Stablecoins

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Paul Ryan Says 'Stablecoin Legislation Would Be A Good Step' To Strengthen US Treasuries​

Former Speaker of the House Paul Ryan emphasized the importance of stablecoin regulation, advocating for it as a crucial step for the U.S. financial system.

What Happened: Ryan believes that passing stablecoin legislation this year could significantly bolster demand for U.S. Treasury securities and enhance the global standing of the U.S. dollar.

“Stablecoin legislation would be a good step in the right direction. That could be helpful. That could be done this year,” Ryan told Bloomberg in an interview on May 10.

He highlighted that stablecoins, which are digital currencies backed by the U.S. dollar, differ from cryptocurrencies due to their reliance on real-world assets like treasuries and cash for backing.

More:

MSN

 

[WinkWink]

 

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Banking Industry feels threatened by stablecoins:

One of the few pieces of legislation that could actually pass through Congress into law poses an existential risk to bankers, experts said.

Lawmakers in both the House and the Senate — and on both sides of the aisle — have spent the last several years negotiating legislation that's meant to set up a regulatory framework for stablecoins.

Although multiple proposals are floating around Capitol Hill, the most prominent candidate is the yet-unreleased bill from Reps. Patrick McHenry, R-N.C., and Maxine Waters, D-Calif., respectively the chairman and the ranking member of the House Financial Services Committee.

The chances of this advancing beyond the House committee stage got an additional boost earlier this month as Sen. Sherrod Brown, D-Ohio, chairman of the Senate Banking Committee and a longtime skeptic of crypto legislation, signaled some willingness to consider a stablecoin bill if it was packaged together with a cannabis banking bill.

There's multiple avenues for that package to be considered, including an upcoming must-pass defense spending bill, according to three committee sources familiar with discussions. Other crypto legislation is scheduled to receive a vote in the House this week.
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Why bankers should be more worried about stablecoin legislation

Banking experts said that none of the currently circulating stablecoin proposals adequately address concerns about the overlap between banking and commerce and how a stablecoin issuer would go through insolvency.

www.americanbanker.com

They should feel threatened by the potential of a CBDC IMO.

 

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Bold emphasis is mine:

Tether, the issuer of the USDT stablecoin and a leading player in the digital asset industry, has made a strategic investment of $18.75M in XREX Group, a fully regulated, blockchain-enabled financial institution. The investment aims to drive innovation in the digital asset industry and facilitate USDT-based cross-border payments in emerging markets. XREX will use the funding to offer businesses greater ease, efficiency, and potentially lower costs in financial transactions. In collaboration with the Unitas Foundation, XREX will also launch XAU1, a USD-pegged unitized stablecoin over-reserved with Tether Gold (XAUT), providing customers with a stable alternative and a hedge against inflation. This partnership will also enhance solutions to detect and prevent illicit use of stablecoins.

Tether Invests $18.75M in XREX Group to Facilitate Launch of Gold-Backed Stablecoin – News Bytes Bitcoin News

Tether, the issuer of the USDT stablecoin and a leading player in the digital asset industry, has made a strategic investment of $18.75M in XREX Group, a

news.bitcoin.com

So Tether, which manages a USD-pegged stablecoin (USDT) as well as a supposed gold backed coin (XAUT) is investing a company that is going to roll out another USD-pegged stablecoin (XAU1) that includes XAUT in it's treasury and presumably will compete with USDT?

I find this very curious. Is the inclusion of XAUT in the treasury supposed to provide more confidence that the new stablecoin's assets are better than USDT's?

The last sentence quoted appears to indicate that development of this new stablecoin is a response to US regulators targeting USDT. US regulators have claimed that USDT is being used by nations to bypass sanctions. So I guess it is going to have more surveillance and control governance built into it.

 

[pmbug]

The former speaker of the House, Paul Ryan, published an op-ed in the Wall Street Journal last week claiming that stablecoins could be a magic bullet to address the country’s looming fiscal train wreck. I normally don’t pay these sort of pieces much attention since they typically involve—as is the case here—a former politician shilling for whatever industry is paying them these days. This one, though, deserves more consideration than most.
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As Ryan notes, longtime buyers of U.S. debt like China and Saudi Arabia have already started to pull back, threatening the long-term status of the dollar as the world’s reserve currency—a status that makes it cheap for America to borrow and lets it flex enormous economic influence overseas. What to do about this? The obvious answer is to reform runaway Social Security and Medicare spending. But neither Trump nor Biden dares to touch that. And so we have Ryan’s plan B: stablecoins.

Ryan observes that, if fiat-backed dollar stablecoin issuers (think Tether, USDC, and PayPal) were a country, its U.S. debt holdings would exceed those of Saudi Arabia. Meanwhile, he makes the point: “If other countries are successful at bolstering their currencies’ influence while dumping Treasury debt, the U.S. will need to find new ways to make the dollar more attractive. Dollar-backed stablecoins are one answer.”

It’s not a crazy idea. Stablecoins are taking off in countries like Nigeria and Argentina, where lousy rulers have made citizens reluctant to hold the local currency. They are also cheap and easy to move around and, as Ryan points out, “permissionless blockchains come packaged with the deeply American values of freedom and openness.” The more widely stablecoins spread, the more people there will be with a vested interest in the success of the U.S. economy.
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Paul Ryan says crypto could avert a U.S. debt crisis. Is that true?

The idea of using stablecoins to project U.S. influence overseas is gaining traction.

fortune.com

 

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This is somewhat crazy... Folks spending millions to slander Tether...

 

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Wyoming is pushing crypto payments and trying to beat the Fed to a digital dollar​

As crypto investing becomes more mainstream and institutionalized with bitcoin ETFs, Wyoming is already pushing into the next phase of growth for crypto: consumer payments.

The state is creating its own U.S. dollar-backed stablecoin, called the Wyoming stable token, which it plans to launch in the first quarter of 2025 to give individuals and businesses a faster and cheaper way to transact while creating a new revenue stream for the state. The group behind it is hoping it can serve as the model for a digitized dollar at the federal level.

Success would be "adoption of a stablecoin … that's transparent, that is fully backed by our short-term Treasurys [and] that's dollar dependent," Wyoming Governor Mark Gordon told CNBC at the Wyoming Blockchain Symposium in Jackson Hole. "One of the big things for me is to be able to bring back onshore a lot of our debt, because if it's bought by treasuries and supported by Treasurys, it will help to stabilize that market to a degree."

"It is clear to me is that digital assets are going to have a future," Gordon said. "The United States has to address this issue. Washington's being a little bit stodgy, which is why Wyoming, being a nimble and entrepreneurial state, can make a difference."

The Cowboy State isn't new to pushing the boundaries of business law. In 1977, it created the LLC and it has passed more than 30 pieces of crypto legislation to create a favorable regulatory environment for businesses and investors since 2018.

Development on the project is ramping at a time when many crypto market participants are wondering what's next. Making bitcoin ETFs available to U.S. investors in January was a huge feat. It was the result of a more than 10-year effort by the industry, and sent prices to new records this year. But although the market is still bullish, trading has been rangebound for months.

More:

MSN

 

[searcher]

Trump's Crypto Project, Ripple, State Of Wyoming Join The Queue Amid Stablecoin Surge: What's Behind The Frenzy?

The digital assets market is experiencing a wave of new stablecoin launches by various technology and cryptocurrency companies, and even a state, in spite of concerns about their limited use and chances of survival.

www.benzinga.com

 

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In this study, we investigate stablecoin usage in five emerging markets, where gaining access to dollars is challenging or impossible. Anecdotally, we know that stablecoins are crossing the chasm into being used as digital dollar equivalents, used for remittances, cross border payments, international trade settlement, and treated as savings instruments for regular folks. But proof has been hard to come by. So we undertook a survey of 2541 crypto users in Brazil, India, Indonesia, Nigeria, and Turkey, to better understand how these individuals engage with stablecoins in their everyday lives.
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Castle Island Ventures

In this report, we investigate the behavior of stablecoin users in five emerging market countries, supplemented with novel onchain data and insights from companies building in these markets.

castleisland.vc

 

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Circle, the issuer of the second-largest stablecoin, will move its global headquarters to New York City's iconic One World Trade Center, where the cryptocurrency firm will occupy one of the top floors in what is the tallest building in the Western Hemisphere.

According to documents shared with CoinDesk, the move will be officially announced on Friday, and a ribbon-cutting ceremony will be held on Friday. New York Mayor Eric Adams will attend.

Stablecoin Giant Circle Is Moving Its Headquarters to New York City

The USDC issuer will move into One World Trade Center, and New York Mayor Eric Adams – who has sought to make the city a crypto hub – will attend the Friday ribbon cutting.

www.coindesk.com

 

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Why Wyoming is developing its own stablecoin​

Oct 4, 2024

Crypto World's Tanaya Macheel travels to Jackson Hole, Wyoming to find out why the state is developing its own stable token, as the Federal Reserve faces pushback on the idea of a central bank digital currency, or CBDC.


5:22

 

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Stripe Inc. said individuals from more than 70 countries have used stablecoins for online transactions during the first 24 hours after allowing merchants using its platform to accept crypto payments again.

Stripe merchants in the US were authorized as of Oct. 9 to receive the Circle-issued stablecoin USDC through their online checkout pages. ...

https://www.livemint.com/news/stripe-says-stablecoins-payments-made-in-more-than-70-countries-after-relaunch-11728587438866.html

I need to see if the Stripe integration we're using here allows for USDC payments on not...

 

[pmbug]

Stablecoins, especially Tether, have become a main actor in the dollar exchange markets in Latam countries. Venezuelans are harnessing Tether, which commands a market cap of nearly $120 billion, given the large gap between the government’s official dollar exchange, dictated by the volume negotiated in banks, and the black market dollar price, handled in peer-to-peer markets.

The difference between these rates, which in the last month has reached over 20%, has created disruptions in the Venezuelan economy and ramped up the stablecoins adoption as a savings tool, but diminished the use of dollars as a medium of exchange. This is because, in stores and businesses, each dollar can be only received at the official dollar rate, causing potential losses to its users.

While the government injected over $190 million in August to provide liquidity and contain the exchange rate, positioning over $4 billion until October 15, but it has just slowed its rise. This trend has proven to be a burden for the ailing Venezuelan government, which has to spend a significant part of its income to artificially maintain low exchange rates to keep the stability of the national economy.

Tether has been a key player in the Venezuelan exchange rate for some time, given the scarcity of physical dollars in the country. Kevin Hernandez, a local cryptocurrency market analyst, estimates that 76% of the crypto transactions in the country involve USDT. He detailed that the P2P markets manage almost $28 million in USDT each month, showing the strength of the stablecoin in the Venezuelan economy.
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More:

Venezuelans Crave USDT as Dollar Exchange Rate Explodes – Premium Bitcoin News

Venezuelans have ramped up the use of Tether USDT, as it has become one of the largest sources of dollar liquidity in national markets.

news.bitcoin.com

 

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Abstract

Using a new series of crypto shocks, we document that money market funds' (MMF) assets under management, and traditional financial market variables more broadly, do not react to crypto shocks, whereas stablecoin market capitalization does. U.S. monetary policy shocks, in contrast, drive developments in both crypto and traditional markets. Crucially, the reaction of MMF assets and stablecoin market capitalization to monetary policy shocks is different: while prime-MMF assets rise after a monetary policy tightening, stablecoin market capitalization declines. In assessing the state of the stablecoin market, the risk-taking environment as dictated by monetary policy is much more consequential than flight-to-quality dynamics observed within stablecoins and MMFs.

Stablecoins, money market funds and monetary policy

Using a new series of crypto shocks, we document that money market funds' (MMF) assets under management, and traditional financial market variables more broadly, do not react to crypto shocks, whereas stablecoin market capitalization does. U.S. monetary policy shocks, in contrast, drive...

www.bis.org

How dumb are these supposedly smart people? Stablecoins are primarily used for jumping into and out of crypto (non-stablecoin) investments. They are not interest bearing investment vehicles like MMFs. "They behave differently!" No shit, Sherlocks!

 

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CD opinion piece.

The Fed Is the Wrong Regulator for Stablecoins

The U.S. central bank would be conflicted overseeing stablecoins, because they compete with the Fed's payments infrastructure and with potential CBDCs.

Stablecoin legislation has been on the cusp of enactment for what seems like ages. The latest effort is Ranking Member of the House Financial Services Committee Maxine Waters’ (D-CA) renewed desire to reach a “grand bargain” with Committee Chair Patrick McHenry (R-NC) to get a bill over the finish line before year end.

It’s an open question whether the Senate would take up the issue, but Sen. Bill Hagerty (R-TN) recently floated a bill that could serve as the Senate companion to a House effort, or at least provide a starting point for new discussions.

More:

The Fed Is the Wrong Regulator for Stablecoins

The U.S. central bank would be conflicted overseeing stablecoins, because they compete with the Fed's payments infrastructure and with potential CBDCs.

www.coindesk.com

 

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It's really hard to be optimistic that Congress will get this right.

 

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Tether said its investment division financed a $45 million crude oil transaction between a major oil company and commodity trader, part of the USDT issuer's attempt to expand beyond its influential stablecoin roots.

The issuer of USDT, the third-largest cryptocurrency, is seeking to carve out a niche within the $10 trillion trade finance industry — which plays a crucial role in facilitating international trade and commerce by reducing risks associated with cross-border transactions. Tether revealed its plan to enter commodities trade finance last month, and it's also expanding into venture capital, bitcoin (BTC) mining and artificial intelligence.

The October transaction involved 670,000 barrels of Middle East crude oil cargo and took place between "a publicly traded super-major oil company" and "top-tier commodity trader," Tether said.
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Stablecoin Giant Tether Enters Oil Trade by Financing $45M Middle Eastern Crude Deal

The USDT issuer is expanding in trade finance, seeking to carve out a niche in the $10 trillion ecosystem.

www.coindesk.com

When the regulatory environment for crypto (and stablecoins specifically) matures after the War on Crypto is finally quashed, international trade is going to move to crypto/stablecoin rails and SWIFT is going to die a slow death.

 

[Peter89]

How dumb are these supposedly smart people? Stablecoins are primarily used for jumping into and out of crypto (non-stablecoin) investments. They are not interest bearing investment vehicles like MMFs. "They behave differently!" No shit, Sherlocks!

In other words SC are currencies, not assets.
The great misunderstanding - caused primarily by BTC - or considering cryptocurrencies as investment assets instead of currencies.

 

[searcher]

Market Watch

This group of cryptocurrencies is starting to make a dent in demand for short-term Treasurys​

Cryptocurrencies are making their way through the plumbing of the financial market — and one of the most interesting ways they’re doing this is by reaching into the U.S. government-debt market.

Stablecoins, a class of digital currencies that attempts to offer a stable value by being pegged to another asset like the U.S. dollar have been using Treasurys as collateral. Their usage has been growing rapidly in recent years amid rising demand for cryptocurrencies with cash-like qualities.

More:

MSN

 

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European MiCA regulations are causing some CEXes to drop support for Tether (USDT) and a few other stablecoins:

Cryptocurrency exchanges in Europe are preparing to delist locally noncompliant stablecoins as European crypto regulations near an enforcement deadline.

Coinbase Europe, Coinbase Germany and Coinbase Custody International will delist Tether’s USDt (USDT) and five other stablecoins on Dec. 13, Coinbase told Cointelegraph on Thursday.

“Based on the latest information, we currently expect we will have to restrict services for the following assets: USDT, PAX, PYUSD, GUSD, GYEN, and DAI,” Coinbase said, referring to the coins as assets restricted by Europe’s Markets in Crypto-Assets Regulation (MiCA).

Coinbase will continue supporting USD Coin (USDC) and the euro-pegged EURC (EURC) stablecoin, jointly operated by Coinbase and the US crypto company Circle.
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https://www.msn.com/en-us/money/mar...ether-s-usdt-stablecoin-in-europe/ar-AA1vKdP8

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Ripple Labs (developers of XRP) are launching a USD based stablecoin called RLUSD:

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Ripple CEO Brad Garlinghouse announced on Tuesday that the RLUSD stablecoin, a cryptocurrency designed to maintain a steady value in line with the U.S. dollar, has been approved by the New York Department of Financial Services. While stablecoins can operate without this approval, Ripple sought to be added to New York’s “greenlist” to gain credibility as a compliance-first company and access the New York market, ensuring that the coin complies with the state’s regulatory standards.
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Despite the sector’s massive growth, two rival stablecoins—Circle’s USDC and Tether’s USDT— have about 90% market share, according to Coingecko data. While other companies have struggled to make inroads with their own challengers, Garlinghouse is confident that Ripple will outcompete these current leaders and become the “gold standard for enterprise-grade stablecoins.”

Toe Bautista, a crypto analyst at market maker GSR, told Fortune that while stablecoins are one of the most “ironclad businesses in crypto,” they are also one of the hardest to get off the ground because they require a substantial amount of capital to back each stablecoin with an equivalent fiat-currency.

Ripple has promised that the stablecoin will be 100% backed by U.S. dollar deposits, short-term U.S. treasuries and other cash equivalents. Bautista says Ripple holds large monetary reserves, including 80 billion XRP allocated to the company in 2012, that will make it easier for the company to deliver on this promise.
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https://www.msn.com/en-us/money/oth...usd-stablecoin-prepares-to-launch/ar-AA1vGZby

I wonder if Ripple is going to claim that XRP is a cash equivalent and use accounting fuckery to claim XRP as RLUSD reserves. Or ... will they need to sell XRP to raise actual cash reserves for RLUSD?