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| | | | |  | | By Sam Sutton, Lorraine Woellert and Jordan Wolman | | | | | 
Crypto’s no good, very bad week. | Richard Sheinwald/AP Photo | ‘A LOT TO BE DONE’ — Hedge funds, asset managers and venture capital firms are licking their wounds after last week’s crypto drubbing. But while those groups mark some high-dollar losses, the pain is even more acute for retail investors who’d bought in on some of the industry’s shakiest promises. “I think young investors, whose first investing experience has been in crypto, are really scared about what’s happening,” Teunis Brosen, head economist for digital finance and regulation for the Dutch lender ING, said inan interview last week. “They are reacting more in a panic than a more experienced investor might do.” The panic began with the spectacular failure of Terraform Labs — a decentralized finance platform that enticed retail traders with eye-popping yields on digital asset deposits. The company’s TerraUSD, a stablecoin that was programmed to withstand market volatility, lost virtually all of its value in less than a week. The token's collapse sent shockwaves through the market, depressing Bitcoin prices and forcing a reckoning on how industry hype can leave investors exposed when enthusiasm turns south. Terraform founder Do Kwon hadwidely,repeatedly andpublicly dismissed any notion that the plumbing of his digital tokens – Luna and TerraUSD – might be susceptible to forces that could wipe out their value with little warning. Industry players have sought to distance themselves from Kwon’s high-profile failure, but there’s been less acknowledgement of the degree to which centralized exchanges and celeb crypto investors played a role in nurturing Terraform’s now-scorched grassroots. Consumers are inundated by ads and media blitzes that encourage participation in markets that are being billed as the future of finance. Even old-school asset managers like Fidelity are in on the game. The 76-year-old institution recently launched a product for fiduciaries looking to add Bitcoin to their 401(k) offerings — something the Labor Department has warned could put workers and businesses at risk. To be sure, traditional markets haven’t exactly been a haven from losses lately, what with inflation and economic volatility. But “recent events should serve as a wake-up call” to crypto investors and regulators about the the damage that can occur when products are promoted without check, said Micah Hauptman, director of investor protection at the Consumer Federation of America. With any risky asset, at some point “the bubble or the hype will start to falter. And at that point, then people will start to recognize precisely how risky this was – regardless of wishful thinking,” said David John , senior strategic policy adviser at the AARP Public Policy Institute. “It’s really sad to see the anecdotal stories that start to pop up when people suddenly realize that their enthusiasm wasn't really warranted.” Whatever vindication crypto’s biggest skeptics might be feeling, the impulse to say “I told you so” is cold comfort given Washington’s sputtering efforts to deliver coherent oversight. “The investing public is not that well protected,” SEC Chair Gary Gensler said at a securities conference Monday, reminding his audience that centralized crypto exchanges aren’t subject to investor protection rules that govern trading platforms for stocks and bonds. “A lot to be done here,” he said.
| | | YOU ASK, WE DELIVER. Join us Wednesday, May 18, for POLITICO’s second annual sustainability summit. Lorraine will moderate a top-notch panel on ESG standard-setting with Nasdaq’s Ed Knight, Lisa Woll of US SIF, IBM’s Christina Shim, and Elizabeth King of ICE. RSVP to attend or watch live. The Long Game is your source for news on how companies and governments are shaping our future. Team Sustainability is editor Greg Mott, deputy editor Debra Kahn and reporters Lorraine Woellert and Jordan Wolman. Reach us all at gmott@politico.com, dkahn@politico.com, lwoellert@politico.com and jwolman@politico.com. Want more? Don’t we all. Sign up for the Long Game. Four days a week and still free!
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There are lots of buyers for cobalt, but too few sellers. | Schalk van Zuydam/AP Photo | COBALT BOOM – Looking for a quick return in this dismal market? Here’s a tip: The cobalt trade grew 90 percent last year as demand for EV batteries took off. Yes, 90 percent. A report from the Cobalt Institute , a trade association for users, producers and recyclers of the element sheds new light on the rapid rise of the critical mineral and its role in America’s mineral security. In 2021, nearly three-fourths of light-duty EV batteries contained cobalt. That demand has made the metal a national security headache. China alone provided about 70 percent of the world’s refined cobalt last year. And the Democratic Republic of the Congo — a nation known for its high rates of sexual violence and child labor — produced 74 percent of mined cobalt. The International Energy Agency warned last year that as demand for critical minerals surges, the U.S. is woefully reliant on foreign countries for supply. It’s an issue that has proven challenging for the Biden administration to navigate. President Joe Biden has invoked the Defense Production Act to boost critical mineral supply and endorsed some mining projects. But he also has revoked permits for a proposed copper-nickel mine in Minnesota and Congressional Democrats are looking to exact a federal royalty rate on hardrock mining for the first time. Republicans call the idea nonsensical given inflation and soaring demand. The Cobalt Institute tsked-tsked Congress for failing to pass provisions in Biden’s Build Back Better plan. The U.S. needs policy support if it wants to catch up with EV markets in China and Europe, the group said.
| | | WOMEN DEALT ANOTHER BLOW — A Los Angeles judge struck down a California law that required companies headquartered in the state to put women on their boards. The Friday ruling came in a case brought by Judicial Watch, a conservative group that had sued to block the 2018 law, saying its enforcement would be an unconstitutional use of taxpayer funds. It’s not the first time courts have thwarted efforts to reshape corporate power. A judge last month struck down a similar California law that directed publicly traded companies to appoint board members from underrepresented groups, such as persons of color or LGBTQ people. Yes, but. California-based corporations have added hundreds of women to their boards since 2018, according to an analysis by California Partners Project. And the trend toward board diversity hasn’t slowed, even outside the state. This might be a case of business, again, getting ahead of regulation. Read the ruling.
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Freight rail has taken its workforce down a few notches. | Steve Helber/AP Photo | CROSSING RAIL WORKERS — First we had container ship snafus and trucker shortages. Now come rail woes. BNSF Railway, CSX Transportation, Kansas City Southern Railway, Norfolk Southern, Union Pacific and other big freight haulers have hemorrhaged a combined 45,000 workers over the past six years and now stand accused of overworking the folks they have left. “They’ve cut labor below the bone, really,” Marty Oberman, chair of the Surface Transportation Board, told the House Transportation Committee on Thursday. “They are overworking and abusing the workforces they have.” Carriers are rushing to hire, but they’re running up against union leaders who say they need to raise pay and reduce punitive attendance policies. Read more from POLITICO’s Eleanor Mueller.
| | | | DON'T MISS THE 2022 GREAT LAKES ECONOMIC FORUM: POLITICO is excited to be the exclusive media partner again at the Council of the Great Lakes Region's bi-national Great Lakes Economic Forum with co-hosts Gov. JB Pritzker and Mayor Lori Lightfoot. This premier, intimate networking event, taking place June 26-28 in Chicago, brings together international, national and regional leaders from business, government, academia and the nonprofit sector each year. "Powering Forward" is this year's theme, setting the stage to connect key decision-makers with thought leaders and agents of change to identify and advance solutions that will strengthen the region's competitiveness and sustainability in today's competitive climate of trade, innovation, investment, labor mobility and environmental performance. Register today. | | | | | | | | EV RIDER — Uber, in an effort to encourage adoption of electric vehicles, unveiled a suite of EV tools for drivers and passengers. Riders in certain cities will be able to request a premium EV, and the company is adding a charging guide to its driver app. (The Union of Concerned Scientists estimates that ride-hailing services produce 70 percent more emissions than the transportation options they replace.) DO SVIDANYA — McDonald’s Corp. on Monday became the latest company to bail on Russia, withdrawing from the market after more than three decades. The company is looking for a Russian buyer who will continue to pay employees at its 850 restaurants. "Our commitment to our values means that we can no longer keep the arches shining there," McDonald's CEO Chris Kempczinski said in a statement. LESS CHILL = LESS WARMING? — Unilever PLC thinks it can lower its carbon footprint by raising the thermostat on its ice cream freezers. The London-based conglomerate will experiment this month with raising the temperature of its freezers to minus 12° Celsius, up from the industry standard of minus 18° Celsius. Emissions from retail freezers account for 10 percent of greenhouse gases in the company’s value chain.
| | | — Power grid operators are moving to keep old coal- and gas-fired plants running longer and harder as parts of the U.S. face potential electricity shortages this year, the Wall Street Journal reports. — New Mexico lawmakers have asked for more federal help as the record Hermits Peak and Calf Canyon wildfires consumed nearly 300,000 acres.
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