Tether Sinks Below $1 in Nightmare Scenario for Bitcoin’s Future
Tether (USDT), the largest stablecoin, slipped below $0.96 early today (Thursday, May 12, 2022) in a further sign of stress in the crypto market, although it has rebounded and later in the day was trading around $0.99. Tether’s CTO Paolo Ardoino said the group is honoring USDT redemptions at $1.00 and has managed more than 300 million in the last 24 hours “without a sweat drop.” Tether has systemic importance for the crypto ecosystem given its evolutionary role as the core accounting unit (pricing) and means of exchange (settlement) underpinning most markets. (Michel Rauchs), which made it concerning that Binance U.S. stopped letting people withdraw money for a few hours on Thursday in the name of “scheduled maintenance“.
Meanwhile, other asset-backed U.S. dollar stablecoins are holding their pegs, with both USD coin (USDC) and crypto-backed DAI occasionally trading at slight premiums. U.S. dollar algorithmic stablecoin TerraUSD (UST) has recovered from its lowest level (about $0.30 yesterday) and has spent the day between $0.40 and $0.65. And speaking of algorithmic stablecoins, Ledger Insights called attention to this paper co-authored by ex-Diem Chief Economist Christian Catalini that described the likelihood of a death spiral for algorithmic stablecoins and put forth the following mapping of stablecoin risk profiles:
SEC Chairman Gary Gensler Re-Affirms His View that Most All Digital Assets are Securities
In a speech delivered today to the International Swaps and Derivatives Association Annual Meeting, U.S Securities and Exchange Commission (SEC) Chairman Gary Gensler re-affirmed his view that most all crypto assets are securities. “Most crypto tokens involve a group of entrepreneurs raising money from the public in anticipation of profits — the hallmark of an investment contract or a security under our jurisdiction. Some, probably only a few, are like digital gold; thus, they might be like commodities. Even fewer, if any, are actually being used in general commerce for payments.” He added that if a swap is based on crypto that is a security then it is a security-based swap that must be registered with the SEC. Gensler stated that whether the platform is centralized or decentralized, offering crypto assets and crypto asset-based swaps means they must “work within our securities regime.” [Read more]
Upcoming events I’m affiliated with:
Satoshi Capital Advisors is hosting a virtual workshop on wholesale CBDC, stablecoins and digital capital markets on May 24 (starting at 08:00 EST). [Register here with the passcode: CBDC]
The CBDC Think Tank is hosting a CBDC Papers Lecture Series on June 17 and 24, each session starting at 7am EST and running for 3 hours. [View list of papers and register here]