The Stablecoin Conundrum ⌛
The Stablecoin Conundrum ⌛
US crypto wants stablecoin laws. Ripple Labs fires back at SEC. Bitcoin halving aftermath: a mixed bag. SEC seeks $5.3B judgment against Terraform Labs. BlackRock's Bitcoin ETF makes history.
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The US crypto industry is yearning for stablecoin regulations.
But a law in 2024 seems unlikely.
Bills are proposed: Both the House and Senate have proposed stablecoin bills, showing bipartisan support.
2025 is the sweet spot: Experts predict a Republican-controlled government in 2025, which could be more receptive to crypto regulations.
Urgency for regulations: The stablecoin market is booming, and regulators worldwide are taking action. The US is lagging behind.
Small chance in 2024: Negotiations are underway to attach stablecoin regulations to unrelated bills, but success is unlikely this year.
The Lummis-Gillibrand Payment Stablecoin Act
Spearheaded by Senators Kirsten Gillibrand and Cynthia Lummis, this act aims to set a clear regulatory framework for stablecoin issuers.
What's the deal?
Mandatory one-to-one cash or cash-equivalent reserves for backing tokens.
Prohibition of algorithmic stablecoins.
Strict prohibition against using stablecoins for illicit activities.
Who’s in Charge?
The bill gives both federal and state agencies a hand in managing and enforcing these rules.
What’s the Buzz in Washington?
There’s potential backing from the Biden administration, but the bill still has to jump through some hoops, like fitting into a broader legislative package and keeping the White House on board.Over in the House, big names like Patrick McHenry and Maxine Waters are hashing out what stablecoin regulation should look like, potentially taking cues from this Senate bill.
The market hits nearly two-year high
Market Cap, USD-pegged stablecoins: $165 billion - highest since June 2022, nearing the all-time high of $180 billion - according to The Block Data Dashboard.
USDe's Impact: Ethena's "synthetic dollar" has grown to a market cap of $2.4 billion, contributing to the overall rise.
More Players in the Game: Established players like Tether (USDT) and USDC are joined by newcomers like PayPal's stablecoin and Ripple's upcoming offering.
Ripple forecasts the total stablecoin market to reach a staggering $2.8 trillion by 2028.
Block That Quote 🎙️
Stuart Alderoty, Chief Legal Officer (CLO) Ripple Labs.
“The SEC’s ask is just more evidence of its ongoing intimidation against all of crypto in the US"
Ripple Labs is firing back at the SEC's hefty fine proposal.
SEC's Penalty: $2 billion, including disgorgement, interest, and a civil penalty.
Ripple's Response: They call the fine "intimidation" and argue their sales weren't misleading. And proposes a much smaller $10 million.
Bitcoin Halving Aftermath: A Mixed Bag
1. The price? After a wild ride leading up to the halving, the BTC is back above $66,000.
Ethereum is also cruising around $3,200, showing modest gains.
While transaction fees spiked briefly due to a Runes, the long-term price impact is yet to be seen.
2. Crypto stocks? Despite a 50% cut in mining rewards, US crypto mining stocks soared on the first trading day after the Bitcoin halving.
US crypto stocks, including Marathon Digital, CleanSpark, Riot Platforms, Cipher Mining, and Hut 8, rallied.
3. Transaction fees? 200% surge in revenue. All thanks to Runes and memecoins. Also, the transaction fee.
After the halving, fees spiked to $146 for a medium-priority transaction and $170 for a high-priority transaction. The current Bitcoin average transaction fee is around $20.
4. Miners eye AI? A recent report by CoinShares halving could push miners towards AI due to potentially higher profits.
Why the switch? The halving is expected to nearly double electricity and production costs for Bitcoin mining.
CoinShares suggests miners could relocate to areas with reliable energy for AI while using more stable locations for AI investment.
5. Mining Incentive? PayPal will give "green miners" who use renewable energy an extra Bitcoin bonus.
Miners who use clean power get a special "green key."
Transactions are routed to these miners with a small fee, but also a locked bonus in Bitcoin.
Only "green miners" can unlock this bonus.
In the Numbers 🔢
$5.3 billion
SEC's ask from Terraform Labs and Do Kwon.
A jury found them liable for fraud.
Disgorgement and interest: $4.7 billion.
Civil penalties: $520 million ($420M from Terraform, $100M from Kwon).
This is on top of potential bans for Kwon and restrictions on Terraform's operations.
Meanwhile, two SEC lawyers (Michael Welsh and Joseph Watkins) resigned after a judge slammed the agency for lying and abusing its power in a case against a crypto firm, DEBT Box.
BlackRock's Bitcoin ETF Makes history.
70 consecutive days of net inflows - placing it among the top 10 longest streaks for any ETF ever.
This means more and more investors are piling into this Bitcoin ETF, adding over $600 million to its assets under management on Monday alone. That brings the total to $18.16 billion.
But, Grayscale's Bitcoin ETF (GBTC) still holds the title for largest crypto-based fund, but its recent outflows could see it dethroned by IBIT.
The Surfer 🏄
NYSE is seeking opinions on shifting to a 24/7 trading schedule for stocks. Round-the-clock trading gained popularity during the pandemic, driven by crypto and increased retail investor activity.
Venezuela's state-run oil firm PDVSA plans to increase the use of USDT for exporting crude and fuel oil. This decision comes after the US reimposed sanctions on Venezuela, leading PDVSA to seek ways to minimise the risk of frozen oil sale profits in overseas bank accounts.
Shiba Inu, an Ethereum-based ecosystem, raised $12 million in a token sale round. The funds will be used to build a privacy-focused blockchain on top of Shibarium.
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