Welcome to the Forward Guidance newsletter, brought to you by Casey Wagner and Ben Strack. Here’s what you’ll find in today’s edition:

• Casey’s favorite quotes from the DC Privacy Summit, and what they signal for the industry. 

• Microsoft is considering holding bitcoin on its balance sheet? Kinda, sorta, not really.

• Making sense of this week’s limited, but interesting, economic data.

Policymakers on privacy: Highlights from the DC Summit

I’m back in New York after a quick trip to DC (just in time to watch the Yankees hopefully beat the Dodgers in Game 1 of the World Series tonight). But I digress. 

I spent yesterday at the DC Privacy Summit, where there was no talk of baseball — but, unsurprisingly, a lot of policy talk. 

In these final days ahead of the election, we’ve heard a lot of the same sound bites. Industry officials want to go on record saying they look forward to working with the next administration and are excited to continue engaging with policymakers. I get it; everyone has a job to do and a message to publicize, but these comments are getting repetitive. 

In an effort to spice things up, here are some of my favorite and (in my opinion) most interesting quotes I heard on Thursday: 

“Privacy doesn't inherently mean the absence of data or anonymity of persons.” 

Carole House, special adviser for cybersecurity and critical infrastructure policy at the White House National Security Council, said this during a keynote discussion. 

House, a co-author of President Joe Biden’s 2022 crypto executive order, added that privacy relates to the balance between protecting sensitive data while maintaining “certain permissions” that allow it to be disclosed when needed. 

“It takes dozens of roundtables for staff and members [of Congress] to really feel comfortable with having a hearing.”

The above quote came from Allison Behuniak, staff director for the House Subcommittee on Digital Assets, Financial Technology and Inclusion. The subcommittee has had seven or so crypto-focused hearings so far this year, which is impressive and speaks to the work happening behind the scenes. 

While there has been more dialogue around crypto on the Hill recently, I think the industry sometimes glosses over the uphill battle often required to get crypto issues in front of lawmakers. With Chair Patrick McHenry retiring at the end of the session, the agenda for the next Congress is even more uncertain. 

“We have to propose solutions that actually will address what policymakers are legitimately concerned about.” 

Michele Korver, head of regulatory at a16z Crypto, made this comment. In what many industry leaders refer to as a “hostile regulatory environment,” it’s not often we see these types of concessions expressed. 

Korver added that the industry should share some of policymakers’ concerns when it comes to privacy. 

“We want our users and the technology to be successful,” she noted. “We want them to be safe and trusted and secure, and not facilitating [illicit activity].”

— Casey Wagner

The percentage of Pennsylvania House members who on Wednesday voted to pass a bill looking to establish crypto regulatory clarity. 

176 Representatives (100 Republicans and 76 Democrats) were in favor of the bill, while 26 voted “nay.”

Introduced by Republican Mike Cabell in May, House Bill 2481 (aka The Blockchain Basics Act) “aims to create clear rules for using blockchain and digital assets, ensuring security and encouraging innovation.”

We already know MicroStrategy loves bitcoin. How about Microsoft?

To catch you up, a Thursday filing showed a proposal the National Center for Public Policy Research intends to submit for consideration at Microsoft’s annual meeting.

It notes a corporation’s “fiduciary duty” to maximize shareholder value by protecting profits from debasement in an inflationary world. The proposal calls on Microsoft — with $484 billion in assets, as of March 31 — to consider diversifying its balance sheet with assets beyond the US government securities and corporate bonds it currently holds. Namely, bitcoin.

BTC’s volatility is acknowledged. Still, the proposal notes “companies should evaluate the benefits of holding some, even just 1%, of its assets in bitcoin.” 

The proposal shouts out the similarly named MicroStrategy, which held 252,220 BTC as of last month. MicroStrategy’s stock is up 249% this year, while Microsoft’s is up 16%.

MicroStrategy founder Michael Saylor also had a message for Microsoft CEO Satya Nadella:

It doesn’t appear this proposal will pass. 

In a statement of opposition, Microsoft’s Board of Directors said that “volatility is a factor to consider in evaluating cryptocurrency investments for corporate treasury applications that require stable and predictable investments to ensure liquidity and operational funding.”

The company already has “strong and appropriate processes in place” for its corporate treasury, the board adds — noting: “This requested public assessment is unwarranted.”

Perhaps the takeaway, though, is that the board notes it has evaluated bitcoin and other cryptocurrencies in the past, and that Microsoft “continues to monitor trends and developments related to cryptocurrencies to inform future decision-making.” 

So the company’s not closing the door on BTC altogether. I’d say we can add that to the list of positive developments made during a year in which the asset has gone more mainstream.

— Ben Strack

Happy Friday! It was a relatively quiet week in terms of economic data releases, but the figures we did get paint a similar picture to what we’ve been seeing: Economic growth remains pretty solid. Here’s a recap:

• S&P Global PMIs on Thursday came in a bit hotter than expected, once again showing economic strength. The October Flash Composite PMI came in at 54.3, up from 54 last month. The Flash Manufacturing PMI also increased to 47.8, coming in just above the expected 47.6, while the Services PMI rose to 55.3, a slight rise from September’s 55.2. Once again we are seeing signs that point to strong economic growth and — hopefully — a soft landing. 

• Meanwhile, Thursday’s initial jobless claims report was a bit mixed. First-time filings once again showed a big decline, shaving off another 15,000 to come in at 227,000 for the week ended Oct. 19. Economists had expected 242,000. Continuing claims, on the other hand, showed a 30,000 increase the week ended Oct. 12; we are now at a nearly three-year high of 1.897 million. Continuing claims data does lag by a week and Hurricanes Helene and Milton are likely still weighing on the labor market in some states, so we’ll be watching for further tightening in the labor market.

— Casey Wagner

• Soon after hitting roughly $68,700, bitcoin’s price fell sharply to about $66,000 by 2 pm ET Friday — down about 3% from 24 hours prior. 

• Federal prosecutors intend to offer a plea deal to the man allegedly involved in the hack of the SEC’s X account in January, Bloomberg reported Friday. If you don’t remember, someone had gained “unauthorized access” to the agency’s social media account — posting the SEC had approved spot bitcoin ETFs.

• The SEC, as you know, soon after confirmed that the spot bitcoin ETFs could begin trading. Those US funds collectively reeled in assets of $188 million on Thursday. The category has notched net inflows during nine of the last 10 trading days, totaling just about $3 billion over that span. 

• Have a great weekend, all!