One of the most interesting developments in the last week has been the launch of FedNow, an instant payment settlement service for banks and financial institutions from the Federal Reserve. Up until now, settlement times between banks in the United States vary between one to three days. The promise of FedNow is instant settlement for… Read More On FedNow
In its almost fifteen year existence, crypto has produced many a tale. The latest one is that of payments app Strike. The app claims to use the Lightning Network (LN), bitcoin’s second layer, to expedite cross-border payments and make them cheaper. That network is still under construction and has myriad problems. But that hasn’t stopped… Read More The False Promises of Payments App Strike
Regulators around the world have begun taking tentative steps to regulate crypto and digital assets. Such assets are a new frontier in finance. And available evidence does not encourage much trust or confidence in their value or, for that matter, utility. How, then, should they be regulated? A panel discussion at the Bank of International… Read More How to Regulate Crypto
Slightly more than a month after Ethereum enabled withdrawals of staked ether on its platform, the landscape for staking presents a rosy picture on the surface. The numbers of staked ether and platforms offering staking services has multiplied. Ether’s staking yield, which was expected to decline after withdrawals, popped after the event. Underneath, however, the… Read More Ethereum Staking After Withdrawals
The cases brought by the Securities and Exchange Commission (SEC) against Binance and Coinbase earlier this week instigated steep price declines in crypto prices and a war of words between regulators and the industry’s biggest players. It makes for great drama and news cycles. But will it make a ‘consequential‘ difference to the ecosystem? Not… Read More Notes 6/8: Inconsequential Lawsuits
The surge in market capitalization for Tether always brings the stablecoin’s many mysteries into the spotlight. Who runs it? Who are its bankers? And, most important of all, where are its reserves? Tether claims to be a fiat-backed stablecoin. This means that its circulating supply should be bolstered by an equal amount of fiat currency… Read More The Tether Algorithmic Stablecoin
When it was launched, Ethereum had a simple vision. It was to be a smart contract platform with low fees that settled transactions occurring on other applications. That idea is now a corporate money-making entity. Investors and stakeholders use the venue to boost staking rewards and prices for worthless tokens. Examples include the recent meme… Read More Ethereum’s Latest Bad Idea: Restaking
It is yesterday once more in the bitcoin ecosystem. The recent spike in bitcoin transaction fees has surfaced memories of similar occurrences in the past. Those fee hikes were also instigated by spurious activity on bitcoin’s network and set off a debate in its community about the size of blocks on bitcoin’s network. The Importance… Read More The Future of Bitcoin and its Transaction Fees
There was a thaw in the crypto winter yesterday, a glimmer of celebration, cloaked in schadenfreude, at the House Financial Services Committee hearing yesterday. Securities and Exchange Commission (SEC) Chairman Gary Gensler, sometimes referred to as crypto’s favorite whipping boy, testified before the committee yesterday. Crypto twitter cheered when a group of Republican Congressmen laid… Read More Notes 4/19: SEC Chief Gary Gensler’s Congressional Hearing
Are CBDCs necessary in the United States? … Read More To CBDC or Not To CBDC?
In July last year, I wrote about investor enthusiasm for Ethereum’s move to a Proof of Stake (PoS) consensus system. Traders piled into ether, the blockchain’s native token, in hopes of a big payoff close to the actual event. [There were profits, but they were taken much before the actual event]. Amidst the chilly crypto… Read More What Happens to Ether Prices After The Merge?
The murky waters of cryptocurrencies consist of many worthless tokens. The Gemini dollar (GUSD), a stablecoin issued by cryptocurrency exchange Gemini, is one of them. The token serves no purpose in crypto or outside its ecosystem. It claims to be “regulated from day one” to alleviate user concerns about a run on its holdings. But… Read More Why Does GUSD Exist?
This past week threw crypto’s banking problems into sharp relief. Silvergate Bank was arguably the biggest provider of banking services to the crypto industry and its unraveling will significantly reduce options available to crypto businesses for access to the world of mainstream financial services. As I wrote last year, three banks – Silvergate, Signature, and… Read More The Future of Crypto Banking
The mystery of Tether’s finances is slowly being unraveled. The Wall Street Journal (WSJ) yesterday published a report claiming that the stablecoin is using investment firm Cantor Fitzgerald to help manage its $39 billion treasury bond portfolio. The firm is a primary dealer in the Treasury Market, a designation that enables it to conduct direct… Read More Notes 2/12: Tether Finances, Tornado Cash Revisited
One of the reasons to invest in stablecoins is their de-pegging event. When stablecoins trade below their intended peg of 1:1 with a fiat currency, short traders can turn around and exchange them for the promised parity. In that respect, stablecoins are like money market funds. Over the years, Tether, the world’s biggest stablecoin by… Read More Shorting Tether
Along with bitcoin price, prices for Ethereum’s ether also jumped last week. Depending on your data source, the world’s second biggest cryptocurrency’s price posted weekly gains of anywhere between 13% (at Messari) to 20% (at Coinmarketcap and CoinGecko). Underlying that price increase was a corresponding surge in market valuations for tokens at liquid staking derivatives… Read More Staking Ether: A Risky Trade
Where does Tether get its revenues? Over the years, the stablecoin claims to have made redemptions worth billions of dollars. At the same time, it has made investments and loans worth millions of dollars to crypto ventures on the side. It has 42 employees, per LinkedIn. Where does it get the cash to manage… Read More Where Does Tether Get Its Revenues?
In the early days of the United States, private banks were allowed to issue money on the condition that it was backed by gold. This meant that customers could redeem their specie and notes for gold, which was considered a stable medium of exchange in an economy rife with fraudsters and hucksters issuing fake money.… Read More The Tether Redemption Conundrum
Binance USD (BUSD), Binance’s stablecoin, is among the few regulated parts of the exchange’s sprawling and mostly unregulated operations. It is issued by Paxos – a registered Trust company in New York that was a cryptocurrency exchange in its earlier avatar – and regulated by the New York Department of Financial Services (NYDFS). That stamp… Read More Notes 12/31: Binance’s BUSD: An Unstable Stablecoin
In recent months, Binance has attempted to position itself as a leader of the crypto ecosystem after FTX’s collapse. But its moves have had the opposite effect and drawn attention to problems at the world’s biggest cryptocurrency exchange by trading volume. Investors, fearful of another collapse, are pulling out their funds from the exchange, feeding… Read More Notes 12/21: Binance’s BNB Token – 1
The big news this week has been stablecoin issuer Circle’s decision to scrap its plans for a public listing through a merger with a Special Purpose Acquisition Company (SPAC). The Securities Exchange Commission (SEC) played spoilsport to the company’s plans by withholding its approval for the deal. Circle CEO Jeremy Allaire put on a brave… Read More Circle’s Mounting List of Woes