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>>> Powell says Fed cannot hold bitcoin, not seeking to change that
Reuters
by Michael S. Derby and Ann Saphir
December 19, 2024
https://finance.yahoo.com/news/fed-cant-hold-bitcoin-not-211628096.html
NEW YORK (Reuters) -Federal Reserve Chair Jerome Powell said on Wednesday the U.S. central bank has no desire to be involved in any government effort to stockpile large amounts of bitcoin.
"We're not allowed to own bitcoin," Powell said at a press conference following the Fed's latest two-day policy meeting, in which policymakers cut rates as expected while signaling a less certain path for monetary policy in the months ahead.
In terms of the legal issues around holding bitcoin, "that's the kind of thing for Congress to consider, but we are not looking for a law change at the Fed," Powell said.
The Fed chief was addressing the prospect of central bank involvement in the idea of the government building a so-called Strategic Bitcoin Reserve once President-elect Donald Trump takes office.
Powell's comments on Wednesday dented the value of bitcoin, which has rallied sharply along with other crypto assets since Trump's victory in the Nov. 5 election on the prospect of a more hands-off government approach to a class of assets that rarely functions as actual money, but is instead largely used as a vehicle for speculation.
Trump has suggested he will create a U.S. bitcoin strategic reserve - a concept that has also been widely rejected in Europe.
The incoming president has not provided details on what such a reserve would entail, beyond saying its initial holdings could include bitcoin seized from criminals, a stockpile of about 200,000 tokens worth about $21 billion at current prices.
Bitcoin has more than doubled this year to more than $100,000 on optimism over Trump's pro-crypto stance. The asset has proven volatile in its 15 years of existence, which analysts say reduces its utility as a store of value or a unit of exchange, key attributes of a reserve currency.
Republican Senator Cynthia Lummis has introduced a bill to create such a reserve, under which the U.S. Treasury would buy 200,000 bitcoins annually until the stockpile reaches one million tokens. The purchases would be funded by Fed bank deposits and gold holdings.
Funding a strategic bitcoin reserve would likely require the approval of Congress and the issuance of new Treasury debt, according to an analysis published this week by Barclays. Given the likely ways such a reserve could be created, "we suspect such a plan would face stiff resistance from the Fed," Barclays analysts said.
EUROPE AGAINST BITCOIN RESERVES
More broadly, Fed officials have been skeptical of securities such as bitcoin as they have also backed away from their own efforts to create a fully digital dollar in favor of allowing the private sector to innovate payments technologies.
The Fed's main role regarding cryptocurrencies appears to center on how those assets might affect consumer and banking sector safety.
"We regulate and supervise banks and we would want the interaction between the crypto business and the banks ... not to threaten the health and well-being of the banks," Powell said on Dec. 4. But he also noted at that time that when it comes to crypto assets, "we don't regulate it directly."
The European Central Bank’s chief bank supervisor, Claudia Buch, on Tuesday also flagged up risks in the crypto market, including "excessive leverage, intransparency (and) conflict of interest", adding she was keeping a close eye on banks' exposure to that type of assets.
Trump plans to appoint former PayPal executive David Sacks to the newly-created position of White House AI and Crypto Czar, and pro-crypto consultant Paul Atkins to lead the Securities and Exchange Commission.
In Europe, a series of central bankers this week dismissed any suggestion of bitcoin becoming a reserve asset.
Belgium’s central bank governor Pierre Wunsch saw little "appetite for having reserves in bitcoins" in an interview on Wednesday. Outside the euro zone, Hungary’s governor-designate Mihaly Varga said on Monday cryptocurrencies were just too volatile.
"We are following the discussion, especially in the U.S. post-elections, closely," ECB policymaker Olli Rehn said on Tuesday. "But our view has not changed. Cryptos are assets, but they are not currency," the Finnish central bank governor added.
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>>> Bitcoin is 'the right asset' to combat the US deficit: Sen. Lummis
by Madison Mills and Seana Smith
December 19, 2024
https://finance.yahoo.com/video/td-cowen-upgrades-blackberry-buy-225541053.html
With President-elect Donald Trump's return to the White House quickly approaching, investors weigh the prospect of a strategic bitcoin reserve. Senator Cynthia Lummis (R-WY), who introduced the bipartisan Lummis-Gillibrand Responsible Financial Innovation Act focused on regulating crypto, joins Catalysts Co-Hosts Seana Smith and Madison Mills to talk about her stance on the Federal Reserve holding bitcoin.
"I want our federal government to have a strategic bitcoin reserve that can help back the US dollar as the world's reserve currency and then serve as a long-term savings account, thereby offsetting our national debt, which is over $36 trillion now," Lummis tells Yahoo Finance.
The republican senator says, "My proposal would have the US purchase, through other assets that already owns, 200,000 bitcoin a year for five years, for a total of a million, hold it for at least 20 years, and at the numbers that we project, that would accrue a fund that's worth about $16 trillion."
Lummis adds the reason why the federal government has not already pursued bitcoin as a solution to the national deficit is because, as indicated by Fed Chair Jerome Powell at the Fed's December meeting, it doesn't believe the central bank has the legal authority to own bitcoin. "We need to give that to them," she says.
Check out Yahoo Finance's full interview with Senator Lummis here. Also catch Senator Kirsten Gillibrand (D-NY) discuss crypto regulation and Trump's pick for Paul Atkins to lead the Securities and Exchange Commission (SEC) with Yahoo Finance.
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>>> Trump nominates crypto-friendly Scott Bessent as Treasury Secretary
The Street
by Sabrina Toppa
November 24, 2024
https://finance.yahoo.com/news/trump-nominates-crypto-friendly-scott-175152629.html
Quick Summary
President-Elect Donald Trump has nominated Scott Bessent, a pro-crypto hedge fund manager, as his Treasury Secretary. Bessent has supported Trump's call for a strategic bitcoin reserve and has been a major donor to his campaign. As Treasury Secretary, Bessent's responsibilities will include tax policy, managing growing debt, and potentially crypto policy. He has also outlined a
On Friday, President-Elect Donald Trump picked pro-crypto hedge fund manager Scott Bessent as his administration’s new Treasury Secretary, pending a Senate confirmation. The 62-year-old has supported Trump’s call for the creation of a strategic bitcoin reserve, as well as his broader overtures to the crypto industry.
"I have been excited about the [Trump’s] embrace of crypto, and I think it fits very well with the Republican Party, Bessent told media this summer. “Crypto is about freedom.. The crypto economy is here to stay, the Democrats are running from it because they are trying to wash off the stench of Sam Bankman-Fried and his family donations to the Democratic party.”
Bessent’s ambit will include tax policy, managing growing debt, and may grow to include crypto policy, market analysts believe.
Bessent has also been a major donor to Trump, extending $1 million to the Republican candidate for his 2016 inauguration. In the past, Trump has labeled Bessent as “one of the most brilliant men on Wall Street.”
In terms of his economic viewpoints, Bessent espouses a "3-3-3" strategy, where he is advising Trump to deploy deregulation to achieve 3% annual growth to the GDP, trim the budget deficit by making it just 3% of the GDP in the next four years, and increase daily oil production by 3 million barrels a day, according to the New York Times.
Moreover, Bessent has tried to clarify Trump’s controversial economic policies, particularly his proposal to levy protectionist tariffs. While even some Republicans criticized the tariffs for inflating costs and burdening businesses and consumers, Bessent claims that Trump deploys them as strategic leverage to pressure other nations into meeting his demands.
Others in Musk’s camp, like Tesla CEO and billionaire Elon Musk, hoped for a different Treasury Secretary in the form of Howard Lutnick, the CEO of Cantor Fitzgerald.
“Scott has long been a strong advocate of the America First Agenda,” Trump said in his announcement. “We will ensure that no Americans will be left behind in the next and Greatest Economic Boom, and Scott will lead that effort for me, and the Great People of the United States of America.”
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Bitcoin to reach 100 K soon.
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>>> Tesla Quietly Transfers $765 Million In Bitcoin, Putting Musk's Cryptocurrency Strategy Under Intense Scrutiny Amid Market Concerns
Benzinga
by LaToya Scott
October 21, 2024
https://finance.yahoo.com/news/tesla-quietly-transfers-765-million-164536555.html
Elon Musk's ventures into cryptocurrency are raising eyebrows once again. Blockchain analytics firm Arkham Intelligence reported that Tesla recently moved about $765 million worth of Bitcoin to unidentified wallets.
This massive transfer has sparked a flurry of speculation. What's Tesla planning next? Will they sell or is there something else at play? Tesla hasn't commented, leaving experts and crypto-watchers alike in suspense.
According to BitcoinTreasuries, Tesla holds the fourth-largest stash of Bitcoin among U.S. public companies. Only MicroStrategy and crypto mining giants like MARA Holdings and Riot Platforms hold more.
Tesla’s Bitcoin holdings, though substantial, still make up less than 1% of the company’s total $705 billion market cap. This starkly contrasts with other companies where Bitcoin represents a hefty chunk – sometimes over 25% – of their value.
Tesla first made headlines in early 2021 when it invested $1.5 billion in Bitcoin. Musk, never one to shy away from risk, saw the move as a way to diversify Tesla's portfolio and support its interest in accepting crypto car payments.
That news alone sent Bitcoin soaring by over $10,000. But Musk's love affair with Bitcoin didn't last long. By mid-2021, he had hit the brakes, citing concerns over Bitcoin mining's reliance on coal and other fossil fuels, which didn't align with his broader sustainability mission. The about-face sent shock waves through the crypto community, with Bitcoin dropping more than 10% almost overnight.
Still, Musk stood firm, declaring that Tesla wouldn't sell any of its Bitcoin and would resume accepting it for purchases once mining shifted toward renewable energy sources. That didn't last long, either.
By the summer of 2022, Tesla had sold off most of its Bitcoin at about $20,000 per coin, considerably lower than it initially paid. Critics quickly pointed out that the company had sold near the bottom of the market, losing significant potential profit.
Despite the sell-off, Tesla held on to a smaller reserve – fewer than 10,000 Bitcoin – which has appreciated over 350% since the company's initial purchase. Had Tesla not sold its holdings, the Bitcoin stash would be worth more than $3 billion today. According to Forbes, Bitcoin recently hit a high of $73,750, far surpassing the company's original buy price of 43,200 BTC.
Now, the crypto world waits to see what happens next. The timing of this transfer is particularly interesting, as new accounting standards are set to go into effect this December. The Financial Accounting Standards Board (FASB) has updated its guidelines, requiring digital assets like Bitcoin to be marked at fair value.
Previously, assets could only be marked down in case of depreciation, with no recognition of value increases unless they were sold. These new rules will allow companies to reflect gains and losses in their financial reports, which could shift how firms like Tesla approach their Bitcoin holdings.
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>>> 3 Big Changes That Could Be Coming For Cryptocurrency in 2025
by Dominic Basulto
Motley Fool
October 20, 2024
https://finance.yahoo.com/news/3-big-changes-could-coming-104100682.html
2024 has already been a watershed year for the crypto industry, thanks to the launch of the new spot Bitcoin (CRYPTO: BTC) ETFs in January. For the first time ever, both individual and institutional investors have a quick, easy, and regulator-approved way to get direct exposure to Bitcoin without entering the cryptocurrency market through a crypto-trading brokerage.
But there could be even bigger changes ahead in 2025. Many, of course, will be the result of the 2024 presidential election, which has seen crypto introduced as a political campaign issue for the first time ever. Here are three big changes on the horizon, ranked from most likely to least likely to occur.
More crypto ETFs
The new spot Bitcoin ETFs have surpassed all expectations, bringing in more than $30 billion of investor capital. Yes, there was a brief rough patch in August, when it looked like investor inflows would dry up. But inflows are now back on a bullish pace, and these ETFs are being accepted by everyone from the smallest retail investor to the biggest billionaire hedge fund manager.
Thus, the introduction of more crypto ETFs in 2025 is almost a no-brainer. July saw the launch of new spot Ethereum (CRYPTO: ETH) ETFs, and the current expectation is that a handful of other large market-cap cryptocurrencies could be next. The most likely prospects include Solana and XRP, both of which rank among the top 10 largest cryptocurrencies.
A change in how crypto is regulated
Currently, the United States lacks a comprehensive regulatory framework for crypto, but that could be changing in 2025. Both Republicans and Democrats agree that such a framework is needed, and political momentum seems to be building for an overhaul next year.
Right now, the system for regulating crypto is unclear and, at times, unfair. This is a point that cryptocurrency exchange Coinbase Global (NASDAQ: COIN) has argued over and over again, as it has been pulled into regulatory battles with the SEC. Keep in mind: The current system for regulating crypto is based on a 1946 Supreme Court case that was originally designed to settle a dispute over Florida citrus groves. It's getting harder and harder to see how these ancient rules apply to modern business issues.
Thus, 2025 could see the introduction of new legislation that clearly spells out how crypto should be regulated, as well as who should be regulating it. Right now, the SEC is the primary regulator, but the current thinking among pro-crypto advocates is that the Commodity Futures Trading Commission (CFTC) should be in charge. At the very least, look for the replacement of SEC head Gary Gensler in 2025 with someone with a more pro-crypto attitude.
Bitcoin as a national strategic imperative
Bitcoin could become a new strategic imperative for the U.S. government in 2025. Already, there are calls for greater government support for the Bitcoin mining industry, as well as suggestions that the U.S. might be pulled into a Bitcoin "arms race" with the likes of China and Russia.
Some politicians have even suggested that Bitcoin could become part of a solution to the $35 trillion national debt problem. The logic here is very simple: As long as Bitcoin can increase in price faster than the national debt can grow in size, there might be a chance to pay off all this debt one day. Granted, it's going to be tough sledding, given that the U.S. debt is growing by $1 trillion every 100 days. By way of comparison, that's equivalent to the total market cap of Bitcoin right now.
As part of a potential solution, U.S. Senator Cynthia Lummis (R-Wyoming) has already introduced legislation for a strategic Bitcoin reserve that is based on the idea of buying 1 million BTC over a period of several years. Over time, part of that reserve could theoretically be used to pay down debt.
Granted, the chances of any of this happening are directly tied to the electoral success of Donald Trump, who claims to be the first pro-Bitcoin president in history. He has already said that he wants to make America the "crypto capital of the planet." For some people, this might sound terrifying. But for crypto investors, it could be a dream come true.
How to profit from changes to crypto
The big question facing investors in 2025 is how to position a portfolio to take advantage of these potential changes. The simplest solution, of course, is to load up on Bitcoin. Much of the political and regulatory focus seems to be on Bitcoin, which still accounts for more than one-half of the market cap of the entire crypto market. So any change to crypto is going to have an effect, first and foremost, on Bitcoin.
The real-world effect of any new crypto legislation is harder to predict. A clue here might come from other nations attempting to enact new crypto legislation. For example, the European Union's Markets in Crypto-Assets (MiCA) regulation will go into full effect in December. This will establish a comprehensive legal framework for the issuance, investment, and trading of crypto assets across the EU.
For now, keep an eye on the 2024 presidential election. The outcome there could have a huge effect on the crypto market for years to come. If there's a big post-election rally, you can be confident that big changes will be coming for crypto in 2025.
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>>> Trump unveils cryptocurrency plan at Bitcoin2024 Conference
The Hill
by Yash Roy
7-27-24
https://www.msn.com/en-us/news/politics/trump-unveils-cryptocurrency-plan-at-bitcoin2024-conference/ar-BB1qKqsi?OCID=ansmsnnews11
Former President Donald Trump unveiled his plan for cryptocurrency while making history as the first major party candidate to address the annual cryptocurrency conference. During his Saturday speech, he also attacked Democrats for trying to “obliterate” cryptocurrencies.
“I am proud to be the first American president to address a Bitcoin event anywhere in the world,” he said during his appearance at Bitcoin2024 Conference in Nashville’s Music City Center. “If crypto is going to define the future, I want it to be mined, minted and made in the USA.”
Trump and a host of Republicans, including entrepreneur Vivek Ramaswamy and Sens. Marsha Blackburn (R-Tenn.), Bill Haggerty (R-Tenn.), and Tim Scott (R-S.C.) were also in attendance. Trump has pointed to Ramaswamy as his main cryptocurrency advisor.
During his speech, Trump said that if elected president, he would create a cryptocurrency advisory board to create “transparent” regulation within his first 100 days. He also committed to scrapping the Biden administration’s plan to create a central bank for cryptocurrency.
“Regulation will be written by people who love your industry and not hate it within my first 100 days,” he said.
“I will tell the Treasury Department to cease and desist all steps and necessary moves to shut down the central bank,” he added. “Forget about it.”
The Biden administration has rolled out a series of proposals to regulate cryptocurrency, with the Securities and Exchange Commission moving to regulate cryptocurrency agencies more strongly than ever before.
Trump to speak at Nashville BitCoin conference
Trump also lambasted President Biden and Vice President Harris for moving to regulate cryptocurrency during the last four years, saying they want to “choke” off the industry.
“If they win this election, every one of you will be gone. They will be vicious, ruthless,” he said. “Right now, because of me, they are leaving you alone, so please say thank you, President Trump.”
Crypto firms have criticized the Biden administration for being “overzealous” in enforcing industry regulation. They have also increasingly viewed Biden and Democrats as inhospitable to the industry, leading to senior Biden administration officials meeting with crypto leaders earlier in July to try to improve relations.
“Unfortunately, the majority of Dems continue to enable [SEC Chair Gary] Gensler’s unlawful war on crypto – sabotaging the ability for American innovation to thrive,” Ripple CEO Brad Garlinghouse wrote in a post on social platform X after that meeting
“It’s no wonder the GOP has announced a pro-crypto stance,” he continued. “Gensler will go down as the Luddite of his time. Words are easy, action is hard but necessary. Choose wisely. Voters are paying attention.”
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3p - web3camp is a new trend token. I don’t know what is behind this project but the white paper seems true prominent.
>>> SEC drops investigation into Ethereum 2.0, in a major victory for the crypto industry
The halting of the SEC investigation boosted market confidence around the world's second-largest cryptocurrency.
The Street
by MARIO NAWFAL
JUN 19, 2024
https://www.thestreet.com/crypto/markets/sec-drops-investigation-into-ethereum-2-0-signaling-a-major-victory-for-the-crypto-industry
In a significant development for the cryptocurrency industry, the U.S. Securities and Exchange Commission (SEC) has closed its investigation into Ethereum 2.0, a move celebrated as a win for the sector. Scott Melker, host of The Wolf of All Streets podcast and Mario Nawfal, host of Mario Nawfal’s Roundtable, dove into the implications of this decision and what it means for the future of crypto regulation.
Melker highlighted the significance of the SEC's decision. "This is being touted as a huge win for the crypto industry. As they said, ethereum survives the SEC," Melker remarked, emphasizing that the SEC will not bring charges alleging that Ethereum 2.0's sales are securities transactions.
Nawfal pointed out the broader political context, noting recent shifts in the Biden administration's stance on crypto. He mentioned the surprise approval of an ethereum exchange-traded fund (ETF), suggesting that these moves indicate a softer approach towards the industry. "Great news for ethereum, but more importantly, great news for the industry. If this path continues, that pivot continues, then the election's going to be net positive for the industry," Nawfal added.
Melker highlighted the difficulty the SEC now faces in pursuing ethereum as a security after approving its spot ETF, effectively classifying it as a commodity. This marks the first time a Wells Notice issued to a crypto entity has been withdrawn, possibly signaling a more lenient regulatory environment as this year's election approaches.
Reading from the SEC’s letter, Nawfal noted, "The commission is instructing its staff that in cases where such action appears appropriate, they may advise the person under inquiry that a small investigation has been terminated." This official stance underscores the significant shift in the regulatory landscape.
While the decision is positive news for ethereum and other altcoins, questions remain about the future regulatory treatment of ethereum competitors like Solana, Matic, and Cardano, which have been passively named in ongoing lawsuits against major exchanges.
The crypto market has responded positively, with ethereum and other cryptocurrencies experiencing a modest rally. However, the long-term impact will depend on how the SEC proceeds with its regulatory actions against other crypto assets. As Melker concluded, "The best-case scenario is that we get no clarity on anything for the next six months and just don't get more attacks on the industry."
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>>> SEC ends crypto drama by giving the green light to 11 bitcoin ETFs
Yahoo Finance
by David Hollerith and Jennifer Schonberger
January 10, 2024
https://finance.yahoo.com/news/sec-ends-crypto-drama-by-giving-the-green-light-to-11-bitcoin-etfs-165408349.html
The moment the crypto world wanted finally happened Wednesday. And this time it was for real.
Regulators on Wednesday gave money managers the green light to launch 11 spot bitcoin exchange-traded funds, allowing everyday investors to get exposure to the world’s largest cryptocurrency without having to own it.
The ETFs, which begin trading Thursday, could make bitcoin a potential staple in 401(k)s, IRAs, and pension plans and give it mainstream acceptance.
The Securities and Exchange Commission made the announcement roughly 24 hours after a fake social media post claimed those approvals had already been granted.
The chaos triggered by that unauthorized post on X reverberated from Wall Street to Washington while attracting new scrutiny to the SEC, a longtime foe of the industry that is still in the middle of a widespread crackdown on some of crypto’s major players.
The price of bitcoin seesawed Tuesday and Wednesday as investors tried to make sense of the mishap, which erased tens of billions in market value in just minutes.
SEC Chair Gary Gensler made it clear in a statement Wednesday that his agency "did not approve or endorse bitcoin" when it signed off on the new products and called Wednesday's announcement "the most sustainable path forward" following a key court defeat on this issue last summer.
"Investors should remain cautious about the myriad risks associated with bitcoin and products whose value is tied to crypto," he said in his statement.
One SEC commissioner, Caroline Crenshaw, published a dissenting opinion that called the agency's actions "unsound and ahistorical."
"I am concerned that these products will flood the markets and land squarely in the retirement accounts of US households who can least afford to lose their savings to the fraud and manipulation that appears prevalent in the spot bitcoin markets," she said in her statement.
The SEC has rejected such applications in the past, arguing the products were vulnerable to market manipulation.
The list of applicants approved by the SEC Wednesday included some of the biggest names on Wall Street, from BlackRock (BLK) to Franklin Templeton (BEN), as well as a number of firms better known in the crypto world.
These issuers competed with one another in the run-up to their launches to offer the lowest fees, hoping to attract as many investors as possible once ETFs begin trading.
Other big Wall Street players plan to be part of the action, as well. JPMorgan Chase (JPM) and Goldman Sachs (GS) are among the giant banks that have offered to help some of these money managers create and redeem shares of their new funds.
Optimism about these approvals helped bitcoin surge 164% in 2023 and start 2024 by rising above $47,000, its highest level in nearly two years.
A decade in the making
The crypto industry has been waiting more than a decade for this moment.
The first application to create a spot bitcoin ETF came in 2013 from crypto entrepreneurs and twins Tyler and Cameron Winklevoss, famous for their early role in the creation of Facebook.
Since then, the SEC has denied more than 30 similar applications.
A key turnaround moment came last year in June when the world’s biggest money manager, BlackRock, filed for a spot bitcoin ETF. The interest from one of Wall Street’s biggest names sparked other asset managers to follow suit.
Another important development came last August when one of the ETF applicants, Grayscale Investments, won a key legal victory over the SEC. Grayscale had sued the SEC in 2022 after it wasn't allowed to convert its Grayscale Bitcoin Trust (GBTC) into a spot bitcoin offering.
Its core argument was that the agency had already approved exchange-traded products that held bitcoin futures contracts and thus had "acted arbitrarily and capriciously."
A three-judge panel of the District of Columbia Court of Appeals in Washington sided with Grayscale, saying the firm had "advanced substantial evidence" its product was similar to bitcoin futures ETFs previously approved by the SEC.
That forced the SEC to reconsider Grayscale’s spot bitcoin ETF application, along with others filed by rival money managers.
"We are now faced with a new set of filings similar to those we have disapproved in the past," Gensler said in his statement Wednesday. "Circumstances, however, have changed."
One of the applicants, Ark Investment Management CEO Cathie Wood, told Yahoo Finance that the dominant providers of spot bitcoin ETFs will be those that take in the most money from investors right out of the gate.
The winners "will be a few and it will be the most liquid," she said.
Historically, launches for other bitcoin products have sent bitcoin’s price on a wild ride.
It happened in 2017 with the launch of the country’s first bitcoin futures contracts and then in 2021 with the SEC’s approval of the first bitcoin futures ETFs. Prices soared and then fell by large amounts in the year following the launches.
In recent weeks, much debate has raged over whether bitcoin will rise or fall once the lauded moment of approval comes to pass.
Gautam Chhugani, managing director of the research arm for Bernstein, said his team estimates such financial products will garner $10 billion or more in investment flows through the end of 2024 and "hundreds of billions of dollars" over a two-year period.
That, he added, will help push bitcoin’s price even higher.
"We do think that bitcoin goes to $150,000 by 2025," Chhugani added.
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Does anyone know anything for the $3P token?
For the moment has a low price and seems to be very optimistic.
Your answer comes out of chat gpt ?
Unveiling the Current Trends Shaping the Crypto Industry in 2023
As we traverse through the dynamic landscape of 2023, the cryptocurrency industry continues to evolve, presenting investors with a plethora of transformative trends. Let's delve into the current market dynamics and the trends shaping the crypto sphere.
Metaverse Mania: The concept of the metaverse has gained substantial traction, with various projects and platforms aiming to create immersive digital universes. The integration of blockchain technology, NFTs, and virtual reality has spurred interest, with companies exploring ways to capitalize on this burgeoning trend.
NFT Expansion: Non-Fungible Tokens (NFTs) remain at the forefront, extending beyond art and collectibles. The NFT ecosystem is diversifying into gaming, entertainment, real estate, and even virtual identities, amplifying its utility and broadening its appeal.
Institutional Adoption: Institutional interest in cryptocurrencies continues to surge. Major financial institutions, hedge funds, and corporations are increasingly investing in digital assets. This influx of institutional capital is driving market maturity and stability.
Regulatory Developments: Regulatory clarity remains a focal point. Governments worldwide are exploring crypto regulations to ensure investor protection while fostering innovation. Clarity in regulations is crucial for market growth and institutional participation.
DeFi Evolution: Decentralized Finance (DeFi) has evolved significantly. From lending and borrowing to decentralized exchanges and yield farming, the DeFi landscape is diversifying, attracting both users and capital.
Sustainable Solutions: Environmental concerns around crypto mining have catalyzed a shift towards eco-friendly solutions. The industry is exploring alternatives like Proof-of-Stake (PoS) and eco-conscious mining practices to address sustainability issues.
Layer 2 Solutions: Scalability remains a challenge for blockchain networks. Layer 2 solutions, including sidechains and rollups, are gaining prominence, offering potential solutions to enhance transaction throughput and reduce fees.
Stablecoins Ascendancy: Stablecoins continue to play a pivotal role, offering stability amidst market volatility. Central Bank Digital Currencies (CBDCs) are also gaining momentum, exploring digitization in the form of national currencies.
Blockchain Interoperability: Projects focusing on interoperability solutions aim to bridge the gap between different blockchains, enabling seamless communication and asset transfer across multiple networks.
Tokenization of Assets: Traditional assets are increasingly being tokenized, from real estate to fine art. This trend democratizes access to assets, unlocking liquidity and fractional ownership opportunities.
Navigating the crypto landscape amidst these trends requires a keen understanding of market dynamics, technological advancements, and regulatory shifts. As the industry continues to mature, these trends will undoubtedly shape the future trajectory of cryptocurrencies and blockchain technology.
Investors must stay vigilant, conducting thorough research, diversifying portfolios, and staying attuned to emerging trends to capitalize on the ever-evolving opportunities within the crypto space.
Amid the ongoing surge in interest for Non-Fungible Tokens (NFTs), a notable development emerged as a renowned entertainment conglomerate announced its foray into the NFT market. The entertainment giant unveiled plans to launch an expansive metaverse platform coupled with an innovative approach to NFTs, aiming to redefine the intersection of entertainment, digital ownership, and virtual experiences.
The conglomerate's move involved the creation of a multifaceted metaverse platform designed to offer immersive experiences, blending entertainment content with blockchain-based NFT technology. This initiative aimed to create an interconnected digital universe where users could engage, interact, and participate in diverse activities, ranging from gaming, art, music, to social interactions within a virtual environment.
Central to this initiative was the integration of NFTs, offering users unique digital assets and collectibles tied to the entertainment conglomerate's iconic franchises, characters, and exclusive content. These NFTs were set to represent ownership and access rights to limited-edition digital merchandise, art, and experiences within the metaverse, catering to a broad audience of fans and collectors.
Moreover, the conglomerate emphasized its commitment to fostering a vibrant creator community within the metaverse, allowing artists, developers, and content creators to contribute, monetize their creations through NFTs, and engage with a global audience. The platform aimed to provide a decentralized ecosystem enabling creators to showcase their talent and benefit from the burgeoning NFT market.
The announcement generated considerable buzz within the entertainment and cryptocurrency communities, sparking discussions about the potential impact of a mainstream entertainment giant embracing NFTs and the metaverse. It fueled anticipation among enthusiasts, collectors, and investors eager to explore new possibilities in digital ownership and immersive experiences within this novel entertainment ecosystem.
This strategic move by the entertainment conglomerate not only signaled a significant shift towards digital innovation but also highlighted the growing convergence of traditional entertainment industries with blockchain technology. It underscored the transformative potential of NFTs and the metaverse in revolutionizing content consumption, fan engagement, and digital asset ownership in the entertainment landscape.
Overall, the conglomerate's entry into the NFT space and the metaverse marked a pivotal moment, setting the stage for a new era of entertainment, digital collectibles, and interactive experiences, paving the way for widespread adoption and exploration of the metaverse's limitless possibilities.
In November 2023, the world of cryptocurrencies was stirred by the groundbreaking announcement of the collaboration between a leading tech conglomerate and a government initiative to develop a pioneering Central Bank Digital Currency (CBDC). The partnership aimed to revolutionize the financial landscape, marking a significant milestone in the global adoption of digital currencies.
The tech giant, in collaboration with the government, embarked on a bold initiative to develop a CBDC leveraging cutting-edge blockchain technology. This digital currency aimed to offer secure, efficient, and transparent transactions, backed by the authority and stability of a central bank. The project sought to redefine traditional financial systems, offering a glimpse into the future of monetary transactions and governance.
The CBDC initiative attracted attention globally for its potential to reshape the way financial transactions are conducted. It promised to address concerns related to financial inclusion, security, and transparency while offering a seamless and user-friendly experience for individuals and businesses alike.
This move also signified the increasing acceptance and endorsement of cryptocurrencies by governments and regulatory bodies. It highlighted the growing interest of traditional institutions in embracing digital currencies and exploring their potential to modernize financial infrastructure.
Moreover, the project's emphasis on utilizing blockchain technology reflected a commitment to advancing decentralized and secure financial systems. It underscored the significance of technological innovation in shaping the future of finance, providing a blueprint for other countries and institutions to follow suit.
The announcement sparked discussions within the crypto community, with analysts and enthusiasts eagerly anticipating the potential implications and adoption of this new CBDC. It triggered optimism and curiosity about the evolution of digital currencies and their integration into mainstream financial ecosystems.
Overall, the groundbreaking collaboration between the tech giant and the government initiative to develop a CBDC marked a pivotal moment in the cryptocurrency sphere. It showcased the convergence of technology and finance, hinting at a future where digital currencies could play a central role in shaping global economies and financial systems.
Congratulations on the upcoming launch of ARAT 1.09's decentralized platform! The dedication and nine years of work invested in its development undoubtedly promise something groundbreaking for the world of decentralized platforms.
The recent acquisition and the addition of Lars Schlichting to the team at ARAT 1.09 seem like strategic moves to further fortify and expand the company's capabilities. Lars Schlichting's expertise in regulatory compliance, coupled with Cilandro SA's position as a financial intermediary, certainly brings a valuable asset to the table.
ARAX Holdings Corp.'s vision to invest in world-leading decentralized infrastructure software and technology, focusing on regulatory compliance through their RegTech initiatives, is commendable. The integration of technologies like artificial intelligence, blockchain, smart contracts, and CorePass, the decentralized compliant blockchain-based digital identity, reflects a robust strategy to streamline compliance processes in the digital economy.
The comprehensive framework outlined by ARAX, encompassing various dimensions of regulation, compliance, risk management, reporting, and supervision, holds the potential to revolutionize how compliance is managed in the digital landscape. The emphasis on efficiency, accuracy, transparency, and reduced compliance costs is promising for stakeholders involved.
It's inspiring to witness ARAX's proactive approach in leveraging advanced technologies and data-driven solutions to address the challenges and complexities of regulatory compliance. Such efforts not only enhance effectiveness but also pave the way for a more transparent and efficient digital ecosystem.
Looking forward to witnessing the impact of ARAT 1.09's decentralized platform and the innovative strides taken by ARAX in shaping the future of regulatory compliance in the digital economy.
The comparison between Kaspa and Bitcoin is an intriguing topic in the realm of cryptocurrencies. While Bitcoin remains the pioneering and most well-known cryptocurrency, discussions about newer digital currencies like Kaspa often arise in the context of potential alternatives or successors.
It's important to note that Bitcoin and Kaspa are fundamentally different cryptocurrencies in terms of their underlying technologies, functionalities, and goals. Bitcoin introduced the world to blockchain technology and remains the dominant force in the cryptocurrency market, valued for its decentralized nature, limited supply, and first-mover advantage.
Kaspa, on the other hand, operates on a different protocol and aims to address certain limitations seen in other blockchain networks, particularly related to scalability and throughput. Its unique features, such as the utilization of the GhostDAG protocol, intend to improve the scalability and performance of blockchain networks.
While some may advocate for Kaspa as a potential competitor or improvement upon Bitcoin due to its scalability solutions, it's essential to approach such claims with careful consideration and analysis. The cryptocurrency landscape is dynamic and constantly evolving, with new projects and technologies emerging regularly.
Determining whether Kaspa could potentially challenge Bitcoin's dominance or become a new standard in the cryptocurrency world requires thorough research, understanding of the technology, market trends, adoption rates, and various other factors that contribute to the success and value of a digital asset.
Who believes that kaspa is the new Bitcoin ?
>>> Investing in Cryptocurrency ETF
An in-depth look at the leading cryptocurrency ETFs in the U.S stock market this year. Here's what you need to know.
Motley Fool
By Lyle Daly
Nov 8, 2023
https://www.fool.com/investing/stock-market/market-sectors/financials/cryptocurrency-stocks/cryptocurrency-etf/
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>>> Riot Platforms, Inc.(RIOT), together with its subsidiaries, operates as a bitcoin mining company in North America. It operates through Bitcoin Mining, Data Center Hosting, and Engineering segments. The company also provides co-location services for institutional-scale bitcoin mining companies; and critical infrastructure and workforce for institutional-scale miners to deploy and operate their miners. In addition, it engages in the design and manufacturing of power distribution equipment and custom engineered electrical products; electricity distribution product design, manufacture, and installation services primarily focused on large-scale commercial and governmental customers, as well as a range of markets, including data center, power generation, utility, water, industrial, and alternative energy; operation of data centers; and maintenance/management of computing capacity. The company was formerly known as Riot Blockchain, Inc. Riot Platforms, Inc. was incorporated in 1998 and is based in Castle Rock, Colorado.
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>>> 6 Best Bitcoin ETFs Of July 2023
Forbes Advisor
by Michael Adams
https://www.forbes.com/advisor/investing/cryptocurrency/best-bitcoin-etfs/
ProShares Bitcoin Strategy ETF (BITO) $889 million
ProShares Short Bitcoin ETF (BITI) $100 million
VanEck Bitcoin Strategy ETF (XBTF) $39 million
Valkyrie Bitcoin Strategy ETF (BTF) $27 million
Simplify Bitcoin Strategy PLUS Inc ETF (MAXI) $21 million
Global X Blockchain & Bitcoin Strategy ETF (BITS) $11 million
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Spot bitcoin ETF - >>> BlackRock CEO Larry Fink Talks Up Crypto Demand From Gold Investors
CoinDesk
by Jamie Crawley
July 14, 2023
https://finance.yahoo.com/news/blackrock-ceo-larry-fink-talks-151613849.html
Larry Fink was in a bullish mood on Friday as he spoke of the increasing demand he is seeing for cryptocurrencies among gold investors.
Appearing on CNBC following his company's second-quarter earnings report, the CEO of $8.5 trillion asset manager BlackRock (BLK) said "more and more" gold investors have been asking about the role of crypto over the last five years, highlighting the role exchange-traded funds (ETFs) have had in democratizing access to gold, as they could do in crypto.
"If you look at the value of our dollar, how it depreciated in the last two months and how much it appreciated over the last five years ... an international crypto product can really transcend that," he said. "That's why we believe there's great opportunities and that's why we're seeing more and more interest. And the interest is broad-based [and] worldwide."
BlackRock filed an application to list a spot bitcoin ETF last month with a surveillance-sharing agreement worked in, which could prove to be the deciding factor in the U.S. Securities and Exchange Commission (SEC) finally approving such a product after rejecting dozens of applications in recent years.
"As with any new markets, if BlackRock's name's going to be on it, we're going to make sure it's safe and sound and protected," Fink added.
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Rickards - >>> “Biden Bucks” and the War on Crypto
BY JAMES RICKARDS
JUNE 13, 2023
https://dailyreckoning.com/biden-bucks-and-the-war-on-crypto/
“Biden Bucks” and the War on Crypto
I’ve written a lot about central bank digital currencies (CBDCs) including the U.S. dollar version that I call “Biden Bucks.” The threat from CBDCs is enormous.
They are digital (but not true cryptocurrencies), which means they are programmable. The Treasury and Fed can use the CBDC ledger to track your purchases, look at your political contributions, look at your religious affiliations and basically profile you as an enemy of the state or “ultra MAGA.”
Your “Biden Bucks” could be made to stop working at the gas pump once you’ve purchased a certain amount of gasoline in a week. How’s that for control?
And in a world of “Biden Bucks,” the government will even know your physical whereabouts at the point of purchase.
But it gets even worse…
CBCD + AI = Nightmare
This profiling can be combined with artificial intelligence (AI) and generative pretrained transformer platforms (GPT) to practically read your mind.
From there, the government can freeze your bank accounts, impose taxes and penalties and put you on a “use it or lose it” fiscal policy stimulus plan that forces you to spend your money within 30 days or have it partially confiscated.
If any of this sounds extreme, fantastical or otherwise far-fetched, it’s not. It’s already happening around the world.
China is already using its CBDC to deny travel and educational opportunities to political dissidents. Canada seized the bank accounts and crypto accounts of nonviolent trucker protesters last winter.
These kinds of “social credit” systems and political suppression will be even easier to conduct when “Biden Bucks” are completely rolled out in the U.S.
The Associated Press actually tried to fact-check me, saying that my claims are false, that the digital dollar has nothing to do with social control. The whole project is completely innocent and you can trust the government.
But even the general manager of the Bank for International Settlements, which is known as the “central bank of central banks,” has admitted that CBDCs would give central banks “absolute control” of everyone’s money — and the “technology to enforce that.”
Even The Economist has announced the rise of government-backed digital currencies, warning they will “shift power from individuals to the state.”
Let’s just say The Economist isn’t known for engaging in conspiracy theories.
No Competition Allowed
And this is central to the CBDC plan: As the CBDC dollar is being implemented, it’s important for the government to take away your alternatives. The three main alternatives are physical cash, gold and cryptocurrencies.
Cash is under attack through multiple channels including “no cash accepted” signs at public events, anti-money laundering rules and simple inflation that might allow you to hold cash, but it won’t be worth very much.
(In 1969, the U.S. abolished the $500 bill, leaving the $100 bill as the highest denomination. The $100 bill of 1969 is only worth $12 in today’s purchasing power because of inflation. Give it time and it won’t be worth much more than a $5 bill.)
And cryptocurrencies are also under full-scale attack. The U.S. Securities and Exchange Commission (SEC) has sued Binance, the world’s biggest cryptocurrency exchange, and its founder Changpeng Zhao, alleging they operated a “web of deception.”
Among the 13 other counts in the lawsuit are allegations that Binance inflated trading volumes, mishandled customer funds and misled investors about market-surveillance controls. Just one day later, the SEC also sued the Coinbase crypto exchange for failure to register as an exchange under U.S. law.
During the wave of bank failures in early March, the FDIC closed Signature Bank, which operated a cryptocurrency portal called Signet in addition to normal banking activities. That came days after the failure of Silvergate Bank, which also bridged the normal banking world to the world of crypto.
None of this is random.
Governments Never Wanted to Kill the Blockchain — Just to Control It
The U.S. has opened a full-scale war on crypto. Silvergate, Signature, Binance and Coinbase are just the first victims. They won’t be the last. Crypto has to go if CBDCs are going to be fully implemented.
Many advocates of Bitcoin and other cryptocurrencies have shared a naïve belief that their digital assets are “beyond the reach of governments,” “cannot be traced” and “cannot be frozen or seized.”
They’ve learned otherwise. Blockchain does not exist in the ether (despite the name of one cryptocurrency) and it does not reside on Mars. Blockchain depends on critical infrastructure including servers, telecommunications networks, the banking system and the power grid, all of which are subject to government control.
As I’ve argued for years, governments don’t want to kill the blockchain upon which cryptos are based. They want to control it.
The fact is governments enjoy a monopoly on money creation and they’re not about to surrender that monopoly to cryptocurrencies.
But governments know they cannot stop the technology platforms on which the cryptocurrencies are based. Blockchain technology has come too far to turn back. That’s why they’re co-opting it.
What Happens if CBDCS Get Hacked?
Here’s one issue with Biden Bucks that hasn’t been adequately addressed: How can you trust them to keep your money secure once you are forced to convert it to a traceable digital currency?
Hackers routinely target crypto architecture and steal money. What happens if that digital currency gets hacked?
This is from a 2022 Federal Reserve paper:
Threats to existing payment services — including operational disruptions and cybersecurity risks — would apply to a CBDC as well. Any dedicated infrastructure for a CBDC would need to be extremely resilient to such threats, and the operators of the CBDC infrastructure would need to remain vigilant as bad actors employ ever more sophisticated methods and tactics. Designing appropriate defenses for CBDC could be particularly difficult because a CBDC network could potentially have more entry points than existing payment services.
This part is truly terrifying. To repeat:
Designing appropriate defenses for CBDC could be particularly difficult because a CBDC network could potentially have more entry points than existing payment services.
If bad actors can already hack crypto platforms with ease, what’s to stop them from hacking a CBDC network with more entry points?
You might not be able to fight back easily in the world of “Biden Bucks,” but there is one nondigital, nonhackable, nontraceable form of money you can still get your hands on.
It’s called gold. Get some before it’s too late.
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ARAT 1.09 is launching their decentralized platform this week! They have worked on it for 9 years. It will be the most advanced platform the world has ever seen!
The acquisition this week gave them another advantage!!! Read this below
Lars Schlichting is a key asset
ARAX is advancing its strategy to invest in world-leading decentralized Infrastructure software and tech, acquiring established, mission-critical platforms.
USA, May 11, 2023/EINPresswire.com/?—?With this acquisition, ARAX is advancing its strategy to invest in world-leading decentralized Infrastructure software and technology, acquiring established, mission-critical platforms.
Cilandro SA is registered with So-Fit, a Self-Regulated Swiss Body which supervises transacting processes for combating money laundering and any form of terrorist funding. Through its Registration at So-Fit, Cilandro can act as a financial intermediary and execute transactions on behalf of third parties, including exchanging digital assets with other digital assets. Cilandro will be one of the licensing bodies of Ping Exchange, which will release its alpha version digital asset trading platform in the coming weeks
The acquisition of Cilandro SA perfectly aligns with our strategic vision of investing in world-leading decentralized Infrastructure software and technology, stated Michael Loubser, CEO of ARAX Holdings Corp.
He further added,
The acquired expertise of Lars Schlichting in regulatory compliance, residing in Cilandro and its trusted position as a financial intermediary makes it an ideal addition to our portfolio. We are excited about the potential synergies this acquisition brings and the value it will deliver to our clients and stakeholders.
In today’s fast-paced digital economy, regulatory compliance requirements undergo continuous changes driven by the dynamic nature of the digital landscape. This evolution is one of the key drivers of ARAX’s investment called RegTech in the regulatory technology industry, which aims to streamline compliance processes and make it available to third parties as well as deploy it within ARAX’s use case platforms.
As technology-enabled innovation continues to advance, there is a growing need for effective management platforms that can navigate the complex world of regulation, compliance, risk management, reporting, and supervision. ARAX recognizes this need and is investing in a comprehensive framework that spans multiple dimensions.
The framework begins with a digital identity attribute management platform and encompasses general regulations and technology. ARAX addresses various regulations, not limited to financial, but also data management platforms. This includes the implementation of a data settlement system for self-regulation and third-party integrations. To support these initiatives, ARAX leverages technologies such as artificial intelligence, DLT, blockchain, smart contracts, including programmable regulation, and an API connector platform. These technologies facilitate connections with both blockchain-based and centralized cloud and financial institutional platforms, forming the core of the ARAX RegTech Ecosystem transaction facilitation.
Central to this framework is the role of data. By enabling data ecosystems and promoting data sharing through the CorePass gateway, CorePass is the world’s first real decentralized compliant blockchain-based digital identity with verifiable KYC, AML, etc, where all participants and users in the market can unlock additional value as well as staying in control of their own data specifically in adding digital attributes to the ARAX secure digital attribute management platform.
The framework is integratable with automation and machine-readable regulations, which will empower regulators and compliance officers to extract data directly from the banks’ systems and combine it with information obtained from customers or external sources, an ideal solution for stablecoin or tokens platforms assisting projects to remain compliant within a regulatory environment, a world first blockchain-based software solution in the stablecoin industry.
Such integration will give rise to a multitude of applications for regulated entities, covering compliance, monitoring, risk management, reporting, and operations. Likewise, authorities can leverage RegTech solutions to establish policies, carry out authorization, supervision, as well as ongoing monitoring and control purposes.
The adoption of this multidimensional framework offers various benefits to stakeholders. These include higher efficiency, effectiveness, accuracy, and transparency, as well as reduced compliance costs.
In summary, ARAX is actively working towards streamlining regulatory compliance in the digital economy. By integrating advanced technologies, data-driven approaches, and a comprehensive ecosystem, ARAX aims to enhance efficiency, transparency, and effectiveness while managing the associated risks.
Rickards says that Signature Bank was deliberately taken down because of their crypto portal -
Excerpt -
>>> ...That’s why the FDIC took over Signature Bank on Sunday, March 12, when they shut down Silicon Valley Bank. Signature Bank was no worse off than a lot of other banks. If it had survived until Monday, March 13, it would have been rescued by the Federal Reserve’s Bank Term Funding Program (BTFP) along with the entire U.S. banking system. Why did Signature Bank get whacked under those circumstances?
Signature Bank got whacked because it was offering a portal to the crypto world called Signet. Once the FDIC announced a blanket deposit guarantee and the Fed offered an unlimited ability to swap bonds for cash at par, Signature would have been fine like any other bank.
Yellen just used a panicked weekend to wipe out the Signet portal. As Rahm Emanuel said, never let a crisis go to waste. This is one example of how crypto is getting strangled globally. CBDCs are being set up to replace cryptos as a digital currency....
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https://dailyreckoning.com/another-zombie-bites-the-dust/
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Rickards says that more and bigger crypto related debacles are coming. This will be an ideal opportunity for the Feds to basically regulate private crypto out of existence, in preparation for the coming CBDC paradigm. The Fed finance ghouls control the monetary system, and would never have allowed any competition, so it was very predictable that they would eventually 'deep six' private crypto -
>>> Federal regulators warn banks to beware of ‘significant’ risks surrounding crypto assets
MarketWatch
by Anushree Dave
https://www.msn.com/en-us/money/markets/federal-regulators-warn-banks-to-beware-of-significant-risks-surrounding-crypto-assets/ar-AA15W8kA
A trio of federal regulators issued a warning to banks Tuesday regarding crypto-asset risks.
In a joint statement, the Federal Reserve, the Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency said “it is important that risks related to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking system.”
The document also highlighted a range of risks associated with crypto-assets and crypto-asset sector participants including: fraud and scams, inaccurate or misleading representations and disclosures by crypto-asset companies, and legal uncertainties related to custody practices, redemptions, and ownership rights, among others.
The agencies said that past year was marked by significant volatility and exposure to vulnerabilities in the crypto-asset sector, though it didn’t propose any new policies.
“Given the significant risks highlighted by recent failures of several large crypto-asset companies, the agencies continue to take a careful and cautious approach related to current or proposed crypto-asset-related activities and exposures at each banking organization,” the regulators said. The regulators said they have “significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities.”
The past year saw the collapse of crypto exchange FTX, which filed for bankruptcy in November. The cryptocurrency market also lost a total of $2 trillion since its peak in November of 2021. Popular nonfungible token art projects also saw significant drops in floor price after initial hype in late 2021 and early 2022. Victims of hacks and scandals lost upwards of $3 billion last year.
While crypto regulation has been a hot topic of discussion for the past couple of years, regulators still haven’t settled on what governing the sector looks like.
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Rickards - >>> It’s a Conspiracy!
BY JAMES RICKARDS
DECEMBER 5, 2022
It’s a Conspiracy!
I work hard to avoid promoting conspiracy theories. They’re too easy to adopt as explanations for all sorts of strange events and are highly implausible in most cases.
They require extreme amounts of intelligence, coordination and competence that, quite frankly, the alleged conspirators simply aren’t capable of.
Usually, stupidity is a perfectly good explanation especially when it comes to politicians and other public officials.
Even when elite coordination is apparent it’s not necessarily a conspiracy at work. It may just be the case that like-minded individuals are pursuing a common goal.
Elites mostly went to a fairly small group of top schools and took similar courses taught by a tight-knit group of academics. They came up through the ranks in the same government agencies and multilateral institutions.
With that much in common, it’s no surprise they think alike and share the same globalist goals. At the same time, some conspiracies are real. It’s naïve to believe otherwise.
The Real Deal
But how do you distinguish between the dime-a-dozen conspiracy theories and the real thing?
Smoking gun evidence helps, but that’s rare. Firsthand experience with the matter under consideration is one of the best approaches. That brings me to this story…
It involves the CIA, the failed crypto exchange FTX, money-laundered campaign contributions to Democrats, the Pakistani bank BCCI (which was a criminal enterprise on stilts that collapsed in 1991) al-Qaida, Jeffery Epstein and the crypto stablecoin Tether.
That’s a lot to unpack.
I handled Citibank’s financial control in Africa in the 1980s and BCCI was a bank we ran into constantly. We knew it was bad news then years before the collapse and made sure we kept as far away from them as possible.
I also converted Citi to Islamic banking in Pakistan around the same time. My Pakistan experience was one reason I was recruited by the CIA to do financial counterterrorism aimed at al-Qaida and others in the 2000s.
That experience deserves a few words…
Project Prophesy
The CIA recruited me as part of Project Prophesy, which was launched as a strategic study under the direction of CIA veteran Randy Tauss, who was also a seasoned options trader.
I was tapped to join the group based in part on my experience with Islamic banking in Pakistan.
That was considered useful in understanding the mindset of potential terrorist traders. I later became one of two project managers reporting to Tauss.
In 2004, I helped build a working prototype of a Project Prophesy machine using artificial intelligence, applied mathematics, news feeds, price feeds, computing and human oversight. We were looking for terrorist insider trading.
We developed Project Prophesy in total secrecy. And much of my work is classified. But I can tell you that on Aug. 7, 2006, Prophesy’s system uncovered warning signs of an impending terrorist attack.
Three days later in London, a plot to blow up 10 U.S. passenger jets was thwarted. Twenty-four Pakistani extremists were arrested.
The Government Ignored My Warnings
Then in 2007, my system spotted an impending crash in the real estate and stock markets.
I presented my findings to Treasury officials. But they ignored my warnings. We all know what happened next.
We were ready at that point to build a more robust version of this for the CIA and sought additional funding.
But the CIA decided not to move forward with the project mainly for political reasons.
They were worried about possible adverse headlines if it were made to appear that the intelligence community was trolling through citizens’ personal trading records.
That was never true; we used open-source price feeds to get initial leads and then operated through the judicial system after that. But the publicity risk was there and the CIA did not want to take a chance.
After 2008, I moved on to other projects, but I never lost sight of the potential predictive power that we had discovered in Project Prophesy.
I learned that the techniques I developed were useful far beyond the realm of counterterrorism. They could be used for any kind of geopolitical threats carried out in capital markets.
Cryptos and Capital Markets
And I’ve been expert on cryptos since 2010 shortly after they were created in 2009. Besides, I’ve followed the Tether story for years and have been able to drill down on FTX in real-time.
In other words, I’ve had enough hands-on experience in third-world bank fraud, intelligence work, cryptocurrencies and other touch points to know this story hangs together and makes a highly credible case.
I’ll leave the story to you rather than repeat all of the details. Here’s the main takeaway: FTX is just the tip of the iceberg.
Tether does not have the liquid dollar assets it claims to support its $80 billion of coins issued. When Tether does collapse the impact will be multiples of the FTX impact and will certainly affect mainstream finance leading to bank and hedge fund failures.
If the Tether collapse is delayed somewhat it will be because the CIA finds it so useful in financing Ukraine (a Democratic money-laundering scheme) and so-called “color revolutions” around the world.
It’s all playing out before our eyes. Meanwhile, the crypto dominos continue to fall, and will continue to fall until they’ve knocked down mainstream finance.
Bye, Bye, BlockFi
The crypto exchange BlockFi has filed for bankruptcy. BlockFi had been on the ropes for some time, and finally suspended redemptions by its customers on Nov. 11 because it lacked available funds to repay those customers.
It had agreed to be acquired by a bigger crypto exchange FTX, but that deal was abandoned after FTX was revealed to be the biggest crypto fraud of all. In the end, BlockFi was illiquid with a crashing valuation and no way to pay customers, so it closed its doors and filed for bankruptcy.
There are a number of important lessons for investors to take from this even if you have no direct involvement with cryptocurrencies…
The first is that the crypto world is densely connected. One exchange will leave its funds on deposit with another exchange and so on in a daisy chain of interlocking deposits.
Of course, if one link in the chain fails, the entire chain fails, and no one is repaid. That’s bad enough, but what has been happening in crypto land is even worse.
House of Cards
The parties who receive deposits from others borrow against those deposits. This introduces leverage so that the amounts involved in a collapse are far greater than the amounts originally received.
Many of the participants in this reckless conduct offered to pay customers interest. How could they offer interest when the actual cryptos are not securities and don’t earn anything themselves?
Don’t ask. A party paying “interest” would receive a yield from another party paying “interest” so that the interest component was also added to the original fraud. Interlocking deposits, borrowings, leverage, interest, derivatives and more were all part of the crypto scam.
In addition, many of the “billion dollar” losses you read about in the crypto world are not actually dollars but losses, loans and deposits in cryptocurrencies that are valued in dollars at highly inflated values of the cryptos (another form of leverage).
What’s left is a house of cards that is now tumbling down. Luna and Three Arrows failed before FTX. BlockFi and others have failed since. Genesis may be the next in line.
This slow-motion sequential collapse is far from over. It’s just a matter of time before the crypto-world collapse leaks into the mainstream financial world of banks, brokers and hedge funds.
All I can say is give it time.
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>>> NY Fed Launches Digital Dollar Pilot Program With Big Banks
Investopedia
By RAHUL NAMBIAMPURATH
November 16, 2022
https://www.investopedia.com/ny-fed-works-on-cbdc-6829573
Nine U.S. financial institutions, including Citibank, Wells Fargo, and Mastercard launched a pilot program working with the Federal Reserve Bank of New York to test the feasibility of a digital dollar based on distributed ledger technology.
KEY TAKEAWAYS
Several U.S. financial institutions are collaborating to test the feasibility of a digital dollar based on distributed ledger technology.
Participants include BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank, and Wells Fargo. The New York Innovation Center, part of the New York Fed, is also involved.
The pilot will run for 12 weeks in a test environment and will involve central banks, commercial banks, and regulated non-banks.
Pilot to Use Distributed-Ledger Tech
The project is the most significant step to date in creating a digital dollar to improve financial settlements. The Biden administration has recommended the creation of a digital dollar and the U.S. has recently begun putting resources into the effort. Other countries are also exploring plans to create their own central bank digital currencies (CBDCs).
The proof-of-concept project is a 12-week effort that will test the feasibility of an interoperable digital money platform called the regulated liability network (RLN).
It will use a distributed ledger—like the blockchain technology behind bitcoin. The goal is to improve financial settlements and will involve central banks, commercial banks, and regulated non-banks.
The U.S. dollar will be represented as tokens and settled through simulated central bank reserves on a shared multi-entity distributed ledger. The pilot will be conducted in a test environment and will use a technology provided by SETL and Digital Asset.
The list of participants in the pilot program includes BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Truist, U.S. Bank, and Wells Fargo. Global payments provider Swift is also participating in the effort, along with the New York Innovation Center (NYIC), part of the Federal Reserve Bank of New York.
China Tests Digital Yuan
Other countries have made headway in digital currency development, most notably China. China has tested its digital yuan in several provinces, and the currency is even available to users on the popular app WeChat.
It recently added four provinces to its list of regions for the CBDC trial.
Nigeria also has launched a digital currency, the eNaira.
Central Bank of Nigeria (CBN) Governor Godwin Emefiele said it was responsible for more than $9 million in transactions in the past month.
Earlier this month, France, Switzerland, and Singapore jointly conducted a trial for their digital currencies, one of the first of its kind.
These cross-border trials are also an important agenda in CBDC development.
The Bottom Line
With the White House recommending the creation of a digital dollar, a major announcement could come as early as next year. Major economies like India are also considering adopting CBDCs. The efforts so far are mainly cautious pilot programs. At the same time, regulators around the world are looking at the regulation of cryptocurrencies.
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Rickards - >>> Avalanche!
BY JAMES RICKARDS
NOVEMBER 15, 2022
https://dailyreckoning.com/avalanche/
Avalanche!
It’s time today to move on from politics and the midterm elections. This story is potentially bigger…
The collapse of crypto exchange FTX is the biggest economic and financial story in the world today.
Crypto may be arcane to most readers and is not well understood even by those who follow it closely. Still, it would be a mistake to think of this story as a niche development in a niche market.
The FTX collapse has the potential to spin out of control and affect all capital markets in the same manner as the Mexican collapse in 1994, the Russia-LTCM collapse in 1998 and the Lehman Bros. bankruptcy in 2008.
Think that’s an exaggeration? It’s not.
The story is moving so quickly that readers would be well advised to keep up using the free crypto news service called CoinDesk, which I find quite reliable. Anyway, here’s the rundown…
The Big Brain Behind the Fraud
FTX was founded by Sam Bankman-Fried, a 30-year-old MIT graduate working with a relatively small team of fellow MIT grads and developers.
He attracted investment from some of the biggest names in the investment world including Sequoia Partners, the Ontario Teachers’ Pension Plan, SoftBank and the Singapore sovereign wealth fund Temasek.
FTX even got some investment from Tom Brady!
Bankman-Fried became one of the richest people in the world, worth over $25 billion. He donated over $40 million to Democrats in the recent midterm elections and raised millions more to support the corrupt oligarchs in Ukraine.
The Ponzi Scheme Takes Shape
FTX had an affiliate trading firm called Alameda. Like most exchanges, FTX held customer funds in separate accounts to protect customers. It now appears that Bankman-Fried’s team looted the customer accounts to support losses in the Alameda trading firm.
Word got out, and a classic run on the bank started. FTX first put up gates to stop withdrawals. Then management quit, the exchange closed and Alameda went into bankruptcy. The entire empire collapsed.
Over $10 billion in customer funds have disappeared. The remaining $1 billion in funds was hacked and stolen in what some believe was an inside job by the members of the FTX team who knew the computer code.
A criminal investigation has started in the Bahamas where FTX was registered. If that were the end of the story, it might just be an interesting (if costly) fiasco that someone will write a book about. It’s not the end of the story.
The Dominoes Start Falling
One by one, exchanges that did business with FTX are reporting losses and shutting down. Huge losses are spreading throughout the crypto industry and are beginning to leak into mainstream firms.
Meanwhile, popular meme and Gen X broker Robinhood is reported to be in difficulty and is seeing its stock price crash.
If there’s one thing we know about a financial collapse, it’s that it’s never contained to the original victims but spreads like a virus to unexpected places. It’s impossible to know how far the FTX contagion will spread. We can say with certainty that it will not be contained to crypto-world.
Why do I say that? It all comes back to the term “contagion.”
FTX: “Financial Patient Zero”
Unfortunately, in 2020, the world learned a painful lesson in biological contagions. A similar dynamic applies in financial panics. It can begin with one bank or broker going bankrupt as the result of a market collapse (a “financial patient zero”).
But the financial distress quickly spreads to banks that did business with the failed entity and then to stockholders and depositors of those other banks and so on until the entire world is in the grip of a financial panic as happened in 2008.
Disease contagion and financial contagion both work the same way. The nonlinear mathematics and system dynamics are identical in the two cases even though the “virus” is financial distress rather than a biological virus.
And unfortunately, each crisis is bigger than the one before and requires more intervention by the central banks.
The reason has to do with the system scale. In complex dynamic systems such as capital markets, risk is an exponential function of system scale. Increasing market scale correlates with exponentially larger market collapses.
More Dangerous Than Ever
Today, systemic risk is more dangerous than ever because the entire system is larger than before. This means that the larger size of the system implies a future global liquidity crisis and market panic far larger than the Panic of 2008.
Too-big-to-fail banks are bigger than ever, have a larger percentage of the total assets of the banking system and have much larger derivatives books.
One of my favorite analogies is what I call the avalanche and the snowflake. It’s a metaphor for the way the science actually works but I should be clear, they’re not just metaphors. The science, the mathematics and the dynamics are actually the same as those that exist in financial markets.
Imagine you’re on a mountainside. You can see a snowpack building up on the ridgeline while it continues snowing. You can tell just by looking at the scene that there’s danger of an avalanche.
You see a snowflake fall from the sky onto the snowpack.
It disturbs a few other snowflakes that lay there. Then the snow starts to spread… then it starts to slide… then it gains momentum until, finally, it comes loose and the whole mountain comes down and buries the village.
Do You Blame the Snowflake or the Snowpack?
Some people refer to these snowflakes as “black swans,” because they are unexpected and come by surprise. But they’re actually not a surprise if you understand the system’s dynamics and can estimate the system scale.
Here’s the question: Whom do you blame? Do you blame the snowflake, or do you blame the unstable pack of snow?
I say the snowflake’s irrelevant. If it wasn’t one snowflake that caused the avalanche, it could have been the one before or the one after or the one tomorrow.
The instability of the system as a whole was a problem. So when I think about the risks in the financial system, I don’t focus on the “snowflake” that will cause problems. The trigger doesn’t really matter.
In the end, it’s not about the snowflakes; it’s about the initial critical-state conditions that allow the possibility of a chain reaction or avalanche. We’ll see if FTX turns out to be the snowflake, regardless.
This is a good time to increase your cash allocation, both to avoid unexpected losses and to go shopping in the wreckage once the full extent of the damage is known. Oh, and don’t forget to stock up on cash and gold.
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>>> NVIDIA Corporation (NVDA) provides graphics, and compute and networking solutions in the United States, Taiwan, China, and internationally. The company's Graphics segment offers GeForce GPUs for gaming and PCs, the GeForce NOW game streaming service and related infrastructure, and solutions for gaming platforms; Quadro/NVIDIA RTX GPUs for enterprise workstation graphics; vGPU software for cloud-based visual and virtual computing; automotive platforms for infotainment systems; and Omniverse software for building 3D designs and virtual worlds. Its Compute & Networking segment provides Data Center platforms and systems for AI, HPC, and accelerated computing; Mellanox networking and interconnect solutions; automotive AI Cockpit, autonomous driving development agreements, and autonomous vehicle solutions; cryptocurrency mining processors; Jetson for robotics and other embedded platforms; and NVIDIA AI Enterprise and other software. The company's products are used in gaming, professional visualization, datacenter, and automotive markets. NVIDIA Corporation sells its products to original equipment manufacturers, original device manufacturers, system builders, add-in board manufacturers, retailers/distributors, independent software vendors, Internet and cloud service providers, automotive manufacturers and tier-1 automotive suppliers, mapping companies, start-ups, and other ecosystem participants. It has a strategic collaboration with Kroger Co. NVIDIA Corporation was incorporated in 1993 and is headquartered in Santa Clara, California.
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>>> Bitcoin falls below $19,000 following Grayscale ETF rejection
Yahoo Finance
David Hollerith
June 30, 2022
https://finance.yahoo.com/news/bitcoin-price-june-30-140257134.html
After fighting to hold $20,000 on Wednesday, buyer support for bitcoin (BTC-USD) collapsed Thursday morning, with bitcoin falling over 5% to trade as low as $18,930.
This latest decline has seen bitcoin lose more than 37% in June — its worst month since since December 2018.
Thursday's drop comes after the SEC sent rejection letters for ETFs proposed by both Grayscale and Bitwise, while continued inflation fears also weigh on sentiment in the broader crypto market.
Like bitcoin, sell-offs continued for other cryptocurrencies Thursday morning. Binance's BNB token (BNB-USD) down 4%, Solana (SOL-USD), down more than 6%, Cardano’s ADA token (ADA-USD), down more than 4%, Chainlink (LINK-USD), down 3%, have all seen losses on the day.
Grayscale ETF rejection and lawsuit
The SEC's rejection of Grayscale's proposed ETF was a key factor dragging down crypto markets early Thursday.
"The next few months for crypto are going to be very telling," Grayscale CEO Michael Sonnenshein told Yahoo Finance Live on Thursday.
As Yahoo Finance previously reported, Grayscale had sought approval from the SEC to convert GBTC into an exchange traded fund (ETF) that holds bitcoin and relies on “authorized participants” to continuously redeem and create shares could close this discount.
On Monday, Grayscale attempted to show regulators an ETF would be operationally viable, announcing Wall Street firms Jane Street and Virtu Finance had agreed to fill the authorized participant role as long as Grayscale received approval from the SEC.
As the SEC showed in its filing on Wednesday, the regulator continues to harbor concerns that “the price of bitcoin is subject to manipulation on unregulated platforms” and the approval could invite additional manipulation.
As of midday Thursday, GBTC was trading hands at around $12.25 per share, a roughly 30% discount to the per-share value of the trust's bitcoin holdings. With ETF conversation, Grayscale had sought to close this gap between the market price and the trust's net asset value.
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BIS / CBDC - >>> Crypto fears now materialising, central bank body BIS says
Reuters
June 21, 2022
By Marc Jones
https://www.reuters.com/business/finance/crypto-fears-now-materialising-central-bank-body-bis-says-2022-06-21/
LONDON, June 21 (Reuters) - Recent implosions in the cryptocurrency markets indicate that long-warned-about dangers of decentralised digital money are now materialising, the Bank for International Settlements has said.
The BIS, the global umbrella body for central banks, sounded the warning in an upcoming annual report, in which it also urged more effort in developing appealing central bank digital currencies.
BIS general manager Agustin Carstens pointed to recent collapses of the TerraUSD and luna 'stablecoins', and a 70% slump in bitcoin, the bellwether for the crypto market, as indicators that a structural problem exists.
Without a government-backed authority that can use reserves funded by taxes, any form of money ultimately lacks credibility."
"I think all these weaknesses that were pointed out before have pretty much materialised," Carstens told Reuters. "You just cannot defy gravity... At some point you really have to face the music".
Analysts estimate that the overall value of the crypto market has slumped more that $2 trillion since November as its troubles have snowballed. read more
Carstens said the meltdown was not expected to cause a systemic crisis in the way that bad loans triggered the global financial crash. But he stressed losses would be sizeable and that the opaque nature of the crypto universe fed uncertainty.
"Based on what we know, it should be quite manageable," Carstens said. "But, there are a lot of things that we don't know."
CENTRAL BANK DIGITAL CURRENCIES (CBDCs)
The BIS is a long-term sceptic of cryptocurrencies and its report laid its vision for the future monetary system - one where central banks utilise the tech benefits of bitcoin and its ilk to create digital versions of their own currencies.
Roughly 90% of monetary authorities are now exploring CBDCs as they are known. Many hope it will equip them for the online world and fend off cryptocurrencies. But the BIS wants to coordinate key issues such as making sure they work across borders.
The immediate challenges are mainly technological, similar to how the mobile phone world needed standardised coding in the 1990s. But there is also the geopolitical issue as relations between the West and countries such as China and Russia wane.
"This (interoperability) is a topic that has been on the G20 agenda for quite some time.. so I think there is a good chance for this to move forward," Carstens said, adding how there had been a number of "real-life" trials with different CBDCs over the last year.
Asked how long before international standards for CBDC interoperability might be agreed, he said: "I think in the next couple of years. Probably 12 months is too short."
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>>> Ethereum maximalist Mark Cuban says the crypto crash reminds him of Warren Buffett’s advice: ‘When the tide goes out, you get to see who is swimming naked’
Fortune
by Taylor Locke
June 15, 2022
https://finance.yahoo.com/news/ethereum-maximalist-mark-cuban-says-200750202.html
The cryptocurrency market is seeing a flash of failed and struggling projects amid a rough downturn that has left investors fearful over what’s to come.
Looking ahead, billionaire Mark Cuban sees extinction.
“In stocks and crypto, you will see companies that were sustained by cheap, easy money—but didn’t have valid business prospects—will disappear,” the Shark Tank investor and Dallas Mavericks owner told Fortune. “Like [Warren] Buffett says, ‘When the tide goes out, you get to see who is swimming naked.’”
After the Terra ecosystem collapsed, with failed algorithmic stablecoin TerraUSD (UST) and cryptocurrency Luna (LUNC) becoming nearly worthless, there has been a ripple effect throughout the space. This week alone, Celsius Network, one of the largest cryptocurrency lending platforms, halted withdrawals and sparked fears of bankruptcy.
It’s also been reported that prominent cryptocurrency fund Three Arrows Capital is facing possible insolvency after $400 million in liquidations. The value of the global cryptocurrency market dropped below $1 trillion as Bitcoin, the largest cryptocurrency by market value, fell to $20,193, and Ether, the second largest, to $1,023.
Despite the negative market sentiment, Cuban said he expects innovation to come out of the crypto market downturn as well.
“Disruptive applications and technology released during a bear market, whether stocks or crypto or any business, will always find a market and succeed,” he told Fortune.
He says that cryptocurrencies are related to the Nasdaq, which has proved especially true in recent months. Tech stocks and Bitcoin, for example, have moved in tandem lately. The correlation between the Nasdaq 100 and Bitcoin was recently near all-time highs.
“If rates go up, it will struggle till it’s priced in,” Cuban said. “The exception, as with stocks, is for new, game-changing applications.”
Cuban himself is an avid cryptocurrency investor and self-proclaimed Ethereum maximalist. He owns a few cryptocurrencies and non-fungible tokens (NFTs) and has invested in a few blockchain companies.
This story was originally featured on Fortune.com
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>>> Celsius' move to halt crypto withdrawals catches Washington's eye
Yahoo Finance
by Jennifer Schonberger
June 14, 2022
Crypto lender Celsius Network’s decision to pause all withdrawals and transfers for customers as cryptocurrencies plunge is catching the attention of the administration and lawmakers.
The thinking within the Biden administration is that regulations that were proposed to regulate stablecoins by the President Working Group’s report could extend to the entire crypto space to avoid runs and platforms shutting down as in the case of Celsius.
“Recent events, Celsius and USTerra, only reinforce the need for a regulatory framework for digital assets. These events bolster the case for action and the need to mitigate the risks of these assets,” according to an administration official.
Celsius Network stopped all customers’ redemptions and transfers between accounts in the wake of “extreme market conditions” Sunday night as crypto assets plummeted in value, causing some to question the platform’s solvency. Celsius Network’s CEL token has plummeted more than 50%.
Digital currency is used for verified transactions while maintaining a digital record in a decentralized system using cryptography, rather than by a centralized authority.
Kavita Gupta, founder of early stage blockchain fund Delta BC Fund said Celsius is a classic example of lacking liquidity.
“It’s a liquidity issue,” Gupta told Yahoo Finance Live. People who invested in Celsius expecting 16% to 18% returns, Celsius was always vocal it was taking that money as a hedge fund to manage in other assets," Gupta said. "When there was a big withdrawal and everyone tried to get their [crypto] out it was like a classic banking problem. It’s just more people trying to take money out than they have liquidity for.”
The PWG report said stablecoin issuers should have adequate reserves to make sure they can make good on redemptions. The thinking is the same principle should extend to exchanges where there should be adequate reserves held by platforms so that when people want their money back they can get it easily and runs are avoided.
To help ensure against runs, the PWG’s proposals for stablecoins could extend to digital asset exchanges. Like with stablecoin issuers, customer assets should be separated from trading platforms; digital wallets held on exchanges should be subject to federal regulatory oversight; exchanges should be restricted from lending customers’ digital assets out; and they should also comply with liquidity and capital requirements.
The Securities & Exchange Commission did not immediately respond to Yahoo Finance for comment. SEC Chair Gensler has repeatedly encouraged exchanges to register with the agency, threatening enforcement action if not.
Meanwhile, Sen. Kirstin Gillibrand’s (D, NY) office said the senator’s bill jointly introduced with Sen. Cynthia Lummis (R, WY) to regulate crypto would help prevent the current upheaval in crypto markets by bringing crypto exchanges under the purview of the Commodities Futures Trading Commission.
That would require exchanges to hold significantly higher capital — $20 million of net adjusted capital — to back their trading activities. The bill would guarantee that if an exchange or lender suffered financial difficulty, customers would be assured they would get their assets back.
The bill also requires a 100% reserve, asset type, and detailed disclosure requirements for all stablecoin issuers to guarantee that stablecoin holders can redeem the stablecoin in exchange for the equivalent dollar value at any time.
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>>> Kevin O’Leary on US crypto regulation: ‘We need to catch up with the rest of the world’
Yahoo Finance
by Brad Smith
April 18, 2022
https://finance.yahoo.com/news/kevin-o-leary-on-us-crypto-regulation-we-need-to-catch-up-with-the-rest-of-the-world-153530069.html
Shark Tank star and O’Shares Investment Advisers Chairman Kevin O’Leary predicts that one day blockchain and cryptocurrency will represent the 12th sector of the S&P 500 and is "very confident" sensible government crypto regulation will happen before mass adoption.
“The pace and acceleration of policy proposals coming out of bipartisan Senate committees and the Hill has never been greater” Kevin O’Leary said on Yahoo Finance Live “We've got the Lummis bill. We have the Haggerty bill for stablecoin, the Toomey bill for stablecoin. We have the POTUS executive order, all within six weeks of each other, all discussing the future of cryptocurrencies.”
Cryptocurrency regulation has varied internationally, ranging from outright bans to early cases of bitcoin becoming a country's national currency — as El Salvador announced in 2021. Fifteen countries currently ban bitcoin and other cryptocurrencies and deem them illegal in any shape or form, according to data from Cryptimi.
On the opposite end, Canada allows bitcoin ETFs, ethereum ETFs and has licensed a cross-country cryptocurrency dealer.
“There's so much innovation going on in different geographies with regulators at different stages of releasing policy on this, that we have fallen behind in the U.S.,” O’Leary said.
The U.S. Securities and Exchange Commission has yet to introduce regulation for crypto exchanges, but SEC Chair Gary Gensler is hopeful to formalize guidelines this year. Meanwhile, the Federal Reserve published a research and analysis white paper which called attention to the price volatility, limitations on transaction throughput and energy footprint of cryptocurrencies, suggesting the Fed may favor a Central Bank Digital Currency or stablecoin.
Meanwhile, the benefits of cryptocurrency’s underlying technology — blockchain — are being heralded by technologists and the finance sector.
JPMorgan Chairman and CEO Jamie Dimon had historically bashed bitcoin, but in his latest annual shareholder letter, he said, “Decentralized finance and blockchain are real, new technologies that can be deployed in both public and private fashion, permissioned or not.”
Major investment firms have also been pouring capital into blockchain and cryptocurrency unicorns.
O’Leary commented on one such recent deal, “The announcement of BlackRock and Fidelity putting $400 million into USDC, the Circle product — that's unprecedented for such staid financial services companies to make a bet that large on cryptocurrency.”
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Circle USDC - >>> BlackRock, Fidelity and others to invest $400M in USDC stablecoin issuer Circle
TechCrunch
by Jacquelyn Melinek
April 12, 2022
https://finance.yahoo.com/blackrock-fidelity-others-invest-400m-141621168.html
Circle, a crypto-focused financial technology firm, has entered an agreement for a $400 million funding round, the company announced. It is expected to close in the second quarter of 2022.
Investors in the round include BlackRock, Fidelity Management and Research, Marshall Wace and Fin Capital.
In 2018, The Centre Consortium issued its USD Coin (USDC), a stablecoin that is pegged to the U.S. dollar on a 1:1 basis. This means every USDC is backed by $1 in reserves. The Centre has two founding members: Circle and the cryptocurrency exchange giant Coinbase.
In addition to the capital raise, BlackRock has entered a strategic partnership with Circle to be its primary asset manager of USDC cash reserves and explore capital market applications for its stablecoin, among other objectives. "Our broader strategic partnership with BlackRock, announced today, will allow us to explore new use cases where USDC may be an efficient resource in the financial services value chain," Jeremy Allaire, co-founder and CEO of Circle, told TechCrunch.
Crypto is altering the investing landscape for even the most disciplined VCs
USDC is the second-largest stablecoin behind USD Tether (USDT) and the fifth-largest cryptocurrency by market capitalization, according to data on CoinMarketCap. Its market capitalization rose about 370% year over year from $10.82 billion to $50.83 billion and about $5 billion in volume was traded in the past 24 hours, up over 39%.
Although USDC ranks in second place for stablecoins, compared to USDT, it has about $32 billion less in market cap and a 24-hour volume that’s roughly $73.6 billion less than the No. 1 stablecoin.
The fresh capital will be used to promote the company’s strategic growth “as demand for dollar digital currency and related financial services continues to scale globally,” Circle said in a statement.
"This is a milestone moment for Circle and part of the “coming of age” of crypto," Allaire said. Circle is focused on continuing to increase mainstream adoption of USDC and blockchain technology for payments, commerce and financial applications, he added.
This funding comes at an interesting inflection point after the firm delayed its SPAC merger and doubled its valuation to $9 billion in February 2022. It was previously valued at $4.5 billion in July 2021. At the time of the delay, Circle terminated its previous agreement with Concord Acquisition Corp., a publicly traded SPAC, only to reach a new deal with the company for a merger.
The original deal had a termination date of April 3, 2022, but the new agreement has been pushed to December 8, 2022, with the potential to be delayed as far as January 31, 2023, under certain circumstances, according to a press release.
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>>> Major clearing house tests how to settle a CBDC
Yahoo Finance
by Jennifer Schonberger
April 12, 2022
https://finance.yahoo.com/news/clearing-house-cbdc-142923910.html
A major clearing house is working on a prototype to explore how a central bank digital currency could be settled if adopted, as the Federal Reserve and Biden administration explore the pros and cons of a CBDC.
The Depository Trust & Clearing Corporation, which clears and settles trades for stocks and bonds, is teaming up with the Digital Dollar Project, a nonprofit led by former U.S. regulators, to test the design of a CBDC and settling delivery and payment at the same time in a project dubbed Project Lithium.
One of the keys to a central bank digital currency is that it’s instantaneous and settled immediately. Project Lithium is looking at using distributed ledger technology to create the best design that allows the most efficient instantaneous settlement.
“A CBDC could improve time and cost efficiencies, provide broader accessibility to central bank money and payments, and all while emulating the features of physical cash in an increasingly digital world,” said Christopher Giancarlo, co-founder and executive chairman of The Digital Dollar Project and former chairman of the Commodities Futures Trading Commission.
The use of printed U.S. currency is on the decline as markets become more digitized and securities are tokenized. Unlike private cryptocurrencies like bitcoin, a CBDC would be issued and backed by the Federal Reserve, just like U.S. paper dollars and coins.
The pilot will also look into how it can use DTCC’s clearing and settlement capabilities to realize the potential benefits of a CBDC, including improving capital efficiency, lowering counter-party risk, transparency for regulators, and guaranteeing cash and securities are delivered to the proper parties.
This comes as the Federal Reserve Bank of Boston and the Massachusetts Institute of Technology’s Digital Currency Initiative have come up with an initial design for a central bank digital currency. The theoretical coin, which was unveiled as the Federal Reserve explores the pros and cons of adopting one, could handle 1.7 million transactions per second, and settle in under two seconds, the Boston Fed and MIT estimated.
The Federal Reserve hasn’t made a decision on whether to adopt a CBDC yet. But Treasury Secretary Janet Yellen said a CBDC could help create a more efficient payment system and could become a form of trusted money comparable to physical cash. She says she’s not sure what conclusions the administration will reach, but that issuing a CBDC would present a “major design and engineering challenge that would require years of development — not months.”
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>>> IMF warns crypto rout could lead to systemic risk, backs Fed digital coin
Yahoo Finance
by Jennifer Schonberger
January 27, 2022
https://finance.yahoo.com/news/imf-warns-crypto-winter-could-lead-to-systemic-risk-backs-fed-digital-coin-224508066.html
The International Monetary Fund says cryptocurrencies and stocks are likely to see more volatility, with the Federal Reserve set to raise interest rates, and as increasing correlations between the two asset classes create risks to the financial system.
Digital coins have gotten off to a rocky start in 2022, with a deep sell-off obliterating billions in market value. Since hitting a record high in November, the value of Bitcoin (BTC-USD) has been shaved nearly in half.
“The Fed needs to tighten financial conditions, that means that interest rates have to come up, risky asset prices have to come down, and that could be painful to some degree,” Tobias Adrian, director of the IMF’s Monetary and Capital Markets Department, told Yahoo Finance in an interview.
“That's what is going to change economic activity, which then will change inflation,” he added.
Adrian didn’t specify an exact timeline, but thinks it could be anywhere from two to six months before markets fully adjust to a new level of interest rates.
He explained that heavy leverage in crypto markets is magnifying spot price volatility – and is closely tied to leverage being taken on in the stock market, as hedge funds invest in both assets.
At the moment, banks themselves have little exposure to crypto assets, in general. Yet Adrian argued there’s little data showcasing how much risk investors overall are taking, leaving gaping holes as to what the real risks might be within digital assets, since full exposure isn’t known.
“There's very little data at the moment, data disclosures are not standardized,” he stated.
“Investors often don't know how much risk they're taking… There’s little regulation around margin setting, or around possible pitfalls around cyber risks,” Adrian added. “So there's really a lot of scope to improve the regulatory environment for the crypto space.”
Adrian says crypto is very much in the shadow banking system, but that over time he expects more regulations. He says the challenge is that crypto is so decentralized with no legal entity operating the digital coins, like Bitcoin.
Digital wallet providers, which store users’ cryptocurrencies, lend themselves to be regulated using cyber risk requirements and data disclosure requirements, the economist argued.
Why stablecoins, CBDCs make sense
When it comes to stablecoins, Adrian thinks it’s a good idea for some issuers to have a banking license and be regulated as such, because they offer services similar to that of traditional banks.
“We know that well-regulated banks and banks backstopped by the Federal Reserve work well,” he told Yahoo Finance. “When stablecoin providers don't have these kinds of regulatory setups and liquidity provisions, it's going to be difficult for them to be truly stable.”
Yet other stablecoin issuers may not be fit to have a banking license, he said, pointing to ones that operate more like money market funds.
“It depends on the business model of the stable coin as to whether they're more like a bank or more like a mutual fund,” Adrian added.
Some stablecoin issuers have bank licenses in certain states, while others have applied for banking licenses. Currently, U.S. policymakers are weighing whether stablecoin issuers should be granted banking licenses at a federal level where they could access the Fed’s system. The Biden administration has recommended that only banks should be allowed to issue stablecoins.
As the Fed mulls whether to adopt a digital dollar, Adrian said a well-designed central bank digital currency (CBDC) is a good idea. Assuming it’s properly designed, it could improve the efficiency of the payment system, allow more Americans to access the financial system and make payments with other countries cheaper and faster, according to the economist.
But he also says a CBDC is foundational to allowing cryptocurrencies to exist.
“There are many problems with crypto assets, but it's difficult to imagine them going away,” says Adrian. “A central bank digital currency is also an important bridge to the crypto asset universe and makes sure that federal reserve money is an important foundation for this emerging financial system.”
Adrian added that a CBDC should be able to coexist with private sector stablecoins.
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CBDCs - >>> As many as 87 countries are exploring a central bank digital currency
Yahoo Finance
January 4, 2022
https://finance.yahoo.com/video/crypto-many-87-countries-exploring-172617285.html
AKIKO FUJITA: Well, China has now released a pilot version of its digital Yuan wallet app for Android and iOS, as the country's central bank moves aggressively to develop its own digital currency. The PBOC though, certainly not the only central bank that's looking to roll out their CBDC.
Let's bring in Emily Parker, CoinDesk global macro editor and CoinDesk TV anchor. Emily, I just threw in a lot of acronyms in there. But we're talking about central bank digital currencies. And dozens of countries, I mean nearly 100, now working on this.
EMILY PARKER: Absolutely. So as you mentioned, China has grabbed a lot of the headlines for taking the lead in developing a central bank digital currency. But we're seeing more and more countries getting involved. So I think, according to the Atlantic Council, which has a very cool CBDC tracker, there are something like 87 countries that are developing, or exploring rather, exploring a central bank digital currency.
And the latest, we've learned, is Mexico, which has announced that they plan to issue a CBDC within the next two years. So Mexico is joining other countries in the region, such as Peru and Brazil, who are actively exploring this. So this is something that's going on all over the world.
And if we look at those 87 countries, again according to the Atlantic Council, that accounts for over 90% of global GDP, the countries that are exploring developing this central bank digital currency. So it's definitely, definitely not just China.
ZACK GUZMAN: Yeah, although a lot of the attention has been on China, given kind of what's going to play out at the Olympics and kind of the buildup to unveiling that one. And of course, there's the big overhang and big question of whether or not anyone who's actually crypto-savvy is going to want to use any of these, or if they might beat out other stablecoins in terms of being the rails that we see used in terms of large institutions.
But when we look at maybe the other big story to watch in 2022, certainly a big one in '21, the rise of NFTs. And now in Korea, we're seeing it used politically, not just for the tech-savvy anymore. I mean, how big is that in terms of bringing on new entrants to the space?
EMILY PARKER: So CBDCs and the news item that you just mentioned are all part of a larger story, which is that cryptocurrencies in theory are supposed to be independent of governments. But what we're seeing now is just a lot of governments trying to get in on the action in some way, either by launching a central bank digital currency or, in the case of Korea, we have the ruling political party now saying that they will basically be giving NFTs in return for political donations.
And clearly what this is is it's a play for younger voters, voters in their 20s and 30s. But this is also an acknowledgment by the Korean government that crypto isn't going anywhere. And if they want to get traction with younger voters, they're going to have to play along.
ZACK GUZMAN: Yeah, I mean, that's the biggest thing too. I think we had, of course, the president of El Salvador labeling Bitcoin, and I guess stances on crypto, a major theme to watch in 2022. Of course, we have the midterms coming up.
I tend to agree with that. I think that it's something that we've seen Republicans and Democrats really start to align on on different sides now, although some of them are conflicting. I mean, how important do you think it is going to be for maybe politicians back here in the US to also-- I don't know if it's important for them to really utilize NFTs to fundraise or whatnot. But how important is it to really start setting, I guess, their stances on these things ahead of those elections?
EMILY PARKER: Yeah, I mean, 2021 was the year that Washington really woke up to crypto. And we're just going to see that trend continuing into 2022. So we're going to see lawmakers in Washington.
What they're going to have to do is learn more about crypto and how crypto works because there are a lot of regulatory actions that are being suggested out there. They're going to have to understand what those are. Whether or not they're going to start issuing NFTs is another question. But I do think we're just going to at least see an attempt to be more educated about crypto in Washington, which I think is a good thing for the industry.
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Shiba Inu Layer-2 Scaling Solution To Be Launched Soon: Developer
https://www.benzinga.com/markets/cryptocurrency/21/12/24690753/shiba-inu-layer-2-scaling-solution-to-be-launched-soon-developer
$SHIB
>>> What DAOs are and what they might buy next
Yahoo Finance
by Andy Serwer with Max Zahn
December 11, 2021
https://finance.yahoo.com/news/what-da-os-are-and-what-they-might-buy-next-103821642.html
The scene: Sotheby’s auction house in Manhattan. Auctioneer Quig Bruning is poised at the lectern before a packed house. Bidding is set to commence at $20 million.
The object in question: A rare, first printing of the U.S. Constitution, one of 13 surviving copies, made for delegates to the Constitutional Convention and Continental Congress.
After a brief introduction the bearded auctioneer commences, and what happens next is straight out of Hollywood: Escalating million-dollar bids phoned in from unseen buyers (on old school landlines presumably to guard against dropped calls), last second raises and high anxiety.
The bidding immediately soars $10 million to $30 million and is pared to two buyers. After that the action slows a bit, though the tension mounts as Bruning congenially elicits $1 million increments. “Quite the drama,” he remarks at one point. (No kidding.) The gavel finally comes down at $43.2 million, a record sale for a historical document according to Sotheby's, with the winner being billionaire financier Ken Griffin, founder of the Chicago hedge fund and financial services firm Citadel.
What Bruning, (or even the participants themselves) may not have realized, is that there was even more here than meets the eye.
What this auction reflected was a smackdown between elite, status-quo finance versus the encroaching world of populist crypto. Because bidding against Griffin and ultimately losing was a crypto-backed entity, ConstitutionDAO, which represents that very new world of non-money, money.
What the heck is ConstitutionDAO? A group of crypto investors who banded together specifically to buy the Constitution using a digitally based organizational structure called a decentralized autonomous organization (or DAO). (Pronounced “Dow.”) Sort of like a decentralized Kickstarter, GoFundMe, or Indiegogo campaign done on crypto. Or maybe even better “a group chat with a bank account,” as one participant describes it.
Ken Griffin may not be J.P. Morgan, and has done some disrupting of his own, but relative to these cats, he’s 100% legacy. That Griffin — who’s been a crypto skeptic, though he’s come around a bit recently —intends to exhibit his copy of the Constitution at Crystal Bridges Museum in Bentonville, Arkansas, which is funded by Alice Walton, daughter of Walmart founder, Sam Walton, is perhaps icing on the old economy cake.
I’ll get back to Grif and the auction in a bit, but first some more on DAOs, which for starters have an ill-defined legal status as of now. So far only Wyoming has legally recognized DAOs. (Hey, here’s an FAQ sheet on how to form a DAO from the Wyoming Secretary of State for ya!) The SEC has taken note and seems not to be amused. To wit: “SEC Stops Wyoming-Based DAO From Registering 2 Digital Tokens."
“The reality of DAOs is they’re not currently legal structures at all,” says Alex Taub, co-founder of Upstream, a platform that streamlines and simplifies the process of creating a DAO, who says he invested a few hundred dollars in ConstitutionDAO. “I don’t care what Wyoming says, that’s flimsy. They’re potential legal structures. The concept of the LLC has only been around since the 1970s, who’s to say DAO is not the LLC of the future?”
On the other hand the federal government hasn’t completely dismissed DAOs. For instance, in a recent bizarro, rabbit hole of a story (even by crypto standards), the Feds sold (through intermediaries) Wu-Tang Clan’s one-of-a-kind album “Once Upon a Time in Shaolin,” which it had confiscated from “Martin Shkreli, (the price-gouging young pharmaceutical speculator who was later convicted of securities fraud)” to PleasrDAO for $4 million, according to The New York Times. Believe me when I tell you this stuff is wild.
Even wilder perhaps (it's difficult to imagine using the superlative adjective in crypto) is Olympus DAO, “a "staking" scheme with an annual percentage yield of 7,000% via new OHM token mints,” according to CoinDesk. (What could possibly go wrong?) In the mood for a tamer, warmer DAO? Check out Kimbal Musk’s (yes, Elon’s bro) Big Green DAO, the first nonprofit-led philanthropic DAO, which focuses on food justice.
For all their revolutionary potential, it’s early days yet for DAOs, with the concept only going back to 2015 or so. One infamous project, “The DAO” launched in 2016 using Ethereum (ETH-USD) and was hacked shortly thereafter. (That hack resulted in what’s known as “hard fork” of Ethereum from Ethereum Classic for those of you versed in this kind of thing.)
Some say DAOs are having their moment — or maybe getting ready for prime time is more like it. “We believe that this past month with the ConstitutionDAO will be the NBA Top Shot moment for DAOs,” says Taub, referring to the basketball NFT (a non fungible token, I wrote about them here) which jump-started that realm.
I should also note that DAOs are connected to the broader trend of what’s known as DeFi (or decentralized finance), a blockchain-based financial parallel universe that uses no (or little) traditional intermediaries like banks, exchanges or broker dealers. It remains to be seen how viable DeFi and DAOs, as well as NFTs and indeed the whole world of crypto is. Suffice it to say that activity in this new world is ramping up, and to a degree at the expense of the legacy world. Will the new world come crashing down? Who knows.
But let’s return to that auction of the Constitution, because there’s a slew of fascinating detail. The Verge, fyi, just did a nice longform interview with Jonah Erlich, a software engineer, who was one of 30 ConstitutionDAO’s core contributors (don’t say organizer).
Turns out the project had 17,437 donors with a median donation size of $206.26, who ponied up Ethereum through a platform called Juicebox.money. According to the Verge interview, the whole thing started as a joke on Twitter and came together in a week. (If that seems capricious, note that Griffin just revealed that buying the Constitution was whimsy for him too. From Bloomberg: “I was sitting at home in New York and my son calls me to say, ‘Dad, you have to buy the Constitution'” (Insists the billionaire’s son.)
As for Erlich, he ended up actually going to Sotheby's for the auction. This from The Verge: “It was exhilarating. … During the auction, when the number was creeping up, I felt like I was going to puke. If we won, I might have cried. It was a very intense experience, especially after this crazy week.”
And what if in fact his group had won? What were their intentions?
“...At that point, the DAO would have voted on what to do with it. For example, we had museums lined up that were going to give proposals on how their museum should be the one to store and display this document. The DAO would also be able to vote on what text should be displayed alongside this copy of the Constitution. What message do we want to share with the world? We probably would have funds left over to give to a community that is really excited about doing things. The token holders would set the future direction.”
Sounds reasonable enough. On the other hand, when Kevin Roose of The New York Times in this comprehensive piece took “a spin through” this community he also found that someone raised this slightly more disturbing line of questioning: “Is there a safeguard to make sure the DAO doesn’t vote to eat the constitution? Or other method of destruction?” Yikes!
In any event it’s all moot because ConstitutionDAO lost — at least in part perhaps because Griffin could see the DAO’s bid was capped at $42 million (Sotheby’s required the DAO to keep millions in reserve) and simply exceeded it by $200,000. “They should’ve obfuscated how much they had,” says Taub. "You’re playing poker with the richest people in the world. They’re no dummies.”
Cullen Roche, the founder and chief investment officer at financial advisory firm Discipline Funds and a former advisor at Merrill Lynch, has a similar take. “I think the lesson with the Constitution DAO is building an entity that publicly reports its bidding value is obviously pretty naive,” he says. “Everybody knows Griffin has bottomless pockets, he wouldn't go to bid and say I’m worth $40 billion and here’s all $40 billion —come play ball. He would never put up a bid like that. In this case transparency was counterproductive and a weakness.”
And there was Griffin’s state of mind. “I told myself, ‘I am going to own this. I don’t do that very often,” he said at an interview on Thursday after a luncheon hosted by the Palm Beach Civic Association at the Florida city’s Four Seasons hotel, according to Bloomberg.
Bloomberg also reported that Griffin said he was in touch with the DAO the night of the auction, and after he won looking to “arrange a joint governance for the document.” A Citadel spokesman said that Griffin “also proposed allowing each of the roughly 17,000 participants in the ConstitutionDAO group the right to generate a non-fungible token tied to the copy.” None of this came to fruition however.
The group is now in the process of endeavoring refunds (which will be net of expenses, called "gas fees"), which some have suggested could be onerous, especially relatively speaking for those who put in small amounts.
Meanwhile, and just to give you another reminder (as if you need one) of how wild and wooly this world is, ConstitutionDAO tokens (named People — like “we the People”) have become a "meme coin" a la Shiba Inu and dogecoin and were still trading as of yesterday morning. As CoinDesk reports: “PEOPLE has no utility and offers no governance rights to holders. But this hasn’t stopped crypto natives from trading up the token to a fully diluted market cap of $839 million as per CoinMarketCap. And the trading frenzy is leading to losses.” (Gee.)
Still, the people of ConstitutionDAO have proudly declared on Twitter (59,700 followers) this to be a victory of sorts and they’re right about that.
In other words, you best believe that Sotheby’s and the rest of the art world knows all about DAOs now. And that this won’t be the last DAO formed to try to buy a document or a piece of art.
And what about beyond that? What about buying a building, a company or even an NFL team (see below)? Why not? If this merry band could pull together $47 million in a few days on whim, imagine what one of these babies could do with say a Greta Thunberg or Amanda Gorman super-charging it?
At some point a DAO will likely make an even bigger splash.
KrauseHouseDAO — an homage of sorts to the late Chicago Bulls’ general manager Jerry Krause — recently tried to raise money to buy the Chicago Bulls. Or maybe, as Yahoo Finance’s Zack Guzman tweeted, a DAO might buy the Broncos. (Legendary Bronco quarterback John Elway, who missed out on a chance to buy a stake in 1998 and is reportedly interested in buying in today, may want to bone up on DAOs.)
DAOs may end up doing a million small things too. “The future of the concept of the DAO ends up becoming a group-chat of a few people who pull money together to do stuff,” says Taub. “[It’s] Web3 with an iMessage wallet attached to it. iMessage meets Venmo.”
For now at least, reverberations from the great Constitution auction of 2021 are still being felt. Bloomberg reports that “Michael Novogratz, billionaire founder of Galaxy Digital Holdings, said Thursday during the Goldman Sachs U.S. Financial Services Conference that Griffin’s bid spoiled the party."
“ConstitutionDAO might have been the coolest thing that happened all year long in crypto, because it’s the pure essence of, ‘Here we are, we are doing it for the people, buying one of the founding documents, one of 13 Constitutions, and we’re gonna give it back to the people.’ Unfortunately, Ken Griffin played the Grinch — rich billionaire coming in to kind of spoil the party, in what I would call a tone-deaf move.”
Note that Novogratz playing the Everyman may strike some as ironic, given that one could argue the Princeton wrestling champ, cum National Guard helicopter pilot, cum Goldman Sachs’ partner, cum hedge fund honcho, cum Federal Reserve advisor is of the old elite world. But note too that Novo has been whole-hog into crypto for more than half a decade now.
So what about this idea generally that DAOs and crypto are disrupting Wall Street?
“It’s weird for me to see things like bitcoin and crypto being touted as an inequality breaker,” says Cullen Roche. "When you look at ownership of bitcoin it’s way more massively unequal even than stocks and bonds are at present. There’s also a lot of hype and narrative of some of these things that exaggerate the benefits of the existing system. Is this really going to overthrow the financial system? Do you think Ken Griffin will go away without a fight?”
There are problems aplenty to be worked out with DAOs. For example, here’s what Alexis Goldstein, the director of financial policy for the Open Markets Institute, says when asked if DAOs can serve as an alternative financial structure that decentralizes control: “In theory, but what I’ve seen in practice it more closely resembles what is seen in shareholder votes: The biggest shareholders have the biggest say.”
Then there are the risks that accompany DAOs as Roche notes: “You could have DAOs being run by Russian bots that are buying, who knows, public companies, doing weird things that could have a big impact on U.S. economic outcomes.”
Roche, Goldstein and others agree that what DAOs desperately need is regulation and governmental oversight. Problem is the politicians never seem to agree on anything — which disruptors love. Caveat Emptor.
<<<
>>> US leads China in 'digital currency space race,' crypto exec says
Yahoo Finance
by Alexandra Semenova
December 10, 2021
https://finance.yahoo.com/news/us-beats-china-digital-currency-space-race-circle-ceo-212552244.html
As the global digital currency race heats up, Circle CEO Jeremy Allaire thinks the broader stablecoin adoption expected to come with regulatory clarity from Washington can give the United States a needed edge in minting the financial system of the future.
Testifying along with five other crypto leaders at Wednesday’s landmark congressional hearing, the digital payment provider’s chief executive officer said the U.S. is beating China in stablecoin transactions with trillions of U.S. dollar-backed payments carried out, compared to $10 billion completed by China’s central bank in its experimental digital yuan program, though clearer rules for mass use are needed to sustain this pace.
“This has the potential to grow at a very significant speed around the world and benefit the U.S. dollar and benefit American businesses,” Allaire told lawmakers. “And I think the primacy and development of this infrastructure is a national security and economics priority for the United States, and we need to get going on it right now.”
Despite larger transaction volumes, U.S. stablecoin issuers lack the key support from policymakers that is crucial for wider adoption, while China’s central bank has pushed forward with real-world trials of digital currencies. As the stablecoin market grows rapidly, reaching over $140 billion as of November, key players are eager for a nod from Washington as watchdogs inch closer towards support for institutional use.
“The United States and the U.S. dollar are winning the digital currency space race today,” Allaire, whose Circle is the second-largest stablecoin issuer, told members of Wednesday’s meeting, citing trillions in transactions.
A central bank digital currency (CBDC) tracker and database from the Atlantic Council, a nonpartisan think tank on international affairs, however, states the U.S. is the furthest behind in digital currency progress among countries with the four largest central banks.
“In the long term, the absence of U.S. leadership and standards setting can have geopolitical consequences, especially if China maintains its first-mover advantage in the development of CBDCs," Atlantic Council researchers wrote.
While Circle has come out against the launch of a centrally-managed CBDC — which differ from stablecoins because they are privately issued — the company has supported the Biden administration’s proposal to regulate stablecoin issuers as banks, viewing the move as a step forward for the industry.
“We think this represents significant progress in the growth of this industry,” Allaire previously told Yahoo Finance. “There's a real recognition that as these payment stablecoins grow, they could grow at internet scale relatively quickly."
'Viable means of payment'
Flagship financial institutions are also bracing for regulation and the potential for institutional use.
Bank of America (BAC) sees developments in the regulatory sphere around stablecoins as a good thing for payment companies, recently identifying Mastercard (MA), Signature (SBNY), Visa (V) and Western Union (WU) as potential beneficiaries.
“We expect regulatory clarity to increase stablecoin use as a viable means of payment, likely driving retail adoption,” Bank of America global research analysts wrote in a recent note.
“Stablecoin regulation is a significant first step toward a comprehensive regulatory framework that encompasses the digital asset ecosystem,” BofA said. “We view a comprehensive regulatory framework as a catalyst to mass adoption of digital assets.”
<<<
>>> The Great Crypto Crackdown
BY JAMES RICKARDS
SEPTEMBER 28, 2021
https://dailyreckoning.com/the-great-crypto-crackdown/
The Great Crypto Crackdown
It was another bad day for the stock market today. The major indexes were down big on fears of rising Treasury yields (I don’t believe they’ll continue to rise, but that’s a story for a different day).
Are you thinking of parking your money in cryptocurrencies like Bitcoin as an alternative to stocks?
I’m not here to tell anyone what to do with their money, but you might want to think twice…
China just made cryptocurrencies illegal in the world’s second-largest economy. No transactions in cryptos are to be allowed, nor is cryptocurrency “mining.”
The all-out ban is a departure from China’s previous attempts to simply regulate cryptocurrencies as a means to control them.
The People’s Bank of China (PBOC) said the ban is necessary to “maintain national security and social stability.”
China’s crackdown on cryptos is best understood in the broader context of the rise of central bank digital currencies (CBDCs).
Total Surveillance
China is very far along in its roll-out of a digital yuan: the Chinese CBDC. China will use the 2022 Winter Olympics in Beijing as a major showcase for this. They will try to cause all transactions for vendors, hotels, tickets, souvenirs, etc., to be conducted in the digital yuan.
The European Central Bank (ECB) is also working on a prototype CBDC, and the Fed is doing research and development work on its own CBDCs, in conjunction with MIT.
So CBDCs are coming fast.
The benefits of CBDCs are obvious, including faster transaction times and lower transaction costs. No more 2.5% merchant acquirer fees for Visa!
But the dark side of CBDCs includes the following: easy to monitor citizens’ whereabouts and buying habits, easy to impose negative interest rates, easy to seize and freeze accounts, etc.
This is why China is pushing so hard on its own CBDC. They want total surveillance of their people. They can then determine if they are buying prohibited books or supporting prohibited causes or traveling to sensitive areas such as Xinjiang.
In a U.S. version of this dystopia, your account might be frozen if you donate to the wrong political causes, groups or “extremist” political candidates (basically, anyone who disagrees with the preferred narrative).
If You Can’t Stop It, Control It
People will seek freedom from this digital-monetary dystopia by going to alternatives. What are they? The answer is cash, gold and cryptos.
Cash is already fighting for its life, thanks to people like Harvard Professor Ken Rogoff and his book The Curse of Cash. Cryptos are next to the guillotine. That’s the way to understand what’s happening in China.
If you want to push CBDCs (and the surveillance that goes with them), you have to eliminate cryptocurrencies first so people have nowhere to hide. Governments may have been planning that all along…
Here’s the thing: Governments don’t want to kill the blockchain; they want to control it.
Governments enjoy a monopoly on money creation, and they’re not about to surrender that monopoly to cryptocurrencies like Bitcoin.
But governments know they cannot stop the technology platforms on which the cryptocurrencies are based. Blockchain technology has come too far to turn back.
They have sought to do so using powers of regulation, taxation, investigation and ultimately more coercive powers, including arrest and imprisonment of individuals who refuse to obey government mandates with regard to blockchain. That’s what we’re seeing in China today.
Governments, regulators, tax authorities and the global elite are moving in for the crypto-kill. The future of Bitcoin may be a dystopia in which Big Brother controls the blockchain and decides when and how you can buy or sell anything and everything. That’s the logic of CBDCs.
Furthermore, cryptocurrency technology could be the very mechanism used by global elites to replace the dollar-based financial system.
Government Sets the Trap
In 1956, Mao Zedong, the leader of the Communist Party of China and China’s dictator, was confronted with demoralized intellectuals and artists who were alienated by Communist rule. As a policy response, he declared a new policy of intellectual freedom.
Mao declared, “The policy of letting a hundred flowers bloom and a hundred schools of thought contend is designed to promote the flourishing of the arts and the progress of science.”
This declaration is referred to as the “Hundred Flowers Campaign” (often misquoted as the “Thousand Flowers Campaign”).
The response to Mao’s invitation was an enthusiastic outpouring of creative thought and artistic expression.
What came next was no surprise to those familiar with the operation of state power. Once the intellectuals and artists emerged, it was easy for Mao’s secret police to round them up, kill and torture some and send others to “reeducation camps” where they learned ideological conformity.
The Hundred Flowers Movement was a trap for those who placed their trust in the state. It was also a taste of things to come in the form of the much more violent and comprehensive Cultural Revolution of 1966–1976 in which all traces of Chinese bourgeoisie culture and much of China’s historical legacy were eradicated.
Something similar is going on with Bitcoin and distributed ledger technology (DLT) today. Governments have been patiently watching blockchain technology develop and grow outside their control for the past several years.
Libertarian supporters of blockchain celebrate this lack of government control. Yet their celebration has proven to be premature, and their belief in the sustainability of powerful systems outside government control is naive.
Blockchain does not exist in the ether (despite the name of one cryptocurrency), and it does not reside on Mars. Blockchain depends on critical infrastructure, including servers, telecommunications networks, the banking system and the power grid, all of which are subject to government control.
Basically, Big Brother is coming to the blockchain.
Canary in the Coal Mine
China is the canary in the coal mine. The U.S. will not be far behind in strict regulation of cryptocurrencies. The SEC’s Gary Gensler and Treasury Secretary Janet Yellen are already working on it.
With CBDCs as the new world money and cash and cryptos eliminated, gold is the only form of money left if you want to avoid the surveillance state.
The obvious attraction (apart from 5,000 years of history) is that it is nondigital and not issued by central banks. It cannot be hacked, frozen or seized online.
Bottom line: The news from China is the thin end of the wedge. It’s part of a much larger effort to substitute CBDCs for other forms of money.
And that is part of an even larger effort to control dissent and maintain social order. The COVID lockdowns are just one example.
It might be a good idea to buy your gold now… while you still can.
Regards,
Jim Rickards
for The Daily Reckoning
<<<
>>> Ray Dalio: I have more gold than crypto
MarketWatch
Sept. 15, 2021
By Frances Yue
https://www.marketwatch.com/story/ray-dalio-i-have-more-gold-than-crypto-11631734752?siteid=yhoof2
‘You don’t want to commit cash. You don’t want a bond… You want stocks, you want gold, you want tangible assets, you want real estate,’ Dalio said.
Though holding some bitcoin and admitting the cryptocurrency’s attraction as “alternative gold,” Ray Dalio disputed Cathie Wood’s view that bitcoin BTCUSD, 0.55% will rise tenfold in five years.
“That doesn’t make any sense to me,” the billionaire and founder of hedge fund Bridgewater Associates on Wednesday said at the SALT conference held in New York. The tenfold rise could be “very much a stretch,” Dalio said.
“There’s a certain amount of reflation turn-around for those kinds of things going up to make a price increase, and there’s a certain market share that gold might have, that bitcoin might have and other things might have,” Dalio said.
In a different panel of the SALT conference, Ark Invest’s ARKK, +0.83% Wood said on Monday that she expected bitcoin’s price to top $500,000.
Dalio also said he had more gold than crypto. “I would say diversification is a good thing. We could get into the merits of one versus the other,” he said.
Meanwhile, Dalio reiterated his view that the U.S. has “bad finances,” spending more than it is earning. “You can fill that in by printing money and continue to create debt. But that’s not sound finances.”
It means “you don’t want to commit cash. You don’t want a bond, it’s going to have a negative real return.” Dalio said. “You want stocks, you want gold, you want tangible assets, you want real estate, you want the things that are basically anti-money…you want to get into those things that have more of those intrinsic values accompanying it.”
When asked about his personal plans, Dalio said he expects to “go quiet” and “do the things I like to do” after a year or two.
“My goal is not anymore to be more successful myself but just to try to pass along. And then I’ll do that for a year or two. And then I’m done,” Dalio said.
<<<
>>> 3 Blockchain ETFs for Q4 2021
BLOK, BLCN, and LEGR are the three blockchain ETFs for Q4 2021
Investopedia
Aug 12, 2021
https://www.investopedia.com/news/3-blockchain-etfs-buy-2018/?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral
Blockchain exchange-traded funds (ETFs) own stocks in companies that have business operations in blockchain technology or in some way profit from it. Blockchain is made up of complex blocks of digital information and increasingly is used in banking, investing, cryptocurrency, and other sectors. While blockchain is a relatively new technology, many of the companies that operate in the space are well established. Some examples include International Business Machines Corp. (IBM), Oracle Corp. (ORCL), and Visa Inc. (V).
Many investors may be wary of risking an investment in blockchain due to the technology's association with the volatile cryptocurrency market. However, blockchain is not the same thing as cryptocurrency, and blockchain ETFs invest only in stocks of regulated companies, many of which are big blue-chip technology firms, and not in cryptocurrency directly.
KEY TAKEAWAYS
The three blockchain ETFs outperformed the broader market over the last year.
These three ETFs, ranked by one-year trailing total return, are BLOK, BLCN, and LEGR.
The top holdings of these ETFs are class A shares of MicroStrategy Inc., class A shares of Coinbase Global Inc., and Nvidia Corp., respectively.
There are three blockchain ETFs that trade in the U.S., excluding inverse and leveraged ETFs as well as funds with less than $50 million in assets under management (AUM). This list excludes the Bitwise Crypto Industry Innovators ETF (BITQ), which launched in May 2021 and does not have enough trading history to be included in our rankings.1
The three blockchain ETFs have outperformed the broader market over the past 12 months, posting higher total returns than the S&P 500's total return of 34.0%, as of Aug. 10, 2021.2 The best-performing blockchain ETF for Q4 2021, based on performance over the past year, is the Amplify Transformational Data Sharing ETF (BLOK). We examine the three blockchain ETFs below. All numbers are as of Aug. 10, 2021.1
Amplify Transformational Data Sharing ETF (BLOK)
Performance over One-Year: 112.9%
Expense Ratio: 0.71%
Annual Dividend Yield: 1.30%
Three-Month Average Daily Volume: 448,406
Assets Under Management: $1.2 billion
Inception Date: Jan. 16, 2018
Issuer: Amplify Investments
BLOK is an actively managed ETF that invests a minimum of 80% of its net assets in stocks of companies engaged in the development and utilization of blockchain technologies. It follows a blended strategy, investing in a mix of value and growth stocks of various market capitalizations across the world, and is comprised mostly of companies operating within the software & services and diversified financials industries.3
The fund's top three holdings are class A shares of MicroStrategy Inc. (MSTR), a provider of enterprise software platforms; class A shares of Square Inc. (SQ), a financial services and digital payments company; and Hut 8 Mining Corp. (HUT:TSE), a Canada-based bitcoin mining and blockchain infrastructure company.4
Siren Nasdaq NexGen Economy ETF (BLCN)
Performance over One-Year: 38.9%
Expense Ratio: 0.68%
Annual Dividend Yield: 0.63%
Three-Month Average Daily Volume: 55,737
Assets Under Management: $289.1 million
Inception Date: Jan. 17, 20185
Issuer: SRN Advisors
BLCN tracks the Nasdaq Blockchain Economy Index, which gauges the performance of companies involved in developing, researching, supporting, innovating, or utilizing blockchain technology.5 The ETF follows a blended strategy, investing in growth and value stocks, and its top three holdings are class A shares of Coinbase Global Inc. (COIN), the operator of a cryptocurrency exchange platform; class A shares of Square Inc.; and class A shares of MicroStrategy Inc.6
First Trust Indxx Innovative Transaction & Process ETF (LEGR)
Performance over One-Year: 36.4%
Expense Ratio: 0.65%
Annual Dividend Yield: 1.12%
Three-Month Average Daily Volume: 18,962
Assets Under Management: $117.8 million
Inception Date: Jan. 24, 2018
Issuer: First Trust
LEGR tracks the Indxx Blockchain Index, which gauges the performance of companies that either actively utilize, invest in, develop, or have products that are positioned to benefit from blockchain technology. The ETF normally invests a minimum of 90% of its net assets in equity securities that comprise the index and has a total of 100 holdings, excluding cash, most of which operate in the information technology and financial industries.7
LEGR's top three holdings include Nvidia Corp. (NVDA), a graphics processing unit manufacturer; Oracle Corp., a multinational computer technology company; and Advanced Micro Devices Inc. (AMD), a semiconductor manufacturer.8
<<<
>>> Invesco Files for Bitcoin ETF: Will It Be Approved?
Investopedia
By RAKESH SHARMA
Aug 12, 2021
https://www.investopedia.com/invesco-files-for-bitcoin-etf-will-it-be-approved-5197381?utm_campaign=quote-yahoo&utm_source=yahoo&utm_medium=referral
Invesco, an independent investment management company, has filed with the Securities and Exchange Commission (SEC) for a Bitcoin (BTCUSD) exchange traded fund (ETF) that will invest in Bitcoin futures and cryptocurrency exchange traded products (ETPs).1
The Atlanta-based company, which filed its application on Aug. 5, is the latest investment firm in a growing list to clamor for an ETF that will enable greater liquidity in the cryptocurrency ecosystem. There are more than a dozen firms in that list, and Invesco, which has more than $1.5 trillion worth of assets under management, is among the largest.2 Given recent precedence, Invesco might also become among the first firms to gain approval for a Bitcoin ETF.
KEY TAKEAWAYS
Independent investment management firm Invesco filed for a Bitcoin ETF last week.
The fund will not invest directly in the cryptocurrency and will put money in CME Bitcoin futures contracts and crypto ETP products
The filing toes the regulatory line drawn by the SEC Chair earlier, when he said that he is "looking forward" to reviewing filings based on CME-traded Bitcoin futures contracts.
More than a dozen Bitcoin ETF applications have been filed with the SEC since last year and are pending a decision.
A Fund That Does Not Invest Directly in Bitcoin
Per Invesco's filing, the Bitcoin Strategy fund will not directly invest in the cryptocurrency. Instead, it plans to invest in bitcoin futures contracts traded at the Chicago Mercantile Exchange (CME) and in crypto ETPs like the Grayscale Bitcoin Trust (GBTC). It will also put money into a host of traditional financial instruments, such as government securities and money market funds, for a "temporary defensive position" against the volatility of crypto markets.
Invesco's investment strategy is notable because it comes on the heels of recent comments made by SEC Chair Gary Gensler about the possible approval of a Bitcoin ETF. During his remarks at the Aspen Security Summit last month, Gensler said investment vehicles that provide exposure to crypto assets already exist in the markets and name-checked GBTC and mutual funds that invest in Bitcoin futures at CME.
"I anticipate that there will be filings with regard to exchange traded funds under the [1940] Investment Company Act. When combined with the other federal securities laws, the '40 Act provides significant investor protections. Given these important protections, I look forward to the staff's review of such filings, particularly if those are limited to these CME-traded Bitcoin futures," the SEC Chair said.3
Gensler, who taught a course on blockchain and cryptocurrencies at the Massachusetts Institute of Technology (MIT) before becoming a commissioner, has argued for bringing cryptocurrency exchanges and products under government regulation. He is a fierce critic of the current state of affairs in the crypto ecosystem. At the security forum, he said that cryptocurrencies in their current form were an asset class that was "rife with fraud, scams, and abuse in certain applications."
Both investments that Invesco mentioned in its filings report to government agencies. While CME falls under the jurisdiction of the Commodities Futures Trading Commission (CFTC), the Grayscale Bitcoin Trust is an SEC-reporting entity and plans to convert itself into an ETF in the future.4
A Possible Bitcoin ETF Approval?
To be sure, Invesco is not the only Bitcoin ETF application that aims to invest only in regulated derivative products such as Bitcoin futures contracts. Another investment firm VanEck filed for an ETF based on Bitcoin futures contracts back in 2017. It has resubmitted the application with "minor amendments," according to a recent report.5
However, Invesco's filing has generated excitement in the crypto community because it hews closely to Gensler's recent directive. There is also precedence in the recent past suggesting that the SEC might look at the filing favorably.
The Bitcoin Strategy ProFund (BTCFX) mutual fund, which also invests in the cryptocurrency's futures contracts traded at the CME, received approval from the agency earlier this year.6 "The advantage of this approach is clear. The futures market is regulated. So, you've got the CME [Chicago Mercantile Exchange], the CFTC [Commodity Futures Trading Commission], you've got the clearinghouse, and then you're in a mutual fund that people understand well and you can get in and out every day at NAV," ProShares head of investment strategy Simeon Hyman told CNBC.7
The head of investment strategy at Grayscale, a firm whose products have benefitted from Gensler's insistence on regulation, told the same channel that the SEC Chair's comments at Aspen were "very positive." According to Grayscale's David LaValle, "the story is no longer if there's going to be bitcoin ETF but when there's going to be a bitcoin ETF."
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>>> Hackers return $260 million to cryptocurrency platform after massive theft
Reuters
by Tom Wilson, Tom Westbrook and Alun John
August 11, 2021
https://finance.yahoo.com/news/defi-platform-poly-network-reports-064756815.html
LONDON/SINGAPORE/HONG KONG (Reuters) - Hackers behind one of the biggest ever cryptocurrency heists have returned more than a third of $613 million in digital coins they stole, the company at the center of the hack said on Wednesday.
Poly Network, a decentralised finance platform that facilitates peer-to-peer transactions, said on Twitter that $260 million of the stolen funds had been returned but that $353 million was outstanding.
The company, which allows users to swap tokens across different blockchains, said on Tuesday it had been hacked and urged the culprits to return the stolen funds, threatening legal action.
The hackers exploited a vulnerability in the digital contracts Poly Network uses to move assets between different blockchains, according to blockchain forensics company Chainalysis.
A person claiming to have perpetrated the hack said they did it "for fun" and wanted to "expose the vulnerability" before others could exploit it, according to digital messages shared by Elliptic, crypto tracking firm, and Chainalysis.
It was "always the plan" to return the tokens, the purported hacker wrote, adding: "I am not very interested in money."
The hackers or hacker have not been identified, and Reuters could not verify the authenticity of the messages.
Tom Robinson, co-founder of Elliptic, said the decision to return the money could have been prompted by the headaches of laundering stolen crypto on such a scale.
An executive from cryptocurrency firm Tether said on Twitter the company had frozen $33 million connected with the hack, and executives at other crypto exchanges told Poly Network they would also try to help.
"Even if you can steal cryptoassets, laundering them and cashing out is extremely difficult, due to the transparency of the blockchain and the broad use of blockchain analytics by financial institutions," said Robinson.
Poly Network did not respond to requests for more details. It was not immediately clear where the platform is based, or whether any law enforcement agency was investigating the heist.
The size of the theft was comparable to the $530 million in digital coins stolen from Tokyo-based exchange Coincheck in 2018. The Mt. Gox exchange, also based in Tokyo, collapsed in 2014 after losing half a billion dollars in bitcoin.
The Poly Network attack comes as losses from theft, hacks and fraud related to decentralised finance (DeFi) hit an all-time high, according to crypto intelligence company CipherTrace.
At $600 million, however, the Poly Network theft far outstripped the $474 million in criminal losses CipherTrace said were registered by the entire DeFi sector from January to July. The thefts illustrated risks of the mostly unregulated sector and may attract the attention of regulators.
DeFi platforms allow parties to conduct transactions, usually in cryptocurrency, directly without traditional gatekeepers such as banks or exchanges. The sector has boomed over the last year, with platforms now handling more than $80 billion worth of digital coins.
Proponents of DeFi say it offers people and businesses free access to financial services, arguing that the technology will cut costs and boost economic activity. But technical flaws and weaknesses in their computer code can make them vulnerable to hacks.
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>>> Skepticism builds within the Fed over the need for a digital dollar
Yahoo Finance
Brian Cheung
August 5, 2021
https://finance.yahoo.com/news/skepticism-builds-within-the-fed-over-the-need-for-a-digital-dollar-155332561.html
A second top Federal Reserve official on Thursday voiced his opposition to the creation of a Fed-issued digital currency that could be used by the general public.
Fed Governor Christopher Waller added that a central bank-issued digital currency (CBDC) may be costly to implement, arguing that privately issued stablecoins may better handle the need for faster payments.
“After careful consideration, I am not convinced as of yet that a CBDC would solve any existing problem that is not being addressed more promptly and efficiently by other initiatives,” Waller said in remarks at the American Enterprise Institute Thursday.
The Fed is currently in the early stages of evaluating the pros and cons of a CBDC, which could take the form of a digital dollar held in digital wallets managed by the central bank. The central bank plans on issuing a paper on the prospects of a CBDC and the broad cryptocurrency space in September.
But Waller has already joined his colleague, Fed Vice Chairman of Supervision Randal Quarles, in publicly criticizing the need for a CBDC. Quarles said in late June that a CBDC could be a serious target for hackers, arguing that issuing one would “pose significant and concrete risks.”
Waller similarly said that the “extreme cybersecurity risk” is the biggest downside concern, in his view.
Proponents of a CBDC argue that it could serve as a lower-cost way for users to make payments and transfer money, particularly for the roughly 5.4% of U.S. households that are unbanked (as of 2019).
The likes of former Federal Deposit Insurance Corp. Chair Sheila Bair have also argued that a CBDC, in future crises, would allow the Fed to bypass the banking system and provide monetary stimulus directly to American wallets.
Private stablecoins
Waller pushed back on the potential benefits of a Fed-issued digital dollar, questioning the central bank’s ability to build the technology at a cheaper cost than private issuers.
The Fed governor, who joined the central bank’s board in December 2020, said private stablecoins are already offering the “attractive payment instrument” of an asset that is pegged one-to-one to the dollar.
Stablecoins tie their values to one or more other assets, such as sovereign currencies, and serve as a less volatile asset compared to unbacked cryptocurrencies like bitcoin.
Still, Waller said stablecoins would benefit from some regulation, as Fed Chairman Jerome Powell has also suggested.
“It’s not clear that the stablecoin issuer is going to honor that 1:1 exchange rate in a run — if a run were to occur,” Waller said Thursday. He cited Tether as an example, suggesting that the nature of its commercial paper holdings are not transparent enough.
Waller proposed some liquidity test on the balance sheets of privately-issued stablecoins, which could evaluate the holdings of short-term government bonds and other securities widely regarded as highly liquid.
Bank of America wrote last week that stablecoins, whether private or central bank-issued, “seem inevitable and the only question is how soon and with what kinks along the way.”
An escalating debate within the Fed will raise further questions about the right balance between public and private players.
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>>> Tether Executives Said to Face Criminal Probe Into Bank Fraud
Bloomberg
By Tom Schoenberg, Matt Robinson, and Zeke Faux
July 26, 2021
DOJ examining whether banks were misled about crypto business
Tether says it’s committed to cooperating with law enforcement
https://www.bloomberg.com/news/articles/2021-07-26/tether-executives-said-to-face-criminal-probe-into-bank-fraud
A U.S. probe into Tether is homing in on whether executives behind the digital token committed bank fraud, a potential criminal case that would have broad implications for the cryptocurrency market.
Tether’s pivotal role in the crypto ecosystem is now well known because the token is widely used to trade Bitcoin. But the Justice Department investigation is focused on conduct that occurred years ago, when Tether was in its more nascent stages. Specifically, federal prosecutors are scrutinizing whether Tether concealed from banks that transactions were linked to crypto, said three people with direct knowledge of the matter who asked not to be named because the probe is confidential.
Criminal charges would mark one of the most significant developments in the U.S. government’s crackdown on virtual currencies. That’s because Tether is by far the most popular stablecoin -- tokens designed to be immune to wild price swings, making them ideal for buying and selling more volatile coins. The token’s importance to the market is clear: Tethers in circulation are worth about $62 billion and they underpin more than half of all Bitcoin trades.
“Tether routinely has open dialogue with law enforcement agencies, including the DOJ, as part of our commitment to cooperation and transparency,” the company said in a statement. Its corporate structure consists of a tangled web of entities based in the British Virgin Islands and Hong Kong.
The Justice Department declined to comment.
Read More: Why Yellen and Powell Cast a Wary Eye on Stablecoins
Federal prosecutors have been circling Tether since at least 2018. In recent months, they sent letters to individuals alerting them that they’re targets of the investigation, one of the people said. The notices signal that a decision on whether to bring a case could be made soon, with senior Justice Department officials ultimately determining whether charges are warranted.
The probe is reaching a tipping point as stablecoins attract intense scrutiny from regulators. The U.S. Treasury Department and Federal Reserve are among agencies concerned that the tokens could threaten financial stability, and are obscuring transactions tied to money laundering and other misconduct because they allow criminals to make payments without going through the regulated banking system. Treasury Secretary Janet Yellen said last week that watchdogs must “act quickly” in considering new rules for stablecoins.
Tether's Dominance
The token is by far the most popular stablecoin
A hallmark of Tether is that its creators have said each token is backed by one U.S. dollar, either through actual money or holdings that include commercial paper, corporate bonds and precious metals. That has triggered concerns that if lots of traders sold stable coins all at once, there could be a run on assets backstopping the tokens. Fitch Ratings has warned that such a scenario could destabilize short-term credit markets.
Read More: Crypto Lode of $100 Billion Stirs U.S. Worry Over Hidden Danger
Tether was first issued in 2014 as a solution to a problem plaguing the crypto market: banks didn’t want to open accounts for virtual-currency exchanges because they feared touching funds tied to drug trafficking, cyberattacks and terrorism. By accepting Tether, exchanges could give traders a way to park their balances without being exposed to Bitcoin’s price gyrations. And funds could be transferred instantaneously from exchange to exchange.
But Tether’s corporate side still needed banks to hold its money and process customer transactions. One early relationship that soured was with Wells Fargo & Co. In 2017, the Tether Ltd. affiliate and Bitfinex -- a crypto exchange with common owners and executives -- sued Wells Fargo for blocking wire transfers that had been sought through Taiwanese banks.
In the lawsuit, Tether Ltd. and Bitfinex said Wells Fargo knew, or should have known, that the transactions were being used to obtain U.S. dollars so clients could purchase digital tokens. The companies dropped the case shortly after filing it.
Wells Fargo declined to comment.
In the course of its years-long investigation, the Justice Department has examined whether traders used Tether tokens to illegally drive up Bitcoin during an epic rally for cryptocurrencies in 2017. While it’s unclear whether Tether the company was a target of that earlier review, the current focus on bank fraud suggests prosecutors may have moved on from pursuing a case tied to market manipulation.
Tether has already drawn the ire of regulators. In February, Bitfinex and several Tether affiliates agreed to pay $18.5 million to settle claims from New York Attorney General Letitia James that the firms hid losses and lied that each token was supported by one U.S. dollar. The companies had no access to banking in 2017, making it impossible that they had reserves backing the tokens, James said. The firms settled without admitting or denying the allegations.
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>>> A Digital Money Rush Is Great. A Run, Not So Much
Stablecoins will become much more widely used and need balanced regulation before they’re too big to fail.
Bloomberg
By Andy Mukherjee
July 22, 2021
https://www.bloomberg.com/opinion/articles/2021-07-22/fed-needs-to-regulate-stablecoins-before-they-become-too-big-to-fail-in-a-crisis?srnd=premium
In Hong Kong, money has been privately issued since 1846. The bill in my wallet is a promise from HSBC Holdings Plc’s local banking unit to pay the value written on it. In accepting it, I gave no thought to the creditworthiness of the lender. Whoever it’s passed on to will also take the banknote at face value, and won’t ask for Hong Kong dollars printed by Standard Chartered Plc instead.
Not requiring due diligence on cash sounds commonsensical, but it’s actually a highly valuable property of money everywhere. Indeed NQA, or “No Questions Asked,” is so important that Yale School of Management finance professor Gary Gorton and Federal Reserve attorney Jeffery Zhang have made it the centerpiece of their new paper, titled “Taming Wildcat Stablecoins.”
Blockchain-based stablecoins such as Tether and the upcoming Diem are the latest form of private money: Tokens that don’t offer Bitcoin-type speculative thrills but seek acceptance instead as one-to-one clones of national currencies. They could become a powerful part of the modern digital economy, provided we know how to prevent a run on them.
Trust in physical cash is supplied by regulators. Since the value of Hong Kong’s currency is pegged to the U.S. dollar, the city’s three note-issuing institutions 1 buy certificates of indebtedness from the monetary authority by paying it 1 dollar for every 7.8 local units they print. Hong Kong’s 7.5 million people don’t have to ask any further questions about the worth of their money.
However, as digital stablecoins proliferate globally, NQA may not hold. That’s what happened during the free banking era in the U.S., when notes issued by a lender in Tennessee would sometimes be discounted by 20% in Philadelphia. “There was constant haggling and arguing over the value of notes in transactions,” Gorton and Zhang write. “Private bank notes were hard to use in transactions.”
Things changed because of the Civil War. President Abraham Lincoln wanted desperately to raise money for the war effort by selling bonds to newly chartered national lenders. The law Congress passed in 1863 also ushered in a uniform currency. Thereafter, banks were taxed for paying out other types of notes, driving them out of existence.
The researchers argue that stablecoins are in a similar situation. In the current regulatory vacuum, they’ll struggle to become no-questions-asked money. For NQA, they’ll need the state’s blessing — and oversight. That’s been in short supply because rapid growth of the novel product has taken regulators by surprise.
But while blockchain technology is new, the economic logic of stablecoins isn’t. Buying $100 worth of these tokens is no different from a depositor parking $100 in a checking account, which preserves its value because of deposit insurance and regulatory scrutiny. Stablecoins will need a similar setup. Or, if the issuers want to avoid the cost of being a commercial bank, regulators will have to insist on transparent, one-to-one backing of liabilities with safe assets. Only then can the public reliably trust tokens claiming to mimic official units of account — dollar, euro, pound, yen, yuan and so on.
Without these safeguards, allowing stablecoins to compete with bank deposits could spawn another combustible financial product. Money market mutual funds, which have avoided being regulated as bank deposits, had to be bailed out twice in a dozen years: during the 2008 crisis, and then again last year when Covid-19 struck. Gorton and Zhang caution that if policy makers wait a decade, stablecoin issuers will become the money market funds of the future. Doubts about a token’s ability to honor its promise of 1:1 exchange into fiat money could prompt users to make a beeline for redemption. Fire sales of assets by the coin issuer could afflict other corners of finance, forcing governments “to step in with a rescue package whenever there’s a financial panic,” the researchers say.
At a little over $100 billion, the combined market value of the top five coins tracking the dollar — Tether, USD Coin, Binance USD, Dai and Terra USD — is modest at present. But that’s because stablecoin users have mostly come from cryptocurrency investors. With Visa Inc. starting to accept USD Coin to settle card payments, it’s only a matter of time before usage goes mainstream. The Diem Association, a consortium of Facebook Inc. and other companies and nonprofits, has tied up with a bank. Diem’s dollar stablecoin can thus be launched from within the the U.S. banking system, and Facebook’s enormous reach could make it take off. Given the rapid pace at which the landscape is changing, Treasury Secretary Janet Yellen is right to tell U.S. regulators to hurry up and put in place a regulatory framework for stablecoins.
If the rules strike the right balance between supporting innovation and maintaining stability, the U.S. may not need to follow China into offering an official digital currency, a possibility that a top Fed official raised recently.
Will the Fed choose regulated private stablecoins, a central bank-issued digital currency, or both? Even as the rest of the world awaits answers, some decisions should be made right away. Tether, the most used dollar coin, is owned by Hong Kong-based iFinex Inc. Every country could potentially have a crypto or fintech firm mirror their official unit of account. Trying to regulate entities once they’re already too big to fail would be pointless.
Money in the 21st century may not need to be official. But it still has to be no-questions-asked, like the Hong Kong dollars in my wallet. That’s a power that only regulators can bestow. They should use it well.
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