anthony Bansi and Pierre Bien-Aimé with supervising producer Michael Kosmides. I'm Alex Osola for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening. Amazon Q Business is the new generative AI assistant from AWS because many tasks can make business slow, as if wading through mud.
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