We are still at the experimental stage with stablecoins.
Here is our pick of the 3 most important Stablecoin news stories during the week.
In a clear sign of an immature market we saw this week a Trader make money on trading the same stablecoin. In digital-asset markets, stablecoins like tether and USDC are supposed to represent $1 of value. But their prices often fluctuate on trading platforms that are short in liquidity enabling a classic arbitrage trade (buy low in one market and almost instantly sell high in the other).
In one Aug. 10 transaction on the Ethereum blockchain, a trader appears to have used a series of transactions in tether and USDC on the decentralized cryptocurrency exchanges Uniswap, Curve and dYdX to net a tidy $40,000 profit off a $45,000 initial investment. That works out to an 89% gain in what was likely a matter of minutes.
First Mover: How a DeFi Trader Made an 89% Profit in Minutes Slinging Stablecoins
JPMorgan is moving it’s stablecoin project known as Quorum along with considerable investment dollars into ConsenSys the Ethereum Blockchain Development company.
- JPMorgan is set to make a $20 million investment in ConsenSys.
- The bank will lead a fundraising round of $50 million.
- The two are also working on merging the bank’s Quorum project into ConsenSys.
JPMorgan Investing in Ethereum: ConsenSys Blockchain Conglomerate Raising $50M
Blockchain firm Apollo Fintech has announced the completion of its National Payment Platform, or NPP on August 12. This new blockchain platform is a cashless system that supposedly enables a central bank to issue central bank digital currency for national adoption.
The NPP system reportedly allows a government agency and central bank to onboard commercial banks and agents after CBDC is issued.
New Blockchain Platform Aims to Help Countries Issue CBDCs More Easily
The Federal Reserve on Thursday announced it is building and testing a hypothetical digital currency, equivalent of cash.
The goal of the program is to enhance the Fed’s understanding of digital currencies, said Fed Governor Lael Brainard, in a speech to a conference on innovation sponsored by the Fed’s San Francisco regional bank.
Brainard went to great pains to stress that the central bank is not poised to issue digital dollars.
A “separate policy process” involving thorny legal questions would be needed if the Fed ever wanted to use a digital currency. The central bank has not made a decision to even start such a process, Brainard said.
“We are taking the time and effort to understand the significant implications of digital currencies and central-bank-digital-currencies around the globe,” Brainard said.
Fed says it is developing an experimental digital currency
Meanwhile China has announced an expansion of the trails of its CBDC which it expects to complete by the end of the year.
China to Launch Major Expansion of Digital Currency Trials
So the FED seems to want last mover advantage and has begun experimenting, meanwhile, the Chinese have expanded trails, JPM has spun out its stablecoin into a larger ecosystem at ConsenSys and there are some Traders out there waiting eagerly to make some easy money from any arbitrage opportunities presented.
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.
For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives.
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