The Regulatory State #33 - 5/17/22
This week’s Terra/UST meltdown…may just be the natural disaster event and flooring exercise needed to force regulation and open the institutional floodgate. Yes, a hybrid quasi asset backed and algorithmic stablecoin collapsed and eviscerated a large swatch of native crypto wealth concentrated during the last bull run.
And yes, the contagion effect touched institutional balance sheets from VanEck to several well known private funds.
But, more importantly it forced a line to be drawn in terms of quality (ahem USDC), after a quick bounce to Dai et al. We have been tracking pure asset backed stables (USDC, Tether) and pure credit based algorithmic stables (Frax) as polar options that survive regulatory headwinds, but the business case for non USD backed stables may now be made.
The Week that Shook Crypto (FT)
Yellen: UST Collapse Could Have Been Avoided With Rules for Stablecoin Issuers (Blockworks)
Terra Collapse Could Spell End for Algorithmic Stablecoins (Blockworks)
'Failure Should Be an Option,' US Sen. Pat Toomey Says of UST Turmoil (CoinDesk)
EU Commission Favors Ban on Large-Scale Stablecoins, Document Shows (CoinDesk)
UST Meltdown Hasn't Spurred US Financial Stability Council Meeting: Sources (CoinDesk)
VanEck, Wrong-footed by UST Collapse, Casts Doubt on Do Kwon’s Rescue Plan (Blockworks)
Why Did Cryptocurrencies TerraUSD and Luna Unravel? Stablecoin Price Crash Explained (WSJ)
Tether Has Cut Commercial Paper Holdings Backing Stablecoin by 50%: CTO (Decrypt)
Coinbase Customers Sue Over Stablecoin That’s ‘Anything But’ (Bloomberg)
Institutionalization of Crypto
Crypto is officially institutional. S&P slapped a rating (any rating, who cares that its junk!) on Compound in a monumental step towards meeting institutional TradFi where it stands.
DeFi is still shining through the clouds of the Terra debacle, as the EU announced a pilot program to explore DeFi supervision in the market and a DeFi-focused ETF secured initial funding. What’s that, what do I hear? Franklin Templeton whispering about ‘thematic tailwinds’ in crypto – does that come with their >$1.5T AUM?
In Industry First, S&P Gives Compound Prime Junk Credit Rating (Blockworks)
D-ETF Secures $50 Million Prior to Public Sale (Blockworks)
Franklin Templeton Exec: Crypto Asset Class Has ‘Thematic Tailwinds’ (Blockworks)
What the OCC’s consent order to Anchorage means for the crypto industry (The Block)
European Union Plans Pilot Project on DeFi Supervision (Blockworks)
Grayscale’s GBTC is bleeding out as the discount expands, but may be the great catalyst in forcing a BTC ETF spot conversion in an effort to unlock investors after a ‘productive’ meeting with the SEC.
GBTC Discount Hits All-Time Low as SEC Mulls Bitcoin ETF (Decrypt)
Grayscale Had ‘Productive’ Meeting With SEC on Bitcoin ETF Conversion (CoinDesk)
Grayscale’s Bitcoin Fund Hits Record Discount After SEC Meeting (Bloomberg)
Fidelity’s Controversial Bet on Bitcoin (WSJ Podcast)
The meaningful shift from Bitcoin maximalism to Bitcoin realism (CoinTelegraph)
We made it.
The Financial Accounting Standards Board put digital asset balance sheet accounting on the docket.
Meanwhile, the SEC and CFTC are openly competing for scope of influence at a TradFi conference, and Coinbase tips the hat to 2008 with an acknowledgement that a run on deposits is indeed not insured and would set the stage for receivership and creditor rights.
Crypto innovation has now been replaced by the classic finance curriculum.
Chairs from the SEC and CFTC talk crypto regulation at ISDA meeting (CoinTelegraph)
Derivatives' Old Guard Fights FTX Chief Over Plan to Cut Out Middlemen (CoinDesk)
CFTC commissioner appoints senior policy adviser experienced in digital asset regulation (CoinTelegraph)
FASB to Review Accounting Rules for Digital Assets Held on Balance Sheets: Report (CoinDesk)
Coinbase Lets Users Know What a Bankruptcy Could Mean for Their Crypto (Bloomberg)
Utah Governor approves of blockchain and digital innovation task force (CoinTelegraph)
EU, enter stage right…please give us smart regulation. This is an opportunity to rebrand and set the tone on the global stage.
Global Financial Stability Watchdog FSB Says It Could Write Crypto Rulebook (CoinDesk)
EU Ban on Tax-Haven Crypto Firms Could Breach Trade Law, Commission Warns (CoinDesk)
For the crypto industry, supporting sanctions is an opportunity to rebrand (CoinTelegraph)
UK And The FCA
The UK and her member states are trying their damnedest to promote a crypto friendly attitude – with the FCA holding a ‘CryptoSprint’ to explore smart regulation, as Prince Chales opens Parliament with a commitment to smart laws, and an increasingly aggressive pro-crypto czar traveling the world on a listening tour.
Just stop giving us whiplash and get on with the love, bruv.
Brexit Hobbled London Crypto. But That Could Soon Change (Bloomberg)
The FCA Is Holding Its First CryptoSprint: Here’s What the Digital Asset Community Wants From It (CoinDesk)
UK Promises New Laws to Promote, Seize Crypto (CoinDesk)
We found out this week that CBDCs are the focus of emerging market central banks’ policymaking in the coming months.
No surprise here that the utility token and censorship-resistant approach is the standard and there has been a movement away from the centralized surveillance approach once espoused by certain global powers (China, Russia…US?). The ECB is leading from the front with an anonymous digital euro…
ECB lays out ‘anonymous’ digital euro as public opposes ‘slavecoins’ (CoinTelegraph)
Nigeria Issues Crypto Asset Rules in Move Seen Boosting Trade (Bloomberg)
El Salvador’s President Went All In on Bitcoin. Then It Tanked. (WSJ)
Germany Affirms Crypto Sold After One Year Is Tax-free (Blockworks)
Argentina’s Central Bank Bans Crypto Trading (Blockworks)
Jamaica To Launch CBDC This Summer (Blockworks)
The Bahamas’ ‘Sand Dollar’ Needs Improved Cybersecurity, IMF Says (CoinDesk)
Chilean Digital Peso Would Need to Work Offline, Central Bank Governor Says (CoinDesk)
SBF…The man, the myth, and the legend’s master plan is coming into focus as a full spectrum chartered bank, broker-dealer, options clearinghouse, and retail monolith.
FTX acquired 7.6% of Robinhood this week and poached a Fidelity executive to push for exchange approval in NY. IS SBF THE NEW
VANDERBILT? Sorry, ROCKEFELLER? Given the effective altruism and all?
FTX Founder Sam Bankman-Fried Buys 7.6% Stake in Robinhood (WSJ)
Crypto’s Merry Band Comes Back to Robinhood (WSJ)
A Crypto Emperor’s Vision: No Pants, His Rules (NY Times)
FTX US Hires Fidelity Executive as Crypto Exchange Seeks New York Approval (WSJ)
Yes we can. Thesis is playing out on par. Crypto native products are now flooding in as tools for crypto pundits out in front of mid term elections.
Political Hopefuls Turn to NFTs to Raise Funds for Midterm Elections (WSJ)
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