Stablecoin News for the week ending Wednesday 16th March.

Here is our pick of the 3 most important Stablecoin news stories during the week.

Regulate it and they will come!

That was the big announcement this week.  The White House announced that President Biden had signed a long-anticipated Executive Order (EO) on digital assets. Initial market response included a rally, as it highlighted the lack of any immediate negative action against digital assets and stablecoins. 

Quick takeaways;

  • The Executive Order (EO) cements the fact that Bitcoin and digital assets are here to stay and that the US government will move towards a balanced regulatory approach that promotes innovation while setting up guardrails to prevent abuse.

 

  • This EO puts to bed the notion that the US government has any interest in banning Bitcoin and other digital assets.

 

  • A US Central Bank Digital Currency (CBDC) was a big focus in the EO, which we can interpret as an effort to maintain USD primacy in the face of competing CBDCs launching around the world. Nevertheless, it is possible that after the study mandated by the EO that the US will decide to move very slowly on a CBDC or may not pursue one at all in the near term.

 

  • The EO was not prescriptive in terms of regulation nor punitive, rather it was focused on information gathering and coordinating the actions of various agencies, which notably excluded strong input from financial regulators such as the SEC, CFTC, and OCC.

 

  • As next steps, we expect to see reports coming back from various agencies largely over the next 90 – 180 days. Ultimately, new regulations or legislation may come many months in the future. Indeed, the EO itself may slow down some of the efforts by Congress to legislate in this space while they wait for the mandated reports and any resulting proposals from the Administration.

Executive Order on Digital Assets Shows They Are Here to Stay (nydig.com)

For those watching the incredible events last week at the Regulated (by the UK FCA) London Metals Exchange (LME) where Nickel prices went parabolic and a half a day’s trading was unwound as short sellers got crushed, some food for thought here as a Hedge fund looks to take on and possibly break the USD stablecoin Tether.  

Also, you may be old enough to remember a certain George Soros who took on the Bank of England on Black Wednesday, which occurred on September 16, 1992, is now known as the day when speculators “broke the pound.”

Fir Tree Capital Management, a $4 billion hedge fund, is shorting Tether as the largest stablecoin in crypto faces down scrutiny from regulators. 

A $4 Billion Hedge Fund Is Shorting Tether’s Stablecoin – Decrypt

And finally, Astral Money, one of the payment solutions to spend Terra-powered tokens in real life, has announced a new debit card that will make it possible to spend the native TerraUSD (UST) stablecoin in Great Britain as well as in countries of the European Union.

https://u.today/it-will-soon-be-easy-to-spend-terras-stablecoin-in-europe

So in summary, the US is preparing to establish a regulated Digital Asset market, however, in the regulated world of the LME we saw short positions taken that should never have been allowed and that damaged the entire market, in the meantime entrepreneurs are continuing to improve stablecoins usefulness as a payment mechanism.  

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Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.  Twitter @Alan_SmartMoney

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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