Today we note some innovations in banking, biotech, raw materials, hydrocarbons, and technology--and political risks.

Yesterday NY State's financial services superintendent Ben Lawsky officially opened the way to bitcoin trading in my state. He asked for submission of proposals to create regulated virtual currency exchanges by firms with "the desire, wherewithal, and the resources to do this the right way." They could then get "bit-licenses" by the end of Q2. We're off to the races.

NY is aiming at a first-mover advantage in computer-created virtual currencies lacking central bank backing.

Meanwhile in China seekers after higher yield than the miserly 3% maximum regulated banks can pay are using money market funds run by giant Internet conglomerate to gain returns twice as high. This is a unique opportunity but also present risks. Currently, banks then borrow from the internet firms and can pay them higher interest rates long term because fund customers are content. So the placements are sticky. People leave the money in the account as long as they payout beats the regulatory cap.

But China plans to free rates up over the next 2 years. Then banks will be able to offer their own high-yield accounts fed by an interbank market for funding. The Internet money market accounts will then face competition.

Here is a note from Patti the Biotech Maven:

"In the current issue of MIT Technology Review (which comes out every other month and which I have been reading for the past 8-9 years for stock ideas) the top story is about the 50 smartest tech companies in the world in2014. In first place Illumina (ILMN) , 2nd is Tesla, 3rd Google, 11th X." The MIT newsletter, now on the Internet, was founded in 1899.

X is a share we recommend, discussed below for paid subscribers. Patti and I also both own ILMN. Our reporter Frida Ghitis last week wrote up a way to play Tesla's battery operated car breakthrough. These are discussed below for paid subscribers. Today's blog is mostly about political risks from innovation and windfalls.

*X, the stock rated 11th by Patti's bimonthly MIT Tech is Hong Kong's Tencent, the Chinese search engine. TCTZF is one of the leading operators of Chinese money market funds along with its archrival Alibaba. Alibaba and Tencent, China's two largest internet conglomerates, are pushing further into the country's financial services industry, each offering higher-yield money-market funds. TCTZF will have to be nimble when the banks gain permission to offer higher interest rates directly, but as a smart innovator I expect it will.

*Our play on battery cars is lithium miner Orocobre, an Australian company operating in Argentina about which Frida wrote. OROCF is back in the portfolio after I pulled it over fear of Cristina Fernandez some years ago. It is speculative but so is Tesla, and much cheaper in forward p/e terms. It has no earnings yet. Today it is trading at $2.10, down mainly because of the fall in the A$ over concerns about falling Chinese demand for home-grown raw materials.

*One reason I am more sanguine about Cristina risk is that she ultimately is paying compensation to Spain's Repsol for snatching its Argentine assets.

Another reason is that lots of countries are plotting to tax and regulate mining and other extractive industries, like Israel.

Jerusalem is working out regulations covering offshore gasfield developers' rights and duties over the next 40 years once Leviathan, the monster find (now expected to yield oil as well as gas), starts production These over the field's 30-40 year lifespan.

A first draft was sent Sunday to the Leviathan partners led by Israel's Delek Group, DGRLY, proposing to nix exports of natural gas if it is needed for domestic markets. This was inserted into the agreement by a lady lawyer not called Cristina, legal adviser to the Israel National Resources Ministry. Her clause will make it tough to sign off-take agreements with foreign customers, starting with Australia's Woodside Pete which signed a $2.75 bn MOU to buy 30% of the Leviathan partnership now subject to legal and also tax hurdles from the Israeli government.

Meanwhile this morning another deal for Delek to snatch more of the gas being produced currently from the smaller Tamar offshore field in which it owns 31.2% via two subs. Tamar will supply 4.5 bn cubic meters of gas over the next 15 years to two utes, worth ~$1 bn. They are Ramat Gabriel and Alon Tabor, which are building 55 megawatt cogeneration plants to supply nearby factories. Delek partly controls both.

On Sunday Delek signed up to off-take 3.3 bn cu m of gas also over 15 years for its wholly owned power plant for a huge desalinization operation on the Mediterranean coast near Tel Aviv. Both deals have to get Israeli anti-trust approval given that Delek is both buyer and seller. But like Argentina, Israel also needs to decide whether its energy bonanza is going to be local or global.

That reminds me of another country I am even fonder of, the USA, which also has to decide whether to allow its shale oil to be exported and whether to allow Canadian tar-sands to traverse the USA. One effect of the politics of petrochemicals has been oddball price disparities in what is supposed to be a global oil market. Another is that Russian plots to take back the Crimea have kept European consumer countries dependent on Russian oil from reacting as vigorously as they should.

*Rumor out of Israel which may not be reliable has it that Opko Health, a dual listed company controlled by the present American Teva board chairman, Dr Philip Frost, who plans to step down, is buying shares of beaten down biotech foundry Hadassit Bio Holdings, HADSY. Frost has been buying OPK shares to sustain their price after much selling here and in Israel after its stock was used to acquire Prolor (PBTH) which we owned.

OPK is considered overpriced given its mixed prospects in the new drug sweepstakes. Acquiring HADSY could give Dr. Frost a portfolio of potentially hot drugs.

HADSY is a penny stock virtually untradable in the US with an ask more than double its bid. The ADR was created by the owners of the technology, Jerusalem's two Hadassah Hospitals. They are under political and union fire by Israelis objecting to plans to cut Hadassah's work-force.

Having two sites resulted from the post-1948 closing of its original hospital in Jerusalem by Jordan. A new hospital was built in West Jerusalem decorated with the famous Chagall stained class depictions of the 12 tribes. Then after the 1967 war, Hadassah gots its downtown Jerusalem site back. But overmanning resulted.

Hadassah issued HADSY shares to try to make up for losses to its endowment from Bernie Madoff, but they failed to click with US or Israeli investors. The in-house issue was badly handled and the market-maker doesn't make a market. If this rumor pans out we may have an out. And Dr Frost may find an easier way to pay for his OPK purchases than trying to collect airtime for his private jet flying from Miami to Tel Aviv from TEVA's unsympathetic new austere Israeli management.

*Equityflux, allegedly a "long only" adviser on www.seekingalpha.com, today called for shorting Canada's IAM Gold, IAG, because it is cutting production that doesn't pay under a lower gold price. This is not only a short sale despite how Equityflux describes itself; it's also stupid. If IAG cannot make enough money by mining at a Mali mine where the gold costs $1789, it should halt output until the gold price covers costs and conserve capital. The mine moreover is only 40% owned by IAG. IAG is up today perhaps because I am not alone in thinking the case for shorting makes no sense.

*A sell was put on Coca Cola Hellenic by Nomura today. CCH stays in our portfolio. We have been this route before. Yes, it bottles coke for Russia and Ukraine. But this is only a small part of its franchise.