Značka: Stablecoin

Tether continues to reduce commercial paper in sharp reduction since March

Tether is reducing its commercial paper holdings on pace with plans, the stablecoin company reported Friday. It has reached the target sum of $8.4 billion in commercial paper, as per intentions first disclosed last month, and will continue to reduce its holdings in the immediate future. On July 31, $5 billion of Tether’s commercial paper holdings will expire, leaving the company with $3.5 billion dollars’ worth in its portfolio. As a result, treasury reserves will make up a larger proportion of the company’s reserves, the report emphasized. Tether stablecoin USDT had about $20.1 billion in commercial paper backing as of March 31. The company’s quarterly assurance opinion stated that the percentage of commercial paper in its reserves was falling and its reserves were fully backed.Related: USDC’s ‘real volume’ flips Tether on Ethereum as total supply hits 55.9BThe stablecoin became depegged for a brief time in May amid broad market turbulence. On June 15, two days after cryptocurrency lending platform Celsius announced it was halting withdrawals, Tether issued a statement to refute rumors that 85% of that portfolio was Asian and Chinese commercial paper trading at a significant discount. Tether stated at that time that it had a goal of reducing its commercial paper portfolio to zero. The USDT market cap fell to an eight-month low, at below $70 billion, a few days later. 1/I have been open about the attempts from some hedge funds that were trying to cause further panic on the market after TERRA/LUNA collapse.It really seemed from the beginning a coordinated attack, with a new wave of FUD, troll armies, clowns etc. https://t.co/hhcsgHV1Ow— Paolo Ardoino (@paoloardoino) June 27, 2022Those are not all of Tether’s stability woes, however. Tether chief technology officer Paolo Ardoino said in a long Twitter thread Monday that the stablecoin was “under attack” from hedge funds. He went on to say the same hedge funds “believed and helped all the FUD spread by the truthers in the past months [and] years.”

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EU agrees on MiCA regulation to crack down on crypto and stablecoins

Officials from the European Union (EU) have agreed on a landmark law that will make life tougher for crypto issuers and service providers under a new single regulatory framework. Stefan Berger, European Parliament member and rapporteur for the MiCA regulation — the person appointed to report on proceedings related to the bill — broke the news on Twitter saying that a “balanced” deal had been struck, which has made the EU the first continent with crypto-asset regulation.MiCA Trilog: Durchbruch! Europa ist der erste Kontinent mit einer Krypto-Asset Regulierung. Parlament, Kommission & Rat haben sich auf ausgewogene #MiCA geeinigt. Für mich als Berichterstatter war wichtig, dass es hier keine Verbannung von Technologien wie #PoW gibt /1— Stefan Berger (@DrStefanBerger) June 30, 2022Known as the Markets in Crypto-Assets (MiCA) framework, the provisional agreement includes rules that will cover issuers of unbacked crypto assets, stablecoins, trading platforms, and wallets in which crypto-assets are held, according to the European Council.Bruno Le Maire, French Minister for the Economy, Finance, and Industrial and Digital Sovereignty claimed the landmark regulation “will put an end to the crypto wild west.”Stablecoins hobbledIn the wake of the dramatic collapse of TerraUSD, the MiCA regulation aims to protect consumers by “requesting” stablecoin issuers to build up a sufficiently liquid reserve.In a Twitter thread, Ernest Urtasun, a member of the European Parliament, explained that reserves will have to be “legally and operationally segregated and insulated” and must also be “fully protected in case of insolvency.”It will see a cap on stablecoins of 200 million Euros in transactions per day. 3/13 Large stablecoins will be subject to strict operational and prudential rules, with restrictions if they are used widely as a means of payment, and a cap of 200€millions in transactions/day.— Ernest Urtasun (@ernesturtasun) June 30, 2022

Crypto Twitter users have already branded the regulation as unworkable, with 24-hour daily volumes of Tether (USDT) at $50.40 billion (48.13 billion Euros) and USD Coin (USDC) at $5.66 billion (5.40 billion Euros) at the time of writing. There would also be difficulty enforcing these rules for decentralized stablecoins, such as DAI. The agreement came on the same day as Circle’s launch of its Euro-backed stablecoin — Euro Coin.As @circlepay brings #EUROC online, a Euro-backed digital currency, we aim to make this a trusted, well-regulated and MICA-conforming innovation. https://t.co/mroCxMCxfs— Dante Disparte (@ddisparte) June 30, 2022

Consumer protectionsCrypto-asset service providers (CASPs) will be required to adhere to strict requirements aimed at protecting consumers, and can also be held liable if they lose investors’ crypto-assets. Urtasun explained that trading platforms will be required to provide a whitepaper for any tokens that don’t have a clear issuer, such as Bitcoin, and they will be liable for any misleading information. There will also be warnings for consumers about risks of losses associated with crypto assets and rules on fair marketing communications. Market manipulation and insider trading is also of focus, according to a statement from the European Council: “MiCA will also cover any type of market abuse related to any type of transaction or service, notably for market manipulation and insider dealing.”The new sheriff: ESMAThe provisional agreement will also see crypto-asset service providers (CASPs) needing authorization in order to operate in the EU, with the largest CASPS to be monitored by the European Securities and Markets Authority (ESMA).ESMA is an independent securities markets regulator in the EU, which was founded in 2011. The new law does not include a ban on proof-of-work technologies or include non-fungible tokens (NFTs) within its scope.However, in regards to NFTs, the European Commission said it will be looking into this over the next 18 months and could create a “proportionate and horizontal legislative proposal” to address emerging risks of the market if it deems necessary. Related: Coinbase seeking aggressive European expansion amid crypto winter“Europe’s upcoming crypto-assets policy framework will be to crypto what GDPR was to privacy,” added Circle’s Disparte. The provisional agreement is still subject to approval by the Council and the European Parliament before headed for formal adoption.

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Double bubble? Terra's defunct 'unstablecoin' suddenly climbs 800% in one week

Terra’s $40-billion experiment to create a functional “algorithmic stablecoin” project has failed drastically following its collapse in May. Nonetheless, its native stablecoin TerraClassicUSD (USTC), earlier called TerraUSD (UST), has been thriving in the past week.Dead stablecoin walkingTo recap, UST lost its U.S. dollar peg in May following mass withdrawals from Anchor Protocol, a lending and borrowing platform offering up to 20% yield to clients on their UST deposits. As of June 15, the token was almost worthless, trading at $0.005 at the Kraken crypto exchange.But USTC started recovering afterward, insomuch that its value per token almost reached $0.10 on June 29. Simultaneously, its capitalization surged from $65 million to $767 million in the same period, according to data from CoinMarketCap.USTC market cap. Source: CoinMarketCapThat is despite USTC operating as an abandoned token after Terra launched a new blockchain with a new native asset LUNA 2.0, following a “hard fork” in May.Interestingly, LUNA 2.0’s older version, called LUNA, which now operates under the name “Terra Classic (LUNC), has also witnessed a spike in its market valuation like USTC, surging from around $160 million to $767 million in June.LUNC market cap. Source: CoinMarketCapMassive concentrated Terra pumpAccording to CoinMarketCap, more than 45% of trading volume behind USTC and LUNC’s surprising price boom has originated from KuCoin, a centralized exchange platform reportedly operating from Seychelles.KuCoin’s lead backer is NEO Global Capital, a Singapore-based venture capital firm also exposed to financial platforms like Babel Finance and CoinFLEX. Both platforms have been facing liquidity troubles due to the ongoing crypto market decline.”This isn’t a boom, bust and boom again cycle,” warned InvestmentU, a financial analytics group in its June 28 note, saying that LUNC could decline massively because “the tech behind it is dead.””Its (LUNC) raison d’etre has been vanquished. And so has its price. While we can appreciate investors’ natural desires for outsized gains, there are better ways to go about it than this.”Related: Terra’s LUNA2 skyrockets 70% in nine days despite persistent sell-off risksThe outlook appears the same for USTC, which has failed to perform its main function, i.e. providing clients a digital, stable version of the U.S. dollar.This is a game for whales Dump Next Time ☝️ all newcomers Lose Money — Crypto Bull (@_Crypto_Bull) June 29, 2022The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Terra's LUNA2 skyrockets 70% in nine days despite persistent sell-off risks

The price of Terra (LUNA2) has recovered sharply nine days after falling to its historic lows of $1.62. On June 27, LUNA2’s rate reached $2.77 per token, thus chalking up a 70% recovery when measured from the said low. Still, the token traded 77.35% lower than its record high of $12.24, set on May 30.LUNA2’s recovery mirrored similar retracement moves elsewhere in the crypto industry with top crypto assets Bitcoin (BTC) and Ether (ETH) rising by approximately 25% and 45% in the same period.LUNA2/USD four-hour price chart versus BTC/USD. Source: TradingViewLUNA2 price rally could trap bullsThe recent bout of buying in the LUNA2 market could trap bulls, given it has come as a part of a broader correction trend.In detail, LUNA2 appears to be forming a “bear flag” pattern, a bearish continuation setup that appears as the price consolidates upward inside a parallel ascending channel after undergoing a large move downside.Bear Flags resolve after the price breaks below the channel’s lower trendline. As a rule of technical analysis, their breakdown takes the price to the level at a length equal to the size of the previous downside move (called “flagpole”), as shown in the chart below.LUNA2/USD daily price chart featuring ‘bull flag’ setup. Source: TradingViewLUNA2, now trading near its Bear Flag’s upper trendline (~$2.40), could undergo an imminent pullback toward the pattern’s lower trendline near $2. If accompanied by an increase in volume, an extended price correction would put LUNA2 at risk of crashing to $1.30, down almost 50% from June 2’s price. LUNA2 is riskyLUNA’s depressive technical outlook also takes cues from its controversial history.Notably, LUNA2 came to existence in late May as a means to compensate investors who had suffered losses during the collapse of Terra’s algorithmic stablecoin, now called TerraClassic USD (USTC).Meanwhile, the almost-worthless old version of LUNA2, named LUNA, started trading as an independent token under the revamped brand called “Terra Classic (LUNAC).”LUNA2 opened across major exchanges with a 483% spike to $12.24, only to give up all the gains in a massive correction move later. Mati Greenspan, the founder of crypto research firm Quantum Economics, noted that nobody in their right mind would want to invest in LUNA2 after the LUNAC collapse.LUNA/USD daily price chart. Source: TradingViewThat leaves LUNA2 in the hands of hardcore holders who want to recoup their Terra losses entirely and speculators who want to place excessively leveraged bets on its day-to-day volatile price moves. Related: Bitcoin price dips under $21K while exchanges see record outflow trendInterestingly, such speculations are also leading LUNAC and USTC’s market cap higher.LUNAC and USTC market cap. Source: CoinMarketCapThe market capitalization of LUNAC, despite being dead in theory, has risen by 75% to $594 million on June 27, after reaching as low as $339 million on June 12. Similarly, USTC’s market valuation has rallied from $13 million to $96 million in the same period.The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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Swiss National Bank exec: Regulators may favor centralized stablecoins after Terra crisis

Swiss National Bank (SNB) deputy head Thomas Muser talked to Cointelegraph editor Aaron Wood and discussed the ongoing trends in central bank digital currencies (CBDCs), stablecoins, and regulations, during the recently concluded European Blockchain Convention (EBC) 2022.Talking about the innovation and adoption of private stablecoins and plans of central banks regarding the CBDC launch, Moser said both could co-exist. He said that CBDC’s function would be very basic and private stablecoin issuers can add services on top of them to meet retail customers’ needs.When asked about the recent collapse of the Terra’s UST and its subsequent impact on regulations, Moser said that the recent spiral crash of the Terra and its decentralized algorithmic stablecoin UST could have a lasting impact on the regulators. He added that regulators may be forced to favor centralized stablecoins over decentralized ones although not every decentralized stablecoin is like UST. He said:“My fear is that that, that people will throw all decentralized stable currency in the same kind of category, which is not true, you know, so there’s a danger. I think that regulation will favor centralized stablecoins.”When asked about the developments on the regulations front, Moser hinted that it could take time. He cited the example of internet regulations from the 1990s where regulators took time to come up with new rules instead of implementing the existing telephone regulations. Related: CBDC may threaten stablecoins, not Bitcoin: ARK36 execMoser said, if current financial regulations are implemented in the crypto industry, the decentralized finance (DeFi) ecosystem would cease to exist. He explained:“if you just take the existing regulation and put it on crypto then defi will disappear. Because you will only have centralized entities that you can regulate with the current regulation. For DeFi, where there is no single entity to be held accountable for, which is really just small contracts interacting, you need a different type of regulation.”Switzerland’s central bank is among the selected few that have begun the pilot for their national CBDCs, apart from China. The central bank carried out wholesale CBDC testing in January this year. Later in the same month, SNB published a report based on its trials and suggested that the risks outweigh the benefits.

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China’s BSN chair calls Bitcoin Ponzi, stablecoins 'fine if regulated'

Amid the Chinese government continuing to celebrate the massive decline of cryptocurrency markets this year, one key local blockchain expert has referred to crypto as a “Ponzi scheme.”Yifan He, CEO of Red Date Technology, a major tech firm involved in the development of China’s major blockchain project, the Blockchain Service Network (BSN), has penned a new article devoted to various kinds of cryptocurrencies and their supposed Ponzi-like nature.Published in the local newspaper The People’s Daily on June 26, the piece refers to private cryptocurrencies as the “biggest Ponzi scheme in human history.”The author mentioned the Terra network’s collapse, with the native token LUNA crashing 99% and the algorithmic UST stablecoin losing its 1:1 peg value to the U.S. dollar in May 2022. He also criticized the increasingly popular virtual currency concept known as X-to-earn, referring to move-to-earn or play-to-earn projects, calling the model a “phishing strategy.” The BSN chair also mentioned some well-known criticism of Bitcoin (BTC) by Microsoft founder Bill Gates and legendary investor Warren Buffett.He is not a fan of Bitcoin or any similar cryptocurrencies himself as well. “Currently all unregulated cryptocurrencies including Bitcoin are Ponzi schemes based on my understanding, just different risk levels based on the market caps and number of users,” He said in a statement to Cointelegraph on Monday.The BSN chair added that he had not had any cryptocurrency wallet or related assets ever: “I don’t touch them and won’t touch them in the future even if they become regulated because I don’t consider that they have any value whatsoever.”According to He, governments like El Salvador — which opted to adopt BTC as legal tender — “seriously need basic financing training.” “Otherwise, they put entire countries at risk unless their original intentions were to build state-owned crypto trading platforms and scam off on their citizens,” the exec told Cointelegraph.While criticizing Bitcoin and many other crypto projects, He still believes that some part of the crypto market could be doing just fine if it’s properly regulated. Cash-backed stablecoins like Tether (USDT) and Circle’s USD Coin (USDC) should not be viewed as Ponzi-like schemes, the BSN chair said, stating:“USDC or USDT are payment-related currencies, not speculative assets. Once they are fully regulated, they are fine.”He previously talked in favor of stablecoins in 2020. The executive once planned to integrate stablecoin payments into BSN as of 2021. The plan was eventually scrapped due to China’s hostility to crypto.Related: China warns Bitcoin is heading to zero but BoE looks on the bright sideThe news comes amid the Chinese government capitalizing on the ongoing crypto market crash to justify its multiple bans on the industry. The latest coordinated ban was enacted in September 2021, with multiple Chinese authorities taking action to prohibit all kinds of crypto transactions in the country.Despite all efforts, China continued to be a dominant Bitcoin mining supplier worldwide. According to data from the Cambridge Bitcoin Electricity Consumption Index, China was the second largest BTC mining hash rate producer after the United States as of January 2022.

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CBDC may threat stablecoins, not Bitcoin: ARK36 exec

Central bank digital currencies (CBDC) do not pose any direct threat to cryptocurrencies like Bitcoin (BTC) but are still associated with risks in relation to stablecoins, one industry executive believes.According to Mikkel Morch, executive director at the digital asset hedge fund ARK36, a state-backed digital currency like the U.S. dollar doesn’t necessarily have to be a competitor to a private or a decentralized cryptocurrency.That’s because the use cases and value proposition of the decentralized digital assets “often go beyond the realm of simple transactions,” Morch said in a statement to Cointelegraph on Thursday.The exec referred to Federal Reserve Chair Jerome Powell who earlier this year hinted that the United States government would not stop a “well regulated, privately issued stablecoin” from coexisting with a potential Fed digital dollar.As such, active commitment to the CBDC development does not mean that other countries like Singapore are unfriendly to non-state-backed cryptocurrencies, Morch said. The executive suggested that a CBDC roll-out may even “facilitate the proliferation of non-sovereign cryptocurrencies and blockchain technologies.”However, the concept of a CBDC is still associated with some risks in regard to stablecoins, Morch noted, stating:“Admittedly, though, a CBDC may diminish the role of and the demand for privately issued stablecoins provided that there is a market for stablecoins already in the country – which is more the case in the U.S. than it is in Singapore.”Morch’s remarks came in response to Singapore’s financial regulator and central bank pledging to be “brutal and unrelentingly hard” on any “bad behavior” from the cryptocurrency industry.On June 23, Singapore’s Monetary Authority’s (MAS) chief fintech officer Sopnendu Mohanty expressed a lot of skepticism about the value of private cryptocurrencies. He also said that he expected a state-backed alternative to be launched within three years.ARK36’s Morch also tied Mohanty’s latest comments with the recent dramatic events in the crypto industry, including the failure of the Terra ecosystem last month, the liquidity crisis of the Celsius crypto lending platform and Three Arrows Capital’s insolvency.Related: Stablecoins highlight ‘structural fragilities’ of crypto — Federal ReserveMorch specifically suggested that MAS’ comments on going brutal make a lot more sense if one takes into account that Three Arrows Capital, also referred to as 3AC, is a Singapore-based firm. “If half of the rumors about how the fund handled the capital of its customers are true, there is little wonder that Singapore’s financial authority sees the need for more regulation in the space,” he added.

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Tether to launch GBPT stablecoin pegged to British pound sterling

Major stablecoin company Tether is expanding its stablecoin offering with a new cryptocurrency pegged to the British pound sterling (GBP).Tether officially announced on June 22 that its upcoming GBP-pegged stablecoin, GBPT, will launch in early July and will initially support the Ethereum blockchain.GBPT will be a stable digital currency pegged on the 1:1 ratio to the GBPT, aiming to provide a faster and cheaper option for asset transfers.GBPT joins a family of four other fiat currency-pegged Tether tokens, including the largest stablecoin by market capitalization, USDT. Other stablecoins include the euro-pegged EURT, the offshore Chinese yuan-egged CNHT as well as the recently launched MXNT, the Mexican peso-pegged stablecoin.According to the announcement, GBPT will be built by the team of developers behind Tether USDT and operate under its main website, Tether.to.“We hope to help lead this innovation by providing cryptocurrency users worldwide with access to a GBP-denominated stablecoin issued by the largest stablecoin issuer […] Tether is ready and willing to work with U.K. regulators to make this goal a reality and looks forward to the continued adoption of Tether stablecoins”.Tether chief technology officer Paolo Ardoino pointed out the the United Kingdom is a major location for the next wave of industry transformation, adding:The announcement also mentions that HM Treasury in April 2022 announced plans to make the country a global cryptocurrency hub and bring stablecoins into its regulatory framework. The United Kingdom’s Economic and Finance Ministry also planned to amend its regulatory framework to include stablecoins as a means of payment.Related: Record stablecoin market share points to crypto upside: JPMorganTether’s GBPT launch comes amid the company’s main stablecoin, USDT, dropping below $70 billion in terms of market capitalization for the first time since October 2021. The stablecoin previously reached a value above $80 billion in May 2022.Tether’s shrinking market cap came amid the ongoing market decline and uncertainty around stablecoins, triggered by failure of algorithmic stablecoins like Terra USD. In contrast to algorithmic stablecoins, asset-backed stablecoins like Tether tokens are 100% backed by cash or cash equivalents like bank deposits, Treasury bills and others.

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Record stablecoin market share points to crypto upside: JPMorgan

The rapid surge in share of stablecoins like Tether (USDT) in the cryptocurrency market may point to an upcoming crypto upside, according to analysts at the American investment bank JPMorgan Chase.The percentage of stablecoins in the total crypto market value has been on the rise, reaching new historical highs in mid-June, JPMorgan strategists believe. Led by JPMorgan crypto market analyst Nikolaos Panigirtzoglou, the analysts provided their industry insights in the bank’s new investor note shared with Cointelegraph.Released on June 15, the investor note reads that the share of all stablecoins rose to above 14%, or a “new historical high, which brings it to well above its trend since 2020.”“The share of stablecoins in total crypto market cap looks excessively high, pointing to oversold conditions and significant upside for crypto markets from here,” the strategists said.Share of stablecoins in the total market cap. Source: JPMorganAccording to the analysts, the lower share of stablecoins in the crypto market is associated with a limited crypto upside. In late April 2022, the strategists forecasted a short-term drop in crypto prices as the share of stablecoins relative to the total crypto market fell from 10% to 7%.At the time of writing, the percentage of stablecoins in the total crypto market has surged even higher, amounting to 17%. According to the crypto data provider CoinGecko, the value of all stablecoins equals $155 billion, while the total market capitalization stands at $946 billion.The share of stablecoins has been growing over the past few weeks despite the total supply of all stablecoins dropping massively during the second quarter of 2022, seeing one of its sharpest declines in history. The stablecoin industry has been associated with a lot of FUD due to the failure of algorithmic stablecoins like Terra. Major cash-backed stablecoin issuers like Tether have been reassuring their customers that they have not been affected by issues like the Celsius’ crisis.Related: Tether’s USDT market cap dips below $70B for an 8-month lowThe total market capitalization has been also tanking this year, falling from above $2 trillion in January to below $1 trillion in mid-June.JPMorgan’s crypto strategists are known for taking a positive stance on the price of Bitcoin (BTC) in the long run. As previously reported, the analysts reiterated in February 2022 that their theoretical long-term target for Bitcoin stood at $150,000.

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Magic Internet Money token depegs as Terra (LUNA) domino effect persists

Magic Internet Money (MIM), a US dollar-pegged stablecoin of the Abracadabra ecosystem, joins the growing list of tokens losing their $1 value amid an untimely crypto winter. The sudden de-pegging of the MIM token commenced roughly on June 17, 7:40 pm ET, which saw the token’s price drop to $0.926 in just three hours.Terra’s LUNA and TerraUSD (UST) death spiral not only affected the investors but also had a negative impact on numerous crypto projects, including Abracadabra’s MIM token ecosystem — as alleged by Twitter handle @AutismCapital. Depegging of Magic Internet Money (MIM) token price chart. Source: CoinMarketCapCiting an insider scoop, AutismCapital claimed that Abracadabra accrued $12 million in bad debt as a direct result of Terra’s sudden downfall “because liquidations couldn’t happen fast enough to cover the protocol’s MIM liabilities.”We have a scoop from one of our associate autists: MIM (Magic Internet Money) may be nearly insolvent. MIM is one of the larger stablecoins, with a market cap of ~$300M.We can’t believe that a project called Magic Internet Money has been acting irresponsibly either.Details:— Autism Capital (@AutismCapital) June 17, 2022Daniele Sestagalli, the founder of Abracadabra, however, refuted the claims of insolvency by ensuring to have enough funds to pay back the piling debts — which has been attributed to the falling MIM prices. Sestagalli stated:“[The Abracadabra] Treasury has more money than the debt and $CRV are valuable for the protocol.”Doubling down on his stance, Sestagalli further publicly shared the treasury address holding $12 million in assets while asking concerned investors to verify the same using on-chain data.On the other hand, Autism Capital alleged that Sestagalli’s bad debt was created five days ago and shared the below screenshot showing his conversation about the same on MIM’s Discord group.Sestagalli’s conversation on MIM Discord group. Source: @AutismCapitalWhile the risk of insolvency continues to threaten the Abracadabra protocol, either through the MIM treasury continuing to dump in value or more bad debt created, investors are advised to keep track of market fluctuations and do their own research (DYOR) before making investment decisions. Related: USDD stablecoin falls to $0.97, DAO inserts $700M to defend the pegFive days ago, on June 13, Stablecoin protocol USDD’s price dipped to $0.97 on major crypto exchanges.1/ And it’s starting$USDD is currently just 92% collateralized by the Reserves (even considering $TRX funds) ⚠️If you subtract $TRX, it turns out collateralization ratio is currently 73%Also, the 140M $USDT are not really USDT, but jUSDT pic.twitter.com/fKYaIQEd1D— Res ®️ (@resdegen) June 12, 2022

To help out during the market fluctuations, the Tron DAO Reserve announced that it received 700 million USD Coin (USDC) to defend the USDD peg. As a result of the fund infusion, the team behind the stablecoin explained that the collateralization ratio of USDD is now boosted to 300%.

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Coinbase is facing class action suits over unstable stablecoins GYEN, TerraUSD

A class-action suit was filed against Coinbase on Thursday claiming the trading platform was negligent in its listing of the TerraUSD stablecoin and alleging that it failed to disclose its financial relationship with Terraform Labs. This is the second class-action suit outstanding against Coinbase. A suit was filed last month in connection with the depegging of GYEN in November. Thursday’s suit alleges Coinbase was negligent for failing to conduct due diligence of Terraform Labs before it listed TerraUSD and misrepresenting TerraUSD’s risk as an algorithmic stablecoin. The suit compares the information on stablecoins provided by trading platforms Robinhood, Gemini and Kraken to that of Coinbase and concluded that “Rather than disclose the nature of TerraUSD as uncollateralized, controlled by an algorithm, and highly risky, Coinbase passed it off as just another stablecoin.” The suit also claims Coinbase Ventures, the investment arm of the company, was one of the largest backers of Terraform Labs, and that was additional motivation for the company not to disclose TerraUSD’s volatility.Related: Elon Musk gets hit with ‘ridiculous’ $258B Dogecoin lawsuitThe plaintiffs and classes in the case are being represented by law firms Milberg Coleman Bryson Phillips Grossman and Erickson Kramer Osborne. The latter firm is also representing the plaintiffs in a case filed against Coinbase and GMO-Z.com Trust on May 13 related to the depegging of the Japanese yen-pegged GYEN stablecoin in November. The GYEN shot up in value then dropped precipitously a week after being listed on Coinbase, causing the platform to freeze some users’ accounts. Some users also lost money – “untold millions,” according to the suit – during the incident. The suit claims GMO-Z.com failed in its duties to the plaintiffs and the class in several ways, beginning with the design of the stablecoin.Coinbase is claimed to have engaged in negligent misrepresentation and failure to use reasonable care in listing the GYEN despite a reasonably foreseeable risk of depegging.

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Elusive Bitcoin ETF: Hester Peirce criticizes lack of legal clarity for crypto

The crypto sector may be maturing, but regulatory clarity around the treatment of digital assets continues to remain cumbersome. This was recently highlighted by Commissioner Hester Peirce — also known as the United States Securities and Exchange Commission’s (SEC) “crypto mom” — in remarks she made at “The Regulatory Transparency Project Conference on Regulating the New Crypto Ecosystem: Necessary Regulation or Crippling Future Innovation?”Peirce began her speech by emphasizing the importance of “regulating the new crypto ecosystem.” While this may be, Peirce also noted that the crypto industry is still in search of an actual regulator. She said: “A bipartisan bill announced last week attempts to answer that question. Some people in the crypto industry are celebrating the allocation of certain authorities to the Commodity Futures Trading Commission (CFTC) instead of the Securities and Exchange Commission. This view is likely rooted in a disappointment that the SEC has not used more proactively the authorities it already has to sensibly regulate crypto.” Everyone asks me when a spot bitcoin ETP will be approved. Here’s my answer: https://t.co/25M5kCDF1Q— Hester Peirce (@HesterPeirce) June 15, 2022After noting this, Peirce added that she is “hopeful that we can change course and use our existing and any prospective authorities wisely.” Yet, before explaining how this may be accomplished, Peirce was quick to point out that her criticisms on topics such as the denial of a Bitcoin (BTC) exchange-traded product (ETP) are targeted at the SEC Commission rather than the staff. “The staff appropriately is following the Commission’s lead, and the Commission has not been leading well,” she remarked.Regulatory matters for crypto industryWhile a number of digital asset bills have been passed this year, the first half of Peirce’s speech focused on the approval of a spot Bitcoin ETP in the United States, which she mentioned is the question she gets asked about most. While spot ETPs have successfully launched in other regions such as Europe and Canada — which saw 1 billion Canadian dollars in assets under management a month after its launch in 2022 — the SEC has continued to push back on this offering. Unfortunately, Peirce remarked that she still “has no idea” when the SEC would approve a spot Bitcoin ETP, noting that “the Commission has added crypto-specific hurdles to what used to be fairly straightforward processes for approving these pooled investment vehicles.” Moreover, while Peirce is aware that the Commission’s resistance to a spot Bitcoin product is difficult to understand, she noted that the Commission has “determined to subject anything related to Bitcoin.” Indeed, while the U.S. crypto ecosystem continues to push forward, industry experts are still left pondering whether a spot Bitcoin ETP will soon be approved. Eric Balchunas and James Seyffart, an exchange-traded fund (EFT) analyst for Bloomberg, recently said that if crypto platforms fall under the SEC’s regulatory framework, a spot ETF may occur in mid-2023. However, the bipartisan crypto bill, also known as the “Responsible Financial Innovation Act” that was introduced in the United States Senate on June 7, 2022, has yet to determine if the SEC or CFTC will be responsible for the allocation of digital assets. Regardless, the push for a spot Bitcoin ETP remains a strong-willed battle, especially for digital asset management firms like Grayscale Investments. Michael Sonnenshein, CEO of Grayscale, recently said that the firm is gearing up for a legal fight if Grayscale’s Bitcoin spot ETF is denied by the SEC. Shortly after this disclosure, Grayscale hired Donald B. Verrilli, a former U.S. Solicitor General, to join the firm to help push for a Bitcoin spot ETF. During a press conference at Consensus 2022, Verrilli went into detail about his plans to convince the SEC to convert Grayscale’s Bitcoin Trust into a spot-based ETF. According to Verrilli, the SEC’s approval of a Bitcoin futures ETF proved to be consistent with U.S. Security Laws, demonstrating that there was no significant underlying risk or fraud and manipulation. As such, Verrilli believes this created a situation where the approval of a Bitcoin spot ETF should be treated similarly to that of a futures ETF. He said:“The Administrative Procedure Act is a federal statute that regulates the conduct of all federal agencies, including the SEC. It sets out rules about what kinds of procedures agencies have to comply with. One of the most fundamental of these is that the agency not be ‘arbitrary and capricious.’ There is a common sense understanding that it’s arbitrary and capricious to treat cases that are alike in a different manner, and that is what the problem is here for not granting approval of a spot ETF.” Recent: Blockchain’s potential: How AI can change the decentralized ledgerPeirce further explained in her remarks that the SEC allowed futures-based Bitcoin ETFs to begin trading in October 2021, saying: “Enabling the change was a clear signal from Chair Gary Gensler, who pointed to the 1940 Act protections, along with the CFTC’s oversight of the futures markets, as a key basis for his comfort with such products. These funds proved popular, but demand for a spot-based product remains because futures products are more expensive to manage and may not as closely track the spot price.” Peirce elaborated on the importance of a spot ETP, noting that this type of product “could enable retail investors to gain exposure to Bitcoin through a securities product that, because of the effective ETF arbitrage mechanisms, likely would track the price of spot Bitcoin closely.” She added that it would likely be inexpensive to manage such a fund, while sitting “conveniently in an investors’ brokerage account alongside other securities.” In addition to the approval of a Bitcoin spot ETP, regulatory clarity around stablecoins is becoming more important than ever before. This has become the case mainly due to the recent collapse of the Terra ecosystem. Senator Pat Toomey, the ranking member of the Senate Banking Committee, told Cointelegraph that the Terra collapse influences legislation in the sense that it serves as a “wake-up” call to the federal government. “My own view is that algorithmic stablecoins should be treated separately from fiat-asset backed stablecoins. They are totally different creatures,” he said. However, Toomey added that there is currently no regulatory regime for asset-backed stablecoins. Yet, he believes this is important to establish, noting that stablecoins backed by traditional instruments like cash and securities plug into the conventional financial system. Given this, it’s important to point out that Toomey recently drafted a regulatory framework for stablecoins, known as the Stablecoin Transparency of Reserves and Uniform Safe Transactions Act, or TRUST Act. This framework proposes that digital assets be identified as “payment stablecoins,” or a convertible digital currency used as a medium of exchange that can be redeemed for fiat by the issuer. While the TRUST Act remains a framework, Toomey mentioned that stablecoin regulation might appear at the end of 2022. Shedding light on this, Kevin O’Leary — venture capitalist and Chairman of O’Leary Ventures — told Cointelegraph that while the bipartisan bill sponsored by senators Cynthia Lummis of Wyoming and Kirsten Gillibrand of New York addresses stablecoin regulation, he thinks that the frameworks proposed by Toomey, along with the Stablecoin transparency ACT sponsored by Senator Bill Hagerty, will likely pass first: “Both of these are the same in the sense that they only contemplate stablecoins. In terms of regulation, these suggest that stablecoins open themselves up for an audit every 30-days, and that no asset inside these tokens can be there longer than a duration of 12-months.”According to O’Leary, this is a money-market strategy. He added that Circle’s USD Coin (USDC) stablecoin hasn’t broken its U.S. dollar peg, even with recent crypto market volatility and the Terra collapse. “There is a lot more promise today from something backed 100% by the U.S. dollar than there is from something algorithmically backed.” Enforcement actions short-cut regulatory process According to Peirce, the lack of regulatory clarity within the crypto ecosystem has proven that the SEC Commission requires a more productive path to regulation. “The Commission’s reluctance to approve a spot Bitcoin ETP is of a piece with its more general reluctance to build a regulatory framework for crypto using standard regulatory processes,” she stated in her speech. As such, Peirce pointed out that the SEC has “cobbled together a regulatory framework through enforcement actions.” Peirce demonstrated this by referencing the BlockFi and SEC settlement that took place in February 2022. She noted that the SEC laid a foundation for BlockFi to register under the Securities Act, which, if successful, could likely become the standard for regulating crypto lending. While notable, Peirce explained that a better approach would have been to first identify crypto lending as implicating the securities laws and to then invite lenders and other members of the public involved with the case to discuss an appropriate path forward. Toomey also mentioned that SEC Chair Gensler has been “pushing the limits of authority,” mentioning this last week during his press conference at Consensus 2022:“I also think he has claimed that virtually all crypto assets are securities without explaining how and why that is so. This is not reasonable because it creates concern about an enforcement action without someone fully understanding what will result in enforcement action and what won’t. Regulation by enforcement is a terrible approach.” Optimism for change Given crypto’s current regulatory environment, it’s notable that Peirce concluded her speech on a high note, remarking that she is “optimistic that we can change course,” as long as both investors and the SEC take a more proactive approach. Although this “approach” remains rather vague, some examples of how this may take shape have come to fruition. For example, O’Leary explained that WonderFi Technologies, a decentralized finance (DeFi) platform, will become the first Canada-regulated digital asset exchange to be listed on the Toronto Stock Exchange (TSX). Recent: Regulations and exchange delistings put future of private cryptocurrencies in doubt“TSX has never listed a crypto exchange before, but invited WonderFi to list because they are fully compliant and there is institutional interest in the sector,” he said. O’Leary also mentioned that he believes cryptocurrencies will become the twelfth sector of the S&P 500 over the next decade because of the potential digital assets provide, such as reducing high fees and speeding up financial services in various economic sectors. All things considered, the listing of WonderFi on the TSX is important for U.S. regulators because it demonstrates how investors can work with regulators to make strides in the industry. O’Leary also mentioned that G7 country regulators talk to each other daily, noting that he thinks the SEC views advancements in Canada as potential use cases that may work in the United States:“Regulators in Ontario allowed the first Bitcoin and Ethereum ETF. If the SEC didn’t approve this, the Ontario Securities Commission never would have allowed this. The Ontario Securities Commission is proving to other jurisdictions that these products can be regulated and issued.” 

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