Good morning. Andrew here. Crypto prices keep going up and up as the Trump administration and Washington have embraced the sector. We dive into what comes next. We’re also looking at the implications of the “reverse acqui-hire” phenomenon taking place in Silicon Valley. And we’re talking about practical A.I. hacks with the C.E.O. of Chime. (Was this newsletter forwarded to you? Sign up here.)
Is the sky the limit for crypto?President Trump could deliver a major boost to the crypto industry as soon as today, when he’s expected to sign into law legislation to create new rules for so-called stablecoins. That, along with a potential move to permit American retirement accounts to invest in crypto, underscores just how much sway crypto companies hold in the Republican-led Washington. That’s powering gains in the paper wealth of these businesses — including those tied to Trump himself. Crypto’s overall market capitalization surpassed $4 trillion for the first time as digital currencies including Ether and XRP have continued to rise over recent days. Bitcoin, which earlier in the week broke past $122,000, is down only slightly. And shares in publicly traded crypto companies, including Coinbase and the stablecoin issuer Circle, are up in premarket trading as well. The latest: The House passed the Genius Act, which would establish regulations for stablecoins, the tokens tied to the value of the U.S. dollar. That could help companies (potentially including Amazon and Walmart) to issue their own stablecoins that could in turn help them bypass traditional payment networks. Waiting to get to that point is a potentially more consequential bill: the Clarity Act, which would establish broader regulation of crypto, including taking away some oversight from the S.E.C. and giving it to the Commodity Futures Trading Commission. It “has been absolutely the most important thing we have been pushing for,” Kara Calvert, a top policy official at the giant crypto exchange Coinbase, told The Times. And in a further boost to the industry, Trump is expected to issue an executive order that would let 401(k)s invest in crypto, among other alternatives to stocks and bonds, The Financial Times reports. That would open up a multitrillion-dollar market to digital currencies, pouring even more money into the sector. There are some bumps in the road. The Senate may draw up its own market structure bill, potentially putting its members — some of whom have opposed legislation like the Genius Act — in conflict with the House. That could lead to lengthy delays in passing more regulation. Potentially less of a worry is opposition by many Democrats who argue that the legislation currently being considered in Congress is too friendly to the industry even as other Democrats voted in favor of bills like the Clarity Act. And some Republicans have called for stricter limits on the Fed ever creating its own cryptocurrency, beyond what’s currently on the table in Congress.
The Trump administration adds more pressure on the Fed. The White House budget director, Russell Vought, said yesterday he wanted an on-site inspection of renovations of the central bank’s headquarters, pressing a new attack on Jay Powell for not lowering interest rates as quickly as President Trump would like. Powell responded that the Fed had obtained proper approval for the work. Meanwhile, several Republican senators joined major bank C.E.O.s in calling for the preservation of the Fed’s political independence. Trump again seeks to quell criticism about his handling of the Jeffrey Epstein case. The president told Pam Bondi, the attorney general, to seek the public release of grand jury testimony from the prosecution of the sex offender, as Republicans continue to attack Trump for not releasing all files related to the matter. The president also threatened to sue The Wall Street Journal after it reported that he had given Epstein a signed bawdy doodle as a birthday present; the two men were friends but became estranged before Epstein faced criminal charges and later died by suicide. Chevron clears a path to close an oil field megadeal. A Paris-based arbitration panel dismissed a claim by Exxon Mobil that it had the right to bid for a stake in a valuable Guyana oil project held by Hess, which Chevron agreed to buy last year for $53 billion. That will let Chevron complete a transaction that will vastly expand its oil resources and better compete against Exxon; shares in Chevron and Hess were up in premarket trading today. CBS unexpectedly cancels “The Late Show With Stephen Colbert.” The decision to end the late-night show next year sent shock waves through the entertainment industry. Paramount, CBS’s parent company, said the move was for financial reasons and unrelated to its efforts to sell itself to Skydance or to Colbert’s political commentary. Late-night shows have struggled with advertising and viewership, and the move raises questions about the fate of other such programs. What’s with the reverse acqui-hire spree?Google’s move last week to hire the leader of Windsurf, a coding start-up, was the latest in a series of high-profile tech “reverse acqui-hires”: a big company poaching top employees from a start-up and licensing its technology, but stopping short of formally acquiring the company. Why has it become such a compelling tactic for tech companies — and why aren’t other industries following suit? Danielle Kaye digs in. A recap: Google last week said it was hiring Varun Mohan, Windsurf’s C.E.O., and other staff members. It also agreed to pay $2.4 billion for a nonexclusive license for the start-up’s technology and for compensation for the hirings. (Days later, Windsurf said it was selling itself to another A.I. start-up, Cognition.) Other similar high-profile deals include Meta hiring Alexandr Wang, the C.E.O. of Scale AI and investing $14.3 billion in the start-up; Microsoft paying $650 million to license Inflection’s A.I. models and hire nearly all of its employees; Amazon hiring executives from Adept and licensing its tech; and Google hiring Character.AI’s co-founders as part of a $2.7 billion — you guessed it — licensing agreement. What’s behind the strategy? Poaching another company’s employees is a standard corporate move, but acqui-hires, and reverse acqui-hires, are more unique to tech. John Coyle, a professor at the University of North Carolina School of Law who studies the strategy, told DealBook that Silicon Valley social norms play a role. “The acqui-hire is there to make sure the investors in the smaller companies see some return on their investment,” he said. Companies outside of tech “don’t necessarily feel the need” to make that concession, he added. California’s ban on noncompete agreements helps as well. Such contracts, which prevent workers from immediately switching jobs within an industry, are generally void in the state. That means tech founders and engineers can more freely jump from company to company. Will the strategy work long-term? If a start-up founder gets a multimillion-dollar paycheck to work, say, for Google, what’s the incentive to work hard? “If you put that much money in somebody’s pocket, when they don’t want to work for you anymore, they don’t need to,” Coyle said. And retention remains a big concern for tech giants, especially given the intense competition for A.I. researchers. “Getting talent is a real challenge, but retention is the other side of the coin that we’re just not thinking enough about,” J. Daniel Kim, an assistant professor of management at the University of Pennsylvania’s Wharton School, told DealBook. Antitrust enforcers are also keeping an eye on the strategy. Regulators in the U.S. and Europe have become increasingly skeptical of these kinds of deals, out of concern that they could thwart competition. Stay tuned for more on this in tomorrow’s newsletter. Pic of the day
Social media has been ablaze the past two days about a TikTok video taken at a Coldplay concert in Boston this week, where a couple is shown embracing on a stadium screen — and then quickly trying to hide their identities. (“Either they’re having an affair or they’re very shy,” Chris Martin, Coldplay’s lead singer, said onstage during the incident.) Internet users claim to have identified the man as the C.E.O. of an artificial intelligence start-up and the woman as its chief people officer, and not his wife. The company’s LinkedIn pages were promptly flooded with comments about the incident; the C.E.O. has since taken down his profile.
Talking A.I. with the C.E.O. of ChimeEvery week, we’re asking a C.E.O. how he or she uses generative artificial intelligence. Chris Britt, who leads the online bank Chime, said he had used A.I. to prepare for investor meetings ahead of the company’s recent I.P.O., and that the company has a mentorship-style program for building internal A.I. tools. His responses have been edited and condensed. How do you use A.I. in your work or personal life? As I was going into investor meetings ahead of our I.P.O., I used A.I. to better understand the individuals I was going to meet. Their funds, what companies they invested in, what trends they were pursuing — that allowed me to better understand what their priorities were and tailor my conversations. And I’m a parent. I remember at the end of the school year, my daughter was exploring the Enlightenment, comparing John Locke to Thomas Hobbes. To help her study for a test, I used A.I. to quiz her on slightly different takes than were in the textbook or study material. It worked well. She got an A. What direction have you given your team on how to use A.I.? We shared a call to arms with all employees a few quarters ago, where we articulated that we have to embed A.I. into everything that we do. We host what we call A.I. pairings, which meet every two weeks. We bring together nontechnical business leaders with engineers who may not necessarily be focused on supporting that part of the business, but can be almost like a consultant for the nontechnical groups and work with them to build tools that help them be more effective in their job. We found that that works really well. The things that you can build now, you used to have to pay hundreds of thousands of dollars to agencies for. We hope you’ve enjoyed this newsletter, which is made possible through subscriber support. Subscribe to The New York Times.
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