The Circle of USDC 🟠
Circle CEO bets on new stablecoin laws in 2024. The threat to USD dominance. Coinbase's African expansion. Stablecoin TUSD dips below $1 peg. Pro-crypto Republican suspends presidential campaign.
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Circle CEO Jeremy Allaire is betting big on 2024 being the year the US finally wrangles crypto cowboys with a new stablecoin law.
Circle's stablecoin USDC is the seventh largest crypto currency with a market cap of over $25 billion.
Why the Hype?
He sees a "very good chance" for a stablecoin law, driven by a trifecta of factors:
The Leadership Lasso: Other countries are already regulating digital dollar currencies, and the US doesn't want to get left in the dust.
Bipartisan Roundup: In a rare twist, Democrats and Republicans are surprisingly unified on the need for stablecoin rules.
Lawman on the Horizon: Bills like the "Clarity for Payment Stablecoins Act" aim to provide a clear regulatory framework for stablecoin issuers.
Allaire sees parallels with the recent approval of spot Bitcoin ETFs, suggesting a broader trend of crypto regulation gaining momentum.
This bodes well for stablecoins seeking similar legitimacy.
“It’s been a really powerful time for that, and we think 2024, with things like the spot ETF and world regulatory clarity, is going to open this up even wider.”
But Hold Your Horses: The corral isn't secure yet. Concerns over illicit activities – think shadowy figures financing mischief or pushing fentanyl – remain a sticking point for some lawmakers.
Circle proposes addressing these concerns concurrently with legislation, viewing them as "opportunities to strengthen the overall framework."
This pragmatic approach could bridge the gap between regulatory caution and crypto progress.
Notable bills include the Clarity for Payment Stablecoins Act and the Stablecoin Transparency Act.
The Clarity for Payment Stablecoins Act: awaiting House approval, the act aims to bring stablecoins under traditional finance regulations.
While Circle's market share for its USDC stablecoin has shrunk, Dante Disparte, the company's chief strategy officer, remains optimistic about payments stablecoin regulation in the early new year.
Circle has actively lobbied for stablecoin legislation.
Spent approximately $760,000 on lobbying since late 2021.
The IPO Filing
Circle has reportedly filed for an initial public offering (IPO) in the United States. The company aims to become a publicly traded firm, but has not disclosed the proposed price range or number of shares to be sold.
The IPO is expected to proceed after the review process by the US Securities and Exchange Commission, subject to market conditions.
Read: Circle's IPO Plans 🔈
Growth in USDC Wallets
Despite a significant decline in USD Coin (USDC)'s circulating supply, the number of wallets holding USDC grew by 59% in 2023.
This growth occurred even as USDC's market capitalisation decreased.
USDC's circulating supply fell from $45 billion to $25 billion, a drop of around 44%.
Factors contributing to the decline: Rising interest rates, regulatory crackdowns, crypto bankruptcies, and fraud.
Despite the market contraction, there's evidence of growing acceptance of USDC.
USDC Usage and Activity
Over the year, $197 billion in USDC was minted or burned, indicating active usage.
The coin served as a bridge between digital assets and traditional finance.
The number of wallets with more than $10 in USDC increased to over 2.7 million.
Andrew Peel, head of digital assets at Morgan Stanley.
Bitcoin’s growth and CBDCs could threaten the US dollar
Andrew Peel indicates a "paradigm shift" in digital asset perception and usage.
This shift, especially with Bitcoin and CBDCs, could challenge the US dollar's global currency dominance.
Current Dollar Dominance: The US dollar currently constitutes about 60% of global foreign exchange reserves.
Factors Accelerating the Shift
Bitcoin: The SEC's approval of several spot Bitcoin ETFs in the US, drawing $1.18 billion in weekly inflows. Bitcoin's significant global adoption over the past 15 years, with an estimated 106 million global holders and presence in over 80 countries.
CBDCs: CBDCs could streamline cross-border payments, reducing reliance on traditional systems like SWIFT and dominant currencies like the dollar. 130 countries are exploring or developing CBDCs, encompassing over 98% of the global GDP.
“[CBDCs] hold the potential to establish a unified standard for cross-border payments, which could diminish the reliance on traditional intermediaries like SWIFT and the use of dominant currencies such as the dollar.”
The president of 21Shares, Ophelia Snyder, believes that taking a short-term view on spot bitcoin exchange-traded funds (ETFs) is a mistake👇🏻
TTD Coinbase 🧿
Coinbase has formed a partnership with African platform Yellow Card.
Why? To expand access to USD Coin (USDC) across 20 African countries.
Integration and Accessibility
Coinbase will facilitate fiat to Bitcoin (BTC) and USDC transactions on Ethereum layer-2 rollup Base.
This service will be available via the Coinbase Wallet, with features supporting transfers via social media platforms like iMessage, Telegram, WhatsApp, Facebook, and Instagram.
Alongside USDC, other cryptocurrencies and stablecoins supported by Coinbase will be integrated.
Yellow Card operates in 20 countries including Nigeria, South Africa, Botswana, Ghana, Kenya, and Tanzania.
The partnership is seen as particularly beneficial for high-inflation and remittance-dependent countries in Africa.
Chris Maurice, CEO of Yellow Card, believes stablecoins like USDC can address real problems for people and businesses in Africa.
Common use cases include international payments, remittances, and protection against inflation.
African Bitcoin Adoption: Top countries for Bitcoin adoption in Africa include South Africa, Nigeria, Zimbabwe, Kenya, and Ghana.
The Central African Republic briefly adopted Bitcoin as legal tender before shifting focus to its crypto token project, Sango Coin.
TTD TUSD 🪙
Justin Sun-linked stablecoin TrueUSD (TUSD) has fallen below its $1 peg, it tumbled as low as $0.984 on Jan 15.
Mass Redemptions Trigger Depeg: Holders cashed out millions of dollars worth of TUSD, in favour of the competitor stablecoin Tether (USDT).
Outsized Selling on Binance Sparks Further Fear: As per Binance data, over the past 24 hours, traders have sold more than $339.2 million worth of TUSD while only buying $296.8 million, resulting in a net outflow of $42.3 million.
Real-Time Attestation Problems Raise Undercollateralisation Concerns: Earlier in January, reports surfaced of TrueUSD struggling to provide real-time attestations of its reserve assets. Meaning the actual value of the reserves might not fully back the outstanding TUSD supply.
Potential Arbitrage Opportunity on Poloniex Hinted at the Problem: A pseudonymous user, Rho Rider, pointed out a potential arbitrage opportunity on Poloniex in December 2023. TUSD was trading approximately 8% below its peg on the exchange, while its price remained stable elsewhere.
The lack of arbitrage activity suggested difficulties with withdrawals and deposits on Poloniex, potentially hindering market correction mechanisms.
Binance Listing Exclusion Fuels Further Speculation: TUSD sell-off might be linked to its exclusion from Binance's Manta launch pool initiative.
TTD Vivek Ramaswamy👨🏻🦱
Vivek Ramaswamy has suspended his US presidential campaign.
Announced at a press conference in Des Moines, Iowa, on January 16.
Why do we care? He was a pro-crypto Republican candidate.
Ramaswamy is now endorsing former President Donald Trump for the upcoming election.
He expressed the need for an "America first candidate" in the race.
By Crypto-Friendly We Mean
Ramaswamy was the only presidential candidate to introduce a specific crypto policy framework.
His proposed "The Three Freedoms of Crypto" focused on exempting crypto developers from liability based on users' actions and providing clear regulatory guidelines for new cryptocurrencies.
He also advocated against federal restrictions on self-hosted wallets.
Ramaswamy criticised the US Securities and Exchange Commission (SEC) and its Chair, Gary Gensler, for their approach to crypto regulation.
He particularly highlighted the SEC's indecision on whether Ether should be classified as a commodity.
TTD Surfer 🏄
Argentine President Javier Milei has stated that he will not oppose provinces' efforts to launch their own currencies.
Hong Kong’s HashKey Group has raised nearly $100 million in its Series A financing round at a pre-money valuation above $1.2 billion.
OKX has obtained a virtual asset service provider (VASP) license in Dubai through its subsidiary, OKX Middle East Fintech.
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