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Crypto market to double in size to $5 trillion in 2024

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Brad Garlinghouse, CEO of Ripple, speaks at the 2022 Milken Institute Global Conference in Beverly Hills, California, U.S., May 4, 2022. 

Mike Blake | Reuters

The CEO of blockchain startup Ripple sees the combined market capitalization of the cryptocurrency market topping $5 trillion this year.

Ripple’s Brad Garlinghouse told CNBC that he expects the entire value of the crypto market to double, citing macro factors including the arrival of the first U.S. spot bitcoin exchange-traded fund (ETFs), as well as the upcoming so-called bitcoin “halving.”

“I’ve been around this industry for a long time, and I’ve seen these trends come and go,” Garlinghouse told CNBC. “I’m very optimistic. I think the macro trends, the big picture things like the ETFs, they’re driving for the first time real institutional money.”

“You’re seeing that drives demand, and at the same time demand is increasing, supply is decreasing,” Garlinghouse said. “That doesn’t take an economics major to tell you what happens when supply contracts and demand expands.”

The first U.S. spot bitcoin ETFs were approved on Jan. 10 by the U.S. Securities and Exchange Commission. They trade on U.S. stock exchanges and allow institutions and retail investors to gain exposure to bitcoin without directly owning the underlying asset.

The bitcoin halving is a technical event that takes place roughly every four years in bitcoin’s history. It halves the total mining reward to bitcoin miners, which are volunteers on the bitcoin network that use high-powered computers to verify transactions and mint new tokens.

The last such event took place in 2020, and the next one is slated to happen later this month.

“The overall market cap of the crypto industry … is easily predicted to to double by the end of this year … [as it’s] impacted by all of these macro factors,” Garlinghouse said.

The total crypto market capitalization was roughly $2.6 trillion as of April 4. If the market were to double, that would imply a new total crypto market cap of $5.2 trillion.

Bitcoin has risen more than 140% in the last 12 months.

It hit a record high above $73,000 on March 13, according to CoinGecko data. It has since fallen well below the $70,000 level, however.

Can ethereum topple bitcoin as the crypto king?

The world’s digital currency has been the main token driving gains for the broader market.

Bitcoin accounts for about 49% of the entire crypto market, with a market capitalization of $1.3 trillion as of April 1.

Positive signs on U.S. crypto regulation

One of the other factors that Garlinghouse sees pushing the crypto market to new highs is the possibility of positive regulatory momentum in the United States.

This year being an election year, crypto hopefuls are optimistic that the next administration will be more accommodating to the crypto industry with its policy focus.

The SEC under Chair Gary Gensler has been aggressive in its enforcement on crypto companies, including Ripple itself.

The SEC targeted Ripple with a securities lawsuit alleging it illegally sold XRP, a cryptocurrency Ripple is closely associated with, in unregistered securities deals. Ripple denies the claims and is fighting the suit.

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Biggest banks planning to sue the Federal Reserve over annual stress tests

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A general view of the Federal Reserve Building in Washington, United States.

Samuel Corum | Anadolu Agency | Getty Images

The biggest banks are planning to sue the Federal Reserve over the annual bank stress tests, according to a person familiar with the matter. A lawsuit is expected this week and could come as soon as Tuesday morning, the person said.

The Fed’s stress test is an annual ritual that forces banks to maintain adequate cushions for bad loans and dictates the size of share repurchases and dividends.

After the market close on Monday, the Federal Reserve announced in a statement that it is looking to make changes to the bank stress tests and will be seeking public comment on what it calls “significant changes to improve the transparency of its bank stress tests and to reduce the volatility of resulting capital buffer requirements.”

The Fed said it made the determination to change the tests because of “the evolving legal landscape,” pointing to changes in administrative laws in recent years. It didn’t outline any specific changes to the framework of the annual stress tests.

While the big banks will likely view the changes as a win, it may be too little too late.

Also, the changes may not go far enough to satisfy the banks’ concerns about onerous capital requirements. “These proposed changes are not designed to materially affect overall capital requirements, according to the Fed.

The CEO of BPI (Bank Policy Institute), Greg Baer, which represents big banks like JPMorgan, Citigroup and Goldman Sachs, welcomed the Fed announcement, saying in a statement “The Board’s announcement today is a first step towards transparency and accountability.”

However, Baer also hinted at further action: “We are reviewing it closely and considering additional options to ensure timely reforms that are both good law and good policy.”

Groups like the BPI and the American Bankers Association have raised concerns about the stress test process in the past, claiming that it is opaque, and has resulted in higher capital rules that hurt bank lending and economic growth.

In July, the groups accused the Fed of being in violation of the Administrative Procedure Act, because it didn’t seek public comment on its stress scenarios and kept supervisory models secret.

CNBC’s Hugh Son contributed to this report.

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