Značka: Stablecoin

U.S. Congressman calls for ‘Broad, bipartisan consensus’ on important issues of digital asset policy

In a letter to the leadership of the United States House Financial Services Committee, ranking member Patrick McHenry took a jab at “inconsistent treatment and jurisdictional uncertainty” inherent in U.S. crypto regulation and called for the Committee to take on its critical issues.McHenry, a Republican representing North Carolina, opened by mentioning that the Committee’s Democrat Chairwoman Maxine Waters is looking to schedule additional hearings addressing matters pertinent to the digital asset industry. He further stressed the need for identifying and prioritizing the key issues and achieving a “broad, bipartisan consensus” on the matters affecting the industry that holds immense promise for the financial system and broader economy.Citing the confusion that the industry faces due to the Commodity Futures Trading Commission (CFTC) and the Securities and Exchange Commission’s (SEC) competing claims for jurisdiction over digital assets, McHenry noted that neither of their positions is grounded in statute. Congress, he maintained, should not hand digital asset regulation over to regulatory agencies or courts, but rather step in to categorize the new asset class and lay down the rules governing it.Furthermore, Congressman McHenry suggested that the Financial Services Committee take a close look at the stablecoin report drafted by the President’s Working Group on Financial Markets (PWG) and examine the Federal Reserve’s position and future steps with regard to a U.S. central bank digital currency (CBDC).In December last year, the U.S. House Financial Services Committee hosted a crypto-focused hearing that featured a strong lineup of industry executives and was widely lauded as a massively productive exchange between policymakers and digital asset stakeholders.

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BIS general manager: Central banks generate trust, not big techs or “anonymous ledgers”

In a speech entitled “Digital currencies and the soul of money,” Agustín Carstens, the general manager of the Bank of International Settlements, criticized private stablecoins and decentralized finance (DeFi), touting central bank-led financial innovation as the best possible path to the future of money.Carstens, who served as governor of the Bank of Mexico between 2010 and 2017, delivered his remarks at the conference on “Data, Digitalization, the New Finance and Central Bank Digital Currencies: The Future of Banking and Money” at the Goethe University in Frankfurt.The economist’s argument revolved around the institutional foundations of money and how, even in the digital age, central banks remain in a position to provide trust in money and ensure “an efficient and inclusive financial system to the benefit of all.” Alternative designs of monetary systems that emerged throughout history, according to the BIS’ top official, “have often ended badly.”To advance his point, Carstens discussed three plausible scenarios of financial innovation. In addition to the global monetary system led by central banks, he envisioned a world where big tech-powered stablecoins are the dominant form of money, and another where the bulk of financial activity is decentralized and runs on distributed ledgers.The stablecoin scenario, Carstens maintained, is fraught with market power and data concentration at the hands of a few dominant private money issuers. National and global monetary systems would become fragmented, while the disintermediation of incumbent banks would threaten financial stability.Speaking of DeFi, the BIS boss claimed that the reality that DeFi applications are delivering is at odds with their proclaimed foundational principles of disintermediation. Carstens said:”To date, the DeFi space has been used primarily for speculative activities. Users invest, borrow and trade crypto assets in a largely unregulated environment. The absence of controls such as Know Your Customer (KYC) and Anti-Money Laundering rules, might well be one important factor in DeFi’s growth.”Furthermore, echoing BIS researchers’ recent claims, Carstens stated that “there is a lot of centralization in DeFi.” He also cited scalability issues and liquidity mismatches as problematic aspects of decentralized finance.In the vision of the monetary future that the economist extolled, central banks are at the core of the financial system, facilitating innovation such as building a global network of CBDCs. Because they are not profit-driven, central banks would act to advance the interests of the public, according to Carstens.These statements come as no surprise when voiced by a chief officer of an institution that is often called a bank for central banks. As Cointelegraph reported earlier, the BIS’ innovation arm is actively engaged in several CBDC trials, including the cross-border settlement initiative ran jointly by central banks of France and Switzerland.

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Bitcoin’s transition to a risk-off asset will propel it to $100K in 2022, says Bloomberg analyst

Bloomberg analyst Mike McGlone is convinced Bitcoin is on track to reach $100K in 2022, as it completes its transition from a risk-on to risk-off asset. While the Fed is planning to raise interest rates to fight inflation, risk-on assets like crypto may suffer, as people would likely prefer to invest in fixed-income assets like bonds. While this trend may represent a short-term hurdle, McGlone said he is confident that Bitcoin will still appreciate significantly in 2022:“Bitcoin is in a unique phase, I think, of transitioning from a risk-on to risk-off global digital store of value, replacing gold and becoming global collateral. So I think that’s going to be happening this year.”He said he considers the current bearish sentiment as a positive sign, indicating market consolidation. The analyst is also bullish on Ethereum, given its key role in providing the main infrastructure for decentralized finance and nonfungible tokens (NFTs). He is also convinced that USD-backed stable coins will proliferate in 2022. McGlone’s outlook for the broad crypto market is not as optimistic, though, given the large number of speculative bets among altcoins.  “Simple rules of economics do not favor prices of a market where there’s an unlimited supply and ease of entry. That’s the crypto market”. To find out more about McGlone’s crypto outlook for 2022, check out the full interview on our YouTube channel and don’t forget to subscribe!

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USDC flips Tether on the Ethereum network

Circle’s USD Coin (USDC) has reached a major milestone by surpassing Tether (USDT) in total supply on the Ethereum network.USDC’s current supply on Ethereum as of writing is 40.06 billion tokens, just ahead of USDT’s supply of 39.82 billion. Tether has been the most popular stablecoin since at least 2016, after originally sharing the market with BitUSD and NuBits (USNBT) stablecoins when it launched in late 2014. At that time, USDT ran on Omni. As the latter two fell into obscurity due to losing their dollar peg and shedding users, USDC emerged in 2018 as a more transparent and more regulated competitor to Tether, which has been under a cloud for years due to doubts over its backing. Although USDT is still the most popular stablecoin with a total supply of 78.5 billion, nearly 50% of the supply or 38.7 billion tokens, is on the Tron network. USDT can also be found on BSC, Solana, Huobi ECO Chain, Avalanche, Polygon, and 13 other chains or layer 2 solutions. The current total supply for USDC is 45.7 tokens across 21 chains or layer-two solutions.Doubts over Tether’s backing has caused its public image to decline over the years. Controversy has plagued the company over how the stablecoin is collateralized and how its reserve funds are managed. The issuance of two Consolidated Reserves Reports about Tether’s financial reserves from accounting firm Moore Cayman in 2021 did little to quell the doubters. In its latest financial report, Tether revealed that it holds $30.8 billion in unspecific commercial paper in addition to other assets backing USDT. Circle has been more transparent about its reserves, though not to the extent some critics demand. In Aug. 2021, Coinbase President Emilie Choi said that the USDC reserves backing the second largest stablecoin in the market would shift entirely to cash and US Treasury bonds. This did indeed happen by Oct. 27 2021 according to an Independent Accountant’s Report done by Grant Thornton.Coinbase is a close partner with Circle, a digital payments service, which helped launch USDC in Oct. 2018. Circle is backed by Bitmain, China Everbright Bank, and eight others.It has been supportive of efforts to solidify a regulatory framework for all stablecoins. Circle CEO Jeremy Allaire supported a Nov. 2021 Biden Administration proposal to treat stablecoin issuers similarly to banks. Allaire also attended a Congressional hearing with several top crypto industry leaders in Dec. 2021 to discuss policy direction with the Financial Services Committee.Centralized stablecoins USDT, USDC, and BUSD are currently the top three in their category, however decentralized stablecoin options have begun to proliferate. Related: Hong Kong Monetary Authority aims to oversee stablecoin reservesTerraUSD (UST) is the fourth largest stablecoin, but is the fastest growing since Nov. 2021. Since then, it has surpassed Magic Internet Money (MIM) and DAI (DAI), and achieved a $10.7 billion market cap.

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CBDCs and stablecoins: EY advises banks to ‘prepare for what's coming’

Big Four accounting firm EY has recommended that banks should change their regulatory perimeter to address the oncoming launches of state-backed central bank digital currencies (CBDC) and private stablecoins. EY’s 2022 Global regulatory outlook highlighted the need for a policy change that can help financial services firms overcome business uncertainties amid mainstreaming of digital assets and cryptocurrency. While acknowledging the uncertainty regarding the digital assets market, the report stated:“If customers can keep their money with a central bank, they have no need for a retail bank, and firms will see their interest rate margins contract precipitously.”EY recommended banking firms collaborate with regional and national regulators to foresee possible crypto adoption and proactively assess its impact on their business. The report also identified digitalization — alternative data sources and digital assets — as a potential factor to impact the regulatory environment:“The macroprudential or international implications of a major currency having a retail coin could be very significant for retail banks and the dollarization of smaller economies. For that reason, most central banks are likely to pursue a wholesale version.”Highlighting the potential of CBDCs to complement or replace fiat currency, EY warns banks to think about the implications for their balance sheets amid the possible interaction between CBDCs and stablecoins. Conceding the difficulty in gaining regulatory clarity, EY concluded:“By understanding the broad direction of regulation, firms can take proactive steps to prepare for what’s coming.”Related: Central bank of Bahrain trials JPMorgan’s blockchain and tokenJust last week, the Central Bank of Bahrain (CBB) collaborated with American investment bank JPMorgan to pilot the country’s CBDC test. As Cointelegraph reported, the CBB completed a digital payments test using JPMorgan’s blockchain and cryptocurrency unit Onyx. Citing the development, CBB Governor Rasheed Al Maraj said that the trial has been crucial for the Bahrainian government to address and potentially eliminate existing inefficiencies in the traditional cross-border payments industry.

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Hong Kong begins discussions to introduce stablecoin regulatory framework

Hong Kong’s central banking institution, the Hong Kong Monetary Authority (HKMA), released a questionnaire to gauge public opinion on regulations for crypto-assets and stablecoins. The state-backed regulator intends to establish a regulatory framework by 2023-24.HKMA’s “Discussion Paper on Crypto-assets and Stablecoins” highlights the explosive growth of the stablecoin market in terms of market capitalization since 2020 and the concurrent regulatory recommendations put forth by international regulators including the United States’ Financial Action Task Force (FATF), the Financial Stability Board (FSB) and The Basel Committee on Banking Supervision (BCBS).Market Capitalization of Crypto-assets. Source: HKMAAccording to the HKMA, the current size and trading activity of crypto-assets may not pose an immediate threat to the stability of the global financial system from a systemic point of view. However, the discussion paper warned:“The growing exposure of institutional investors to such assets as an alternative to or to complement traditional asset classes for trading, lending and borrowing […] indicate growing interconnectedness with the mainstream financial system.”Market Capitalization of Major Stablecoins. Source: HKMA.Based on the above figure, HKMA’s paper shows that the global market capitalization stood at about $150 billion in December 2021, “representing about 5% of the overall crypto-asset market.” The regulator has also shared a list of eight questions to seek policy-related recommendations citing five possible regulatory outcomes — no action, opt-in regime, risk-based regime, catch-all regime and blanket ban:Possible policy options for regulating crypto-assets. Source: HKMA.HKMA expects stakeholders to submit their responses by 31st March 2022, and aims “to introduce the new regime no later than 2023/24.”Major jurisdictions’ regulatory stance towards stablecoins. Source: HKMA.On an end note, the regulator stated that payment-related stablecoins have a higher potential for being incorporated into the mainstream financial system or even day-to-day commercial and economic activities. As a result, the HKMA considers expanding the scope of the Payment Systems and Stored Value Facilities Ordinance (PSSVFO), a law that determines the legality of financial products. Related: Hong Kong real estate giant leads $90M raise for crypto bank SygnumComplementing the local government’s pro-crypto intentions, one of Hong Kong’s largest property developers Sun Hung Kai invested $90 million in Sygnum, a Swiss bank dedicated to digital asset holding. As Cointelegraph reported, the Series B funding round brings Sygnum’s post-money valuation to $800 million, marking a tenfold surge in consolidated revenues from 2021.

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Here is how one algorithmic indicator anticipated multiple phases of FXS’ protracted rally

Frax Share (FXS) has been one of the few altcoins to pull off a dominant price performance amid the down market of late 2021 to early 2022. In the month between Dec. 14 and Jan. 14, FXS was up 128% against the U.S. dollar and 159% against Bitcoin (BTC). In addition to this impressive feat, FXS topped the charts of historically bullish trading conditions on multiple occasions throughout this period. What is behind the token’s recurring strong trading outlook?Governing a stablecoin ecosystemFXS is the utility token underpinning the Frax ecosystem — a stablecoin protocol that seeks to occupy a middle ground between entirely collateralized and entirely algorithmic stablecoins, thus harnessing the advantages of both designs.In accordance with the protocol’s highly “governance-minimized” approach to its architecture, there is a limited set of parameters that the community gets to adjust using the token. These include refreshing the rate-of-collateral ratio — i.e., the share of the protocol’s FRAX stablecoin that is stabilized either algorithmically or through collateralization — in addition to adding collateral pools and adjusting various fees.FXS’ supply is initially capped at 100 million tokens, and the protocol is designed for the token supply to be deflationary as the demand for the FRAX stablecoin rises. This mechanism could be responsible for at least some portion of FXS’ momentum in recent weeks. As Cointelegraph previously reported, FRAX added 300% to its circulating supply between late October and late December.Curve Wars winnerBecause of this link between the demand for FRAX and the corresponding shrinkage in the supply of FXS, rounds of FRAX adoption can theoretically result in waves of FXS appreciation. Evidence supporting this hypothesis can be found in several recent instances of the decentralized finance (DeFi) community adopting the stablecoin.For one, FRAX’s addition to the Convex Finance platform, where several major DeFi protocols compete for voting rights that can be leveraged to increase their respective stablecoins’ yield, preceded a major spike in the FXS token’s price.Interestingly, many of such FXS rallies, apparently inspired by major FRAX adoption events, produce recurring patterns of trading and social activity that get detected by Cointelegraph Markets Pro’s algorithmic indicator, the VORTECS™ Score. This AI-driven tool is trained to sift through tokens’ historical performance data, looking for familiar combinations of variables such as price movement, trading volume and Twitter sentiment that have systematically preceded dramatic price movements.Green means goHere, for example, is the chart of FXS’ VORTECS™ Score vs. price from the week that FRAX was added to Convex Finance. The indicator flashed an ultra-high Score more than one full day ahead of the token’s powerful price spike.VORTECS™ Score (green/gray) vs. FXS price, Dec. 17 – 24. Source: Cointelegraph Markets ProScores above 80 conventionally indicate the algorithm’s solid confidence that the conditions around the assets are historically bullish, while those beyond 90 suggest extremely high confidence. In this case, on Dec. 20, with FXS’ price remaining largely flat, the token’s VORTECS™ Score exploded, reaching an impressive value of 96 (red circle in the chart). Thirty-two hours after the peak Score, FXS’ price shot up from $13.96 to $18.27 in just 18 hours.In the weeks that followed, FXS’ VORTECS™ Score peaks kept coming ahead of price spikes. Earlier this week, two streaks of Scores above 80 foreshadowed two phases of explosive price action, including the one that saw the asset hit a weekly high of $41.72.VORTECS™ Score (green/gray) vs. FXS price, Jan. 6 – 13. Source: Cointelegraph Markets ProNot many digital assets display high VORTECS™ Scores so frequently. Furthermore, CT Markets Pro’s internal research shows that tokens can widely vary in the degree to which historically favorable conditions anticipate their actual price movement. Apparently, what is happening in the case of recent FXS rallies is that the forces driving the waves of the token’s appreciation are similar, leading to a familiar arrangement of trading and social metrics that the VORTECS™ algorithm captures so well.Of course, the relationship between historical precedent and subsequent price action is not always this smooth. Yet, in many cases, this tool — capable of parsing years’ worth of assets’ performance data — can be massively useful for crypto traders.Cointelegraph is a publisher of financial information, not an investment adviser. We do not provide personalized or individualized investment advice. Cryptocurrencies are volatile investments and carry significant risk, including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are correct at the time of writing or as otherwise specified. Live-tested strategies are not recommendations. Consult your financial adviser before making financial decisions.

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Hong Kong Monetary Authority aims to oversee stablecoin reserves

Hong Kong’s central bank, the Hong Kong Monetary Authority (HKMA), wants to supervise stablecoin issuance and reserves management.HKMA published a discussion paper on Jan. 12 regarding cryptocurrencies and stablecoins, in which it provided its views on how the industry should be regulated in Hong Kong.In the 34-page long consultation document, the HKMA paid special attention to “payment-related stablecoins,” pointing out that the market capitalization of all stablecoins hit $150 billion in December, accounting for 5% of the entire crypto market. The regulator added that all existing stablecoins are “mostly asset-linked and predominantly pegged” to the United States dollar, including stablecoins like Tether (USDT) and USD Coin (USDC).“The rapid development of crypto-assets, particularly stablecoins, is a topic of keen attention in the international regulatory community as it presents possible risks regarding monetary and financial stability,” HKMA said.In order to effectively handle associated risks, HKMA laid out eight major policy directions, proposing to become a single regulator to supervise entities involved in both regulating and running operations like issuing stablecoins and managing their reserves. The authority also wants to regulate stablecoin transactions’ validation processes, private key storage management and executing transactions.“We encourage current or prospective players in the stablecoins ecosystem to respond to this paper and submit relevant views to us, so that we could take the feedback into account when formulating the regulatory framework,” HKMA wrote. The regulator expects to finalize its next steps as soon as possible and introduce new regulations by 2023 or 2024.Related: Hong Kong-based Coinsuper allegedly blocks customers’ withdrawalsHKMA is not the only financial regulator concerned about stablecoin risks and planning steps to regulate the growing industry. In November 2021, the U.S. President’s Working Group on Financial Markets issued a report on possible “stablecoin runs” and “payment system risks.” The U.S. Treasury subsequently hinted at new stablecoin-focused laws in December.

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Central bank of Bahrain trials JPMorgan blockchain and token

Bahrain is the latest nation to explore blockchain technology by American investment bank JPMorgan, with the country’s central bank trialing JPMorgan’s proprietary digital currency.The Central Bank of Bahrain (CBB) has successfully completed a digital payment test in collaboration with JPMorgan’s blockchain and cryptocurrency unit Onyx, according to an official announcement published on Jan. 6.The trial involved two other major institutions, Manama-based international bank, Bank ABC, and Bahrain’s national aluminum smelter Aluminium Bahrain, also known as Alba. The test enabled Bank ABC to settle real-time payments to Alba’s counterparts in the United States using the JPM Coin, a blockchain-based payment system and stablecoin pegged to the U.S. dollar.According to the announcement, the CBB was responsible for supervising the trial. CBB governor Rasheed Al Maraj said that the trial has been crucial for the government of Bahrain to address and potentially eliminate existing inefficiencies in the traditional cross-border payments industry.“We are pleased to announce the success of this test, which is in line with our vision and strategy to develop and enrich the capabilities provided to stakeholders in the financial services sector in the Kingdom using emerging and pioneering technologies,” Al Maraj said.The CBB previously disclosed plans to test out the JPM Coin in May 2021, stating that the trial could potentially extend to its central bank digital currency development.Related: WhatsApp starts testing currency payments with Meta’s Novi walletOriginally announced in 2019, JPM Coin was commercially launched in October 2020.The investment bank has been actively promoting its blockchain tech for global use, partnering with Singapore’s largest bank, DBS, to pilot a blockchain payment system. JPMorgan previously provided its Liink blockchain technology to the State Bank of India to reduce transaction costs and improve cross-border payments.

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PayPal reportedly confirms plans to explore the launch of a stablecoin

American fintech giant PayPal Holdings has reportedly confirmed its intent to launch its own stablecoin named PayPal Coin. The development of an in-house stablecoin was first discovered in the source code of Paypal’s iPhone app by developer Steve Moser.Confirming the evidence found on the PayPal app, Jose Fernandez da Ponte, PayPal’s SVP of crypto and digital currencies, told Bloomberg News:“We are exploring a stablecoin; if and when we seek to move forward, we will of course, work closely with relevant regulators.”PayPal Coin logo found inside of PayPal app. Source: PayPal iPhone appMoser’s finding uncovered that PayPal is in the works of building PayPal Coin, which will be backed by the United States dollar. However, a PayPal spokesperson clarified that the source codes of the iPhone application were developed in a recent hackathon. While PayPal’s digital asset is in the making, the name, logo and features of the in-house token are subject to change prior to launch. Supporting the ongoing development, PayPal has previously launched new features that allow users to buy, hold and pay with digital coins.da Ponte had also pointed out in an interview from November 2021 that PayPal has “not yet seen a stablecoin out there that is purpose-built for payments.” According to him, a stablecoin should support payments at scale while ensuring the security of the network, adding:“There would have to be clarity on the regulation, the regulatory frameworks, and the type of licenses that are needed in this space.”Related: PayPal completes crypto trading rollout for UK customersIn addition to launching its own stablecoin, PayPal has also taken proactive measures to spread crypto-related services in jurisdictions out of the U.S. In September 2021, the company announced a rollout of new Bitcoin trading services for the UK market. As Cointelegraph reported, customers can trade major cryptocurrencies including Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin Cash (BCH).

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