FSB consults on regulatory, supervisory and oversight recommendations for “global stablecoin” arrangements
The Financial Stability Board (FSB) today published for consultation 10 high-level recommendations to address the regulatory, supervisory and oversight challenges raised by “global stablecoin” arrangements.
Maker Foundation Faces New Lawsuit Demanding $28M for Black Thursday Liquidations
A new class-action lawsuit against DeFi giant the Maker Foundation alleges that the company misrepresented the risks investors in the ecosystem faced, leading to catastrophic losses of collateral on MakerDAO on March 12. The complaint, which was filed in the Northern District Court of California on April 14, accuses three entities affiliated with Maker of negligence and intentional misrepresentation before investors, or “collateralized debt position holders.”
$1 Billion of USDT Is Sitting on Binance, and That’s Big for Crypto
According to data shared by Jason Choi — a Wharton School graduate that is the Head of Research at crypto hedge fund The Spartan Group — there is now just shy of $1 billion worth of Tether “sitting on the sidelines on Binance alone.” This doesn’t count the other stablecoins that platform supports, including Binance USD, USD Coin, Paxos Dollar, and more.
Stablecoins Printer Going Brrr Since BTC Lows; Dollar's Global Shortage Driving the Demand?
Ever since Bitcoin crashed to $3,850 in mid-March, fiat-backed stablecoins have been printing like crazy, with their market cap growing at a fast speed. During this time, the market cap of Paxos has surged 20% and USDT’s 40%. While Circle and Coinbase’s USDC market cap jumped 55%, Binance’s stablecoin BUSD saw the biggest spike of 85%.
Libra White Paper | Blockchain, Association, Reserve
The new Libra white paper is intended to be a stand-alone update regarding the plans of the Association. Additionally, supporting technical papers also published in June 2019 have been edited or retired. Key changes from the June 2019 white paper include single-currency stablecoins in addition to the multi-currency coin, forgoing the future transition to a permissionless system, enhancing payment safety with a robust compliance framework, and building strong protections into the Reserve design.
Libra Scales Back Global Currency Ambitions in Concession to Regulators
Libra still intends to issue a multi-currency stablecoin, but it would be backed by the new stablecoins, rather than directly by fiat currencies held in a bank. The new model limits Libra’s flexibility, since adding (or removing) a currency from the basket requires issuing (or retiring) another digital token.
Libra Just Made a Bunch of Changes to Play More Nicely With Regulators
Libra has applied for a payment system license from Swiss regulator FINMA (Swiss Financial Markets Supervisory Authority). This is a huge milestone on the way to some publicly usable Libra payments system, but there is still work to be done. Libra’s licensing process will continue to require input from other central banks and financial regulatory authorities around the world.
Libra Association: FINMA licensing process initiated
"The Swiss Financial Market Supervisory Authority FINMA has received an application from the Geneva-based Libra Association for a payment system licence. This marks the start of the licensing process under Swiss supervisory law. The outcome and duration of the procedure remain open."
Libra Compromises Undermine Original Facebook Promise
"Instead of focusing on the freedom of developers to build what they want, the new version of libra focuses on individuals’ ability to own their own keys. Unlike banks, which hold money on behalf of users, making the funds much easier to freeze or seize, libra will seemingly give owners the option to hold their own private keys, an important feature to many cryptocurrency hardliners whose mantra is “not your keys, not your bitcoin.”"
This column argues that aggregate stable coin issuance does not drive crypto prices, in contrast to claims from previous studies. Instead, it claims that issuance behaviour can be explained as maintaining a decentralised system of exchange rate pegs and acting as a safe haven in the digital asset economy. The latter can be demonstrated by the significant stable coin premiums during the COVID-19 panic of March 2020.
Using a rich dataset of signed trades and order books on multiple exchanges, we examine how peg-sustaining arbitrage stabilizes the price of the largest stable coin, Tether. We find that stable-coin issuance, the closest analogue to central-bank intervention, plays only a limited role in stabilization, pointing instead to stabilizing forces on the demand side. Following Tether’s introduction to the Ethereum blockchain in 2019, we find increased investor access to arbitrage trades, and a decline in arbitrage spreads from 70 to 30 basis points. We also pin down which fundamentals drive the two-sided distribution of peg price deviations: Premiums are due to stable coins’ role as a safe haven, exhibiting, for example, premiums greater than 100 basis points during the COVID-19 panic of March 2020; discounts derive from liquidity effects and collateral concerns.
Rep. Sylvia Garcia, a member of the House Financial Services Committee, said Thursday that the consortium's revised roadmap "does not address the concerns I raised" in the past. "I will continue to work to make sure that the SEC regulates any such asset as the security that it is under current securities laws," Garcia said.
First Mover: Stablecoin Surge Might Herald Bitcoin Binge
In the past month, the outstanding value of the top six dollar-linked tokens has surged by more than 25 percent to about $8 billion, according to CoinDesk Research.
Circle CEO Claims 'Explosive' Stablecoin Demand From Everyday Businesses
"U.S. dollar-backed blockchain tokens are surging in popularity around the world, and this time much of the demand is for payments in normal business transactions, not just to move money quickly between cryptocurrency exchanges. Over the past several weeks, Circle have seen explosive interest and growth in USDC. There is clearly very significant global demand for digital dollars, and the use of digital dollars as a new payment medium."
Why This Global Crisis Is a Defining Moment for Stablecoins
Over the past month, stablecoins have lived up to their moniker and value proposition. We’ve seen a flight from traditional crypto assets to stablecoins similar to 2018. The market cap of all stablecoins has swelled from $5 billion at the start of the year to above $8 billion in April. And the improved stability and usability of stablecoins equips them to rise to the occasion and prove utility beyond demand from exchange arbitrage and safe haven appeal.
Synthetix Explores Adjusting sUSD Liquidity Incentives with SIP 51
Synthetix – the permissionless derivatives protocol – is exploring adjusting its economic incentives for liquidity providers across sETH and sUSD pools. sETH acts as the primary on-ramp for Synthetix users, sUSD also acts as a critical off-ramp. Therefore, there must be high confidence (and liquidity) in the stability of the sUSD peg at $1. The added SNX incentives to Curve will aid in sUSD maintaining its $1 peg and assurance for liquidity providers that the incentives will exist in the long term.
Emin Gün Sirer's AVA Labs Seeks Wall Street Business After Open Sourcing 'Avalanche' Protocol
As first envisioned in a 2018 white paper by the pseudonymous “Team Rocket,” the Avalanche protocol uses random network sampling to reach consensus. But it is AVA Labs' (www.avalabs.org) ambition in building new infrastructure for the financial markets that now drives the firm forward.
Why MakerDAO Should Consider Negative Interest Rates for Dai
Since COVID-19 smashed into markets on March 12 the price of Dai skyrocketed as high as $1.50. It has since retreated to a range of $1.01 – $1.03, but it has now spent a full month above its $1 peg – and shows no signs of returning. A negative stability fee would encourage more people to become indebted to the Dai system. This would increase the supply of Dai, and in doing so reduce upwards pressure on the peg.
Heifer International, a nonprofit organization focused on global hunger and poverty issues, has joined the Libra Association, citing the project's potential to help poor farmers access credit.
Synthetix Is Already Tokenizing Real World Markets Through DeFi
Synthetix offers its own stablecoin, sUSD, but it also expands the concept into many other types of assets and tokens. For example, it offers “inverse” tokens which can be used to short-sell a crypto asset.
Although Celo and Libra share a similar mission - both want to help create prosperity - but Celo is a completely decentralized collective of mission-aligned organizations. "There’s no central governing body to determine how Celo will evolve, and people will be able to vote on how Celo evolves."
According to Binance, Libra’s envisioned global payment system could do to the payment industry what SpaceX did to the space industry: shake the foundations of a well-established sector with high entry barriers. The mere advantage of issuing widely-available programmable money would already initiate manifold efficiency gains.
Stablecoins Are Booming, But What Are The Tax Consequences?
While some argue that taxing stablecoins doesn’t make sense because they aren’t speculative assets, unfortunately, until more specific guidance is issued to address stablecoins, they are subject to generic “property” taxation and will result in capital gains taxes.
Twins: Calibra's White-Glove Approach for BFT Testing
Byzantine Fault Tolerant systems have seen extensive study for more than two decades, yet we lack a principled strategy for testing BFT implementations. This paper presents Twins, a new approach for testing BFT systems.
Telegram hits 400 million users while SEC prevents TON launch
Telegram has hit 400 million unique monthly users, but due to an ongoing court case with the SEC, users won’t have direct access to the Telegram Open Network. If the TON doesn't launch by April 30 its investors are entitled to refunds totalling $1.7 billion
The rise of stablecoins and asset-backed tokens could drive the development of financial markets via new forms of transparency and data credibility. This column uses the revised proposal for the Libra global stablecoin as an example to illustrate possibilities for supervisors to harness information in distributed ledger based-finance via ‘embedded supervision’. The aim is to increase the quality of data available to supervisors and to reduce administrative costs for firms.
Libra’s Disparte on big tech’s move into digital currency
Libra Association vice-chair Dante Disparte speaks about the decision to abandon a multi-currency reserve, stress-testing a global payment network and how the Facebook-led body still has 3 billion customers in its sights,
Checkout.com will join the Libra Association in developing its series of stablecoins. Libra was announced last year as an effort to create a single global currency that could expand financial services to anyone who had a smartphone and an internet connection, though some of these ambitions have since been scaled back.
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