Dispatch #60: What the Biden Administration Really Thinks of Stablecoins
The Big Idea
The President’s Working Group Releases Stablecoin Recommendations
Last week, the Big Idea was all about Mark Zuckerberg’s latest entrance into the crypto world, with his renaming of the company to Meta and refocusing on the metaverse. It is worth remembering what happened the last time Facebook popped in here, namely, the announcement of Libra.
Back then, it was a signal for every government in the world to start looking more closely at crypto, and especially stablecoins. Most did so with a skeptical eye.
This year has seen a significant amount of discussion from US regulators on stablecoins, but much of that was just а build up to this – the “Report on Stablecoins” by the President’s Working Group on Financial Markets is fresh out the oven.
The report identifies three risks of stablecoins, including:
- potential future “bank” runs
- payment system risk
- risks around concentration of power and tie-ups with commercial entities
The main recommendation of the report is that Congress legislates around stablecoins with a recommendation that it only comes from insured depository institutions. If Congress were to move too slow, the group suggested they refer stablecoins to the Financial Stability Oversight Council.
US legislators weren’t shy about sharing their opinions on the report. Senator Cynthia Lummis took issue with the proposed method of risk management, saying: “proposing that only insured depository institutions may issue a stablecoin is misguided and wrong.” Senator Pat Toomey said “While Congress works on thoughtful legislation, I hope the administration will resist the urge to stretch existing laws in an effort to expand its regulatory authority."
Still, net net, most of the crypto industry saw the report as relatively neutral. Perhaps most importantly, there is nothing in it to suggest that any sort of extreme policies or outright bans are on the table. Indeed, there is even acknowledgement of the potential for stablecoins to improve US payment rails.
Seems like progress to us!
The Latest In…
Good old Nexonomics is back in its third iteration because let’s face it – it’s a 3.0 world and we’re just living in it. Our legendary initiative whose goal is to drive the tokenomics, upgrade the utility, and boost the value of the almighty NEXO Token was reborn this week.
Nexonomics 3.0 kicked off with a mouth-watering promo – a $25 Bitcoin referral bonus (which is 2.5x our regular reward), no limit on the number of referrals you can make, and a special $100,000 Prize Pool for users in the Platinum Loyalty level. If this Squid Game-inspired visual seems too good to be true, you should ramp up your referral game and see the truth for yourself. More info here.
We aren’t going to lift the Nexonomics 3.0 veil too much but, boy, do we have an exciting list of reveals lined up for the upcoming weeks.
The Latest In…
- Bitcoin hung out in the low-to-mid $60,000s all week, which – while not the new ATH from a couple weeks ago – certainly isn’t bad after a more sedated summer.
- Both Miami and New York City got themselves pro-Bitcoin mayors in the elections this week. Re-elected Mayor Francis Suarez announced he was taking his next paycheck in BTC. A few days later, NYC mayor-elect Eric Adams raised the bar and committed to receiving his first three paychecks in Bitcoin.
- The same supply chain issues that are making people freak out and buy Christmas presents early (expect some Nexo news on this next week) are also delaying shipments of BTC miners to the growing North American mining industry.
The Latest In…
NFTs may not be catching attention for eye-popping prices at the moment, but that doesn’t mean enthusiasm is down.
- An NFT-driven gaming platform called The Sandbox whose tagline is “Play, Create, Own, and Govern a virtual Metaverse made by players” has raised an eye-popping $93M led by Softbank’s Vision Fund 2.
- At this week’s extremely well-attended NFT.NYC, Quentin Tarrantino announced that he would be auctioning six uncut and never-before-seen scenes from Pulp Fiction up for auction as NFTs. Say what again.
The Latest In…
Nexo’s Asset Listings
Nexo has added a fair amount of new assets lately. It would be fair to say it's been a bit of an avalanche, especially since we’ve just welcomed Avalanche's AVAX. On the very next day, AVAX reached an all-time high of $81.07. Coincidence?
So, what can you do with Avalanche on Nexo? You can buy, swap, borrow against your AVAX, and earn interest on it. How much you’d ask? Up to 17% interest until the end of November and as much as 15% after that.
The Latest In…
There is quite a bit brewing in the world of crypto products these days. There has been a bit of an enthusiasm cool down around the Bitcoin futures ETF, where anticipated launches following that of ProShares and Valkerie have failed to materialize. That said, the Chicago Mercantile Exchange is slated to begin trading micro ether futures on Dec 6. These micro futures products offer a smaller contract size, allowing for new types of investors and more precise trades.
The Week’s Most Interesting Data Story
Maybe ETH Is Ultrasound Money
With the recent ETF approval, Bitcoin has been sucking a lot of the oxygen out of the room. However, one recent chart we saw has us buying into this whole notion of ETH as “ultra sound money.” In short, the chart shows the percentage of ETH kept on exchanges versus the one locked in smart contracts. Around January of this year, the amount of ETH productively being used in smart contracts flippe(ne)d the percent on exchanges, and the disparity has been growing ever since. Remember, more of an asset on an exchange means it's more likely to move in the short-term, so ETH leaving exchanges is long-term bullish.
However, the most recent Glassnode data shows that a sharp decline in the supply of ETH in smart contracts followed in late October and early November. We’ll be watching the situation closely to see if “ultrasound money” is indeed more than a meme.
What the Community Is Discussing
9 years to overnight success.
It’s not just crypto Twitter asking why a Futures ETF is okay but a Spot ETF isn’t.
DeFi on Bitcoin? Tell us more. (a thread)
What to Watch for Next Week:
- Is the SHIB bubble about to burst?
- Can AVAX and SOL just keep going up?
- What comes first – a BTC spot ETF or an ETH futures ETF?