In the payments market, stablecoins are increasingly considered as a possible alternative to fiat currencies. Regulators and central bankers, on the other hand, view them as a financial threat because the assets that support them are not regulated.
The price of UST dropped to $0.68 on May 9, 2022. The drop was caused by a general market sell-off in all cryptocurrencies. LUNA’s stock plunged by as much as 60% in a matter of days.
New Stablecoin Legislation?
Raoul Pal, a macro expert and the CEO of Real Vision, believes that recent concerns with Terra’s algorithmic stablecoin, UST, may result in new stablecoin legislation.
In a new interview with Bankless, the former Goldman Sachs executive claims that UST’s recent loss of its US dollar (USD) peg is a normal occurrence in most financial markets.
The UST is supposed to maintain its peg to the USD through a minting and burning system that allows holders to redeem 1 UST for $1 worth of LUNA in principle.
When crypto markets sharply corrected on April 9th, UST lost its peg to the USD, and the price of LUNA fell over 77 percent from it’s all-time high, making its market cap smaller than UST.
Pal believes that the UST scenario could be exploited by regulators to justify new rules and restrictions on stablecoins. While many in the sector may be unhappy with stablecoin restrictions, he believes they are an essential stepping stone for the space.
Unregulated stablecoins are not something the government wants. Whether in the corporate or public sector, they demand central bank digital currencies (CBDCs).
So they’ll use this as an excuse, which is probably excellent for Paxos, Circle, and Tether and Terra, but not so much for Tether and Terra.
“The problem is, if we are borrowing somebody else’s currency, then we have to play their game whether we like it or not. It’s their currency. So anybody who thinks, just because we’ve got some algorithm, it’s not the Federal Reserve’s currency, is [crazy].”
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Jed McCaleb Still Holds 250 Million XRP In His Tacostand Wallet
According to XRPscan, Jed McCaleb, the co-founder of Ripple Labs and its first chief technology officer, has started selling huge sums of XRP on the crypto market after suspending sales in September last year.
He has escalated his selling by around 140% in the last three days, and a crypto enthusiast expects he will be done selling altogether within a month. Jed currently owns over 250 million XRP in his “tacostand” wallet.
9 Million XRP Sold Everyday
According to statistics released by the XRPscan portal, Jed McCaleb resumed selling the last of his massive XRP hoard as the year began.
He has dumped over 464.8 million XRP since January, which is equivalent to $186,790,421 at today’s market rate.
The amount of XRP coins sold each week varies, ranging from 18 million to 26 million and 42 million. As Twitter user Rafael Ken Aguilar pointed out, he has boosted his selling volume by around 140 percent in the last three days, selling nearly nine million XRP every day, up from four to six million per day previously.
If the current selling rate holds, McCaleb expects he will be out of XRP in about a month.
Jed Still Holds 250 million XRP
According to XRPscan, Jed’s wallet, “tacostand,” still has 249,200,734 XRP in it. The XRP community developed a website to track McCaleb’s sales rate, which shows a somewhat higher figure: 257,858,264 tokens.
Hence, this is the last of the nine billion XRP granted to McCaleb by Ripple’s top management when he decided to move away from the firm a year after it was formed to start as a competitor to the blockchain Stellar.
Depending on how much XRP McCaleb sells per week, two probable dates for McCaleb to run out of XRP are listed here: July 14 and August 8.
According to CoinMarketCap, the sixth largest cryptocurrency, XRP, is trading at $0.404 as of this writing, down by 70.0% in the last 24 hours.
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Traders Withdraw $10M Tether USDT, Yet The Firm Claims To Be Strong
A few days ago, the global cryptocurrency market had just entered a recovery phase but that didn’t last long as the market is once again overshadowed by the bearish momentum today.
The recent updates state that as rumors of surging regulatory scrutiny for stablecoins continues grows, crypto traders withdrew about $10 billion from Tether USDT in the previous two weeks.
As per the data USDT’s circulating supply has plunged from 11th May’s $84.2 billion to $73.3 billion yesterday, on 23rd May.
On-chain data suggests that traders withdrew $1 billion from Tether on May 20 alone. Terra cryptocurrency UST and LUNA crash fuelled the enormous outflow. USDT, like numerous other stablecoins, lost its peg following the UST meltdown. This attracted a lot of attention towards stablecoin and its stability.
In a recent blog post, Tether claims that the de-pegging of USDT across crypto exchanges does not imply that the peg has been broken; rather, the de-peg demonstrates that the liquidity has gained more demand than that of exchange’s order books.
Tether USDT Claims To Have 1:1 Backing
Previously, Tether had said that USDT has a one-to-one dollar bank account backing, however later clarified that it utilizes various assets as collateral, including commercial paper and even digital tokens. This was disclosed after it reached a settlement with New York authorities.
As part of the settlement, the company must declare its reserves every quarter. According to the most recent attestation report, it has decreased its commercial paper holdings while boosting its holdings of US Treasury notes. The firm also announced that it is currently carrying foreign government debt.
Although the majority of the assets in the review are stable, “corporate bonds, funds, and precious metals” and “other investments (including digital tokens)” account for roughly 11% of the total.
On the whole, as per the reports the firm’s reserves have surpassed the amount that is required to regain the digital tokens that were issued.
Tether’s account, however, reveals it has $162 million more in reserves than its tokens, according to Patrick McKenzie, a fintech analyst. However, due to the negative character of the crypto market, some of its investments, such as those in the Celsius network, are doing poorly.
According to Paolo Ardoino, Tether’s chief technology officer, Tether’s stability has been maintained even through multiple black swan events and many highly volatile market conditions. And adds up saying, even in the darkest days, Tether has never failed to keep up with its recovery request that comes through any of its verified customers.
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278 Million LUNA Gets Burnt With The Released Address, Do Kwon Says It’s Pointless!
Do Kwon, the now-famous Terra CEO and founder, published on Twitter on May 21 a dead wallet address where people may send their LUNA tokens to be burned. The uploaded wallet was filled with nearly 280 million LUNA tokens, making the tweet one of Do Kwon’s most popular.
With 2,719 transactions, the total amount of LUNA transferred to the burning address has reached 289 million, meaning that the average number of tokens sent to burn every transaction is roughly 107,000.
There was yet another round of foolishness in this narrative. On May 23, two days after the burning address was published, Do Kwon indicated that sending LUNA to that address is pointless and will result in token loss.
From the moment the wallet’s address was originally disclosed, 254 million LUNA were sent to the wallet and after the tweet exposed the useless idea, there were 25 million LUNA transferred.
Terra Isn’t A Ponzi Scheme
Recently, there was a statement from Pennsylvania Senator Pat Toomey that Terra may be a fraudulent project. Of course, Toomey is not alone. Terra was a classic pyramid scam, according to prominent hedge fund manager Bill Ackman, who warned that such fraudulent ventures represent a threat to the whole cryptocurrency ecosystem.
After the failing blockchain project was linked to the famed biotech fraud Theranos, FTX CEO Sam Bankman-Fried remarked that Terra wasn’t a Ponzi scheme. He stated that this project was basically driven by “mass excitement.”
Meanwhile, South Korean officials have allegedly tried to seize the assets of Terra’s non-profit organization, Luna Foundation Guard, accusing Terra of theft. Almost all of the LFG’s money were spent on failed attempts to assist the TerraUSD (UST) stablecoin to reclaim its peg.
At the time of reporting, Terra (LUNA) is trading at $0.0001633 and TerraUSD at $0.067
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Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.
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