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Asset Manager Van Eck Says Stablecoins Should Be Treated as Investment Funds, Not Banks

Asset Manager Van Eck Says Stablecoins Should Be Treated as Investment Funds, Not Banks

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Stablecoins should be treated like investment products, not banks, Jan van Eck, the CEO of the investment firm VanEck, wrote in a Barron’s op-ed on Wednesday.

“They don’t lend money, so I don’t understand why there is a push to regulate them like banks. Bank regulation may in fact imply some sort of government guarantee,” he wrote.

Van Eck’s broadside followed just two weeks after the U.S. Undersecretary for Domestic Finance, Nellie Liang, testified before Congress that stablecoins “are bank-like products…as well as an investment-like product, which is why there was a regulatory gap.” A group of regulators called the President’s Working Group for Financial Markets published a report last year recommending that stablecoins fall under the same regulations as banks.

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In her testimony, Liang said that technology companies without bank licensing should not offer stablecoins.

Van Eck criticized the Working Group report for not seeing the similarities between stablecoins and money market funds.

“Despite the similarity that stablecoins have with money market funds, the PWG suggested that stablecoin issuers be “insured depository institutions.” Stablecoins invest in securities; they don’t lend like banks do,” van Eck wrote.

He made two recommendations for a potential, stablecoin regulatory framework.

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First, he suggested that the SEC oversee stablecoins for a four-year trial period similar to how it considers investment funds under the Investment Company Act of 1940.

Secondly, van Eck recommended not forcing tax withholdings on stablecoins in the future. This measure would give stablecoins an opportunity to prove their value in the U.S. “Most stablecoins currently don’t pay dividends,” he wrote. “We need, however, to imagine a day when stablecoins pay interest and plan technologically and regulatorily for that day.”

Jerald David, the president of asset management firm Arca supports van Eck’s first proposal, saying that “stablecoins on the market today resemble more of a ‘40 Act product than a bank,”

“Adding a wrapper, and creating a Blockchain Transferred Fund would allow for a U.S. dollar proxy that would be welcomed by the banks and large scale financial institutions,” David said.

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Avalanche Founder

Stablecoin Shuffle — Terra Fiasco Shakes Up Fiat-Pegged Crypto Economy, Over $35 Billion Disappears

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Stablecoin Shuffle — Terra Fiasco Shakes Up Fiat-Pegged Crypto Economy, Over $35 Billion Disappears

According to statistics on Friday, May 13, the top stablecoins by market capitalization are currently worth $163.7 billion after the stablecoin economy was valued at close to $200 billion just last week. Of course, the climactic terrausd (UST) failure wiped out billions from the stablecoin economy, and Binance’s stablecoin BUSD has recently entered the top ten crypto market capitalization positions. Just as it caused carnage in the crypto economy, Terra’s recent downfall has caused a great shift within the stablecoin ecosystem.

The Stablecoin Economy’s Great Shift

It was only a week ago when the stablecoin economy was awfully close to surpassing the $200 billion mark, but Terra’s recent collapse changed all that. Terra’s once stable token terrausd (UST) was once the third-largest stablecoin in existence until it lost its $1 parity. The token that’s supposed to be pegged to a U.S. dollar’s value is now trading for under $0.20 per unit. Still, the market valuation makes it the sixth-largest market cap in coingecko.com’s “Stablecoins by Market Capitalization” list.

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The top ten stablecoin tokens by market capitalization according to coingecko.com’s statistics on May 13, 2022 at 2:00 p.m. (ET). Coingecko notes that “UST has remained de-pegged from the U.S. dollar since 9th May 2022.”

During the last month, out of the top ten stablecoins by market valuation, none of the stablecoin projects saw growth. USDC dipped by 0% over the last 30 days, while all the other top stablecoins saw 30-day declines. BUSD is now the third-largest stablecoin token today with a $17.3 billion market capitalization and BUSD has also stepped into the top ten crypto coins by market cap, taking the ninth position among 13,000+ coins.

Makerdao’s DAI token is now the fourth-largest stablecoin market capitalization with $6 billion today. Makerdao’s native token MKR jumped 15% in value during the past 24 hours taking on some of UST’s fallout. In fact, most of the stablecoins that have managed to remain stable and have reaped the benefits of UST’s crash.

While Some See the Need for ‘More Regulatory Framework’ Around Fiat-Pegged Coins, Some Believe a Decentralized Stablecoin Is Still Needed

On May 12, 2022, Circle Financial’s CEO Jeremy Allaire tweeted: “USDC/USDT is the trade of the day. Flight to quality.” The Circle executive appeared on CNBC’s broadcast “Squawk Box,” and noted that there needs to be “more regulatory framework around stablecoins.” A number of people have been watching the performance of so-called decentralized and algorithmic stablecoins extremely closely since Terra’s downfall.

Despite the recent Terra UST carnage, many still believe there’s a great need for decentralized and algorithmic stablecoins among the centralized giants. Avalanche (AVAX) founder Emin Gün Sirer believes the crypto ecosystem needs a decentralized stablecoin.

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A day before LUNA went under a U.S. penny, Gün Sirer said: “Even fully-collateralized fiat stablecoins have de-pegged. Even some of the weak [algorithmic] stablecoins have recovered.” The AVAX founder also stated that he had “always said that [algorithmic] stables are subject to destabilizing bank runs.” Despite the bank run risk, Gün Sirer explained that a decentralized stablecoin is still needed in the industry.

“We need a decentralized stablecoin,” Gün Sirer detailed. “Fiat-backed stables are subject to legal seizure and capture. A decentralized economy needs a decentralized stablecoin whose backing store cannot be frozen or confiscated.”

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Avalanche Founder, AVAX Founder, BUSD, Capitalizations, Circle CEO, crypto economy, Cryptocurrency, DAI, Digital Currencies, Emin Gün Sirer, fiat-pegged tokens, Jeremy Allaire, makerdao, Market Capitalizations, market positions, MKR, stablecoin assets, Stablecoins, TerraUSD, Tether, Top Ten, top ten contenders, usd coin, USDC, UST

What do you think about the stablecoin economy shuffle this week? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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Erratic Bond Yields, Lockdowns, And War — 3 Reasons Why Economic Recovery Won’t Happen Quickly

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Erratic Bond Yields, Lockdowns, And War — 3 Reasons Why Economic Recovery Won’t Happen Quickly

The global economy looks bleak as inflation continues to rise, and a wide array of financial investments continue to shudder in value. Since May 2, 2022, the crypto economy has dropped more than 15% from $1.83 trillion to today’s $1.54 trillion. The price of gold has lost 5% in 30 days, and major stock market indexes have seen record lows during the past two weeks. While many people hope the world’s financial markets will see a turnaround, there are three major obstacles impeding the path to recovery.

3 Factors That Will Impede the Global Economy’s Healing Process

While many people are surprised by the economy floundering, a great number of individuals predicted the economic downfall following the stimulus measures leveraged to fight Covid-19. Presently, global markets are looking awful, as equities are falling in value, precious metals have slipped over the last month, and crypto markets have been a bloodbath during the past 30 days as well.

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On Monday, May 9, 2022, it was a day many investors won’t forget as the Nasdaq index slid by 4%, gold dropped by 2%, crude oil slipped by 7%, and the crypto economy shed 8% over the last 24 hours. Currently, there are three major reasons why the economy may continue to flounder until things start to change. The reasons include the ongoing war in Europe, the current Covid-19 outbreak in China, and U.S. bond market yields.

The Ukraine-Russia war

The first is simple to understand, war is not good for the economy except for firms like Raytheon, Lockheed, Northrop, and General Dynamics. While a great majority of stocks have plummeted, six-month statistics show the aforementioned company stocks have seen significant gains.

For the rest of the ordinary citizens, war is leading to more inflation. Significant financial sanctions against Russia have made it so many countries will not transact with the country. This has caused the tightest financial sanctions in decades which in turn has caused the price of goods and services and especially petroleum products to skyrocket.

Trends forecaster Gerald Celente recently detailed that as long as the Ukraine-Russia war ensues, the “odds of recession increase.” Many other forecasters and financial analysts believe that as long as the war continues, the “U.S. economy will slow, and Europe risks a recession.”

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China’s ‘Zero-Covid-19’ Strategy

Another factor that may impede the global economy’s healing progress is China’s recent Covid-19 lockdown measures. During the past two months, China’s authorities have tested a two-phase lockdown in Shanghai with its strict “zero-Covid-19” strategy. The measures China has been leveraging in recent times have shaken investors, according to various reports.

Five days ago, the New York Times wrote that China’s Covid-19 policies are making it so European investors are wary of investing there. The NYT highlights a survey that says “lockdowns and supply chain issues have soured European businesses in China on the idea of further investment in the country.”

China’s lockdowns and the “zero-Covid-19” strategy have investors shaking in their boots because of what happened in 2020. When China was dealing with Covid-19 in early 2020, many believe the country’s lockdown tactics spread across the world causing a great number of countries to shut down their economies. Investors today are likely frightened that this could happen again and China’s “zero-Covid-19” strategy will spread to other regions worldwide. In turn, an event like this could once again shut down global markets, impede supply chains, and cause economic chaos.

Erratic Bond Markets

The final problem that is hurting financial investors is current bond market yields are wild and erratic these days. On May 10, reports show that the 10-year U.S. Treasury yield slipped by 3% on Tuesday, “as fears of rising inflation and a potential economic slowdown lingered.” In addition to U.S. bond market carnage, bonds in Europe have been extremely volatile as well.

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The reason people fear bond market volatility is because bonds are generational investment vehicles with long-term yields that affect fixed-income investors. Bond markets have been tanking for weeks on end and many believe the economy won’t heal unless bond markets stabilize. The broken bond markets are also being blamed on the Ukraine-Russia war but they were showing signs of weakness well before the conflict.

Moreover, younger generations of bond investors have not felt volatility like this before. The director of global macro at Fidelity Investments, Jurrien Timmer, says the current bond bear market is “historic.” In the same report, JPMorgan Asset Management’s chief investment officer, Steve Lear, said the broken bond market is painful. “It’s been a real and significant and painful move,” Lear said. “For those who haven’t experienced a bond bear market, this is what it feels like.”

These three factors are sores on the global economy and unless they heal, an even deeper recession could be in the cards. Presently, the Ukraine-Russia war continues, China’s lockdown measures are still shaking investors, and bond markets have been erratic for weeks on end and continue to rattle investors to this very day.

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“zero-Covid-19” strategy, 10-year U.S. Treasury yield, Arms Dealers, Bond Markets, Bond yields, bonds, China, China’s Covid-19 policies, crypto economy, economics, Economy, Europe, free markets, Gerald Celente, gold, Investors, Lockdowns, Precious Metals, recovery, Shut-downs, stocks, supply chains, Ukraine-Russia war, US, War

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What do you think about the three factors that could impede a global economic recovery? Let us know what you think about this subject in the comments section below.

Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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As BTC Slides Toward Resistance, The Chance Of A Rare Triple Top Formation Comes Into Play

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As BTC Slides Toward Resistance, The Chance Of A Rare Triple Top Formation Comes Into Play

The cryptocurrency economy has shed a lot of value during the last six months dropping 48.70% from $3.08 trillion to today’s $1.58 trillion. While crypto markets looks extremely bearish these days, a few crypto advocates have theorized the bear market will be less harsh this time around. Furthermore, there’s also the rare scenario that bitcoin’s price could reverse and see a triple top even though it’s commonly said in the finance world “there is no such thing as a triple top.”

The Chances of Bitcoin Experiencing a Triple Top Scenario Is Rare, But Could Happen

Five days ago, Bitcoin.com News reported on a theory that describes bitcoin (BTC) prices experiencing a softer bear market than the leading crypto asset’s 80%+ declines recorded in the past. The reasoning behind the theory is because of past bitcoin price peaks and the most recent peaks recorded in May and November 2021.

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While BTC hit $64K in May and $69K in November, the two peaks were much smaller than previous bull run gains. From the looks of things it seems, BTC’s price experienced what’s called a double top. Now, coinciding with the theory the current market downturn will be a softer bear run, there’s also the rare possibility of a triple top scenario.

Basically, if a triple top scenario takes place, BTC’s fiat value will tap the same resistance it touched during the past downturn. For instance, after BTC tapped a high of $64K in mid-May 2021, the value dropped to a low of $31K on June 21, 2021. From there, the price once again skyrocketed and reached $69K on November 10, 2021.

If BTC is to experience a triple top formation, then after hitting resistance the price should reverse back to the highs seen in May and November 2021.

If a triple-top happens to occur, then the upcoming bottom would be somewhat in the range of the $31K mark, when it starts another reversal. In order for this to happen, BTC will have to see a complete reversal from the same resistance levels and the third top could be equal to and just above or just below the $69K region.

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Reversal Theories Considered ‘Hopium’ as Many Won’t Bet on Such a Risky Play

Of course, many will assume theories of a triple top are based on pure faith and “hopium.” In the trading world, triple tops are very rare and quad tops are seemingly non-existent. In 2019, allstarcharts.com analyst JC says: “We rarely see triple tops, and I can’t even tell you if I’ve ever seen a quadruple top. Betting on these outcomes seems to never pay.”

Which means betting on bitcoin (BTC) experiencing a triple top is a very risky bet in comparison to betting on a double top formation. Moreover, its a common message in the trading world to state:

There is no such thing as a triple top.

While it’s common to say the statement, saying “there is no such thing as a triple top,” the comment is not entirely accurate. They surely have occurred in financial market scenarios in the past, and traders who risked betting on them have reaped the rewards. However, when a triple top does execute and complete, the “party is officially over.” When a triple top is executed, the price will begin a bearish descent until the next price cycle regains bullish strength.

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While many are likely still willing to bet on a triple top formation as far as bitcoin’s price is concerned, its even more likely they are not willing to bet on a seemingly non-existent quad top. Moreover, triple tops being as rare as they are, means a great deal of traders are not willing to bet a third peak is in the cards. The chance of a BTC triple top coming to fruition is not impossible, and no one can safely say the scenario will not come into play.

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all-time highs, Bitcoin, Bitcoin (BTC), bitcoin prices, bottoms and tops, BTC Prices, Charts, crypto economy, cycle, Double Top, Formations, Markets, Moving Averages, peaks, price cycles, Prices, Quad Top, resistance levels, risk, Technical Analysis, Triple Top, triple tops rare

What do you think about the chances of bitcoin’s price seeing a triple top formation after hitting the next resistance level? Let us know what you think about this subject in the comments section below.

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Jamie Redman

Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 5,000 articles for Bitcoin.com News about the disruptive protocols emerging today.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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