Yesterday’s piece that spoke about stablecoins generated some interesting comments. A couple of folks from the traditional finance world wrote back in support of stable coins and how they might be a way to get around regulatory over reach/ignorance; agreed that stablecoins can be extremely useful in certain situations. But the point remains that, as with a lot of innovation – witness automobiles, Uber, Crypto, Airbnb etc, the entrenched base of existing solution providers that get disrupted will fight back. In the case of stablecoins, it just so happens that the entity getting disrupted is your not-so-friendly-neighbourhood Central Bank, which is already looking askance at the flashy, new crypto kid-on-the-block. Imagine if someone tried to launch an INR (Indian Rupee) tether for example. The Indian Government has not officially banned cryptocurrencies, but the Indian central bank (RBI) has deemed it verboten for ‘regulated’ entities, which covers pretty much every bank/ decent-sizes financial institution in India from dealing with companies dealing with cryptocurrencies.
How would one even go about creating an INR base coin? The simplest approach of issuing tokens against a pool of INR will not work for the above reason. There are also strict restrictions around holding INR outside India. Any bank that offers to provide a solution, such as a Note against the INR, will also have to face blowback from Indian authorities if it has an India leg, or from the correspondent banks it deals with, if it does not have an India leg, assuming the INR basecoin begins to scale and achieve any sort of wide spread acceptanceSo that puts paid to the collateral-based approach, and we are then left with alternatives such as crypto-collateralization or seignorage shares, both of which are infeasible, especially in the INR context, for various reasons.
Even beyond the limited short term gain of driving exchange volumes, there is one very compelling reason stablecoins could actually be a pretty interesting evolution to consider, even if as a controlled pilot, for sovereigns like India to consider. For starters, the problem of ‘black money’, or the parallel economy will be taken care off for good. Every transaction, every unit of currency will be perpetually traceable on the blockchain, for good or for bad.Keep in mind that even the original USD-Tether was conceived in a web of secrecy, and continues to be clouded in controversy.
“Tiberius Launching Token” Swiss asset manager and commodities trader Tiberius is looking to tap into the cryptocurrency markets with a new product called Tiberius Coin. The new security-type token will work similar to an ETF and will track the value of 7 metals. The company will list the coin on the Estonia-based LATOKEN exchange, chosen because it fulfills the necessary regulatory standards.
“Another One Bites the Dust” Zebpay, one of India’s largest cryptocurrency exchanges has shut down it’s exchange services and will continue to act only as a cryptocurrency wallet henceforth. This news is a consequence of the crippling policy introduced by the RBI to force all financial institutions from offering services to the domestic cryptocurrency industry, blocking any fiat on-ramp options for Indian cryptocurrency firms.
This is actually a pretty interesting development. What is happening is that most Indian exchanges are upping sticks and relocating to geographies like Malta, Estonia or Singapore, where regulatory regimes are far more salubrious to crypto-health. The assumption is that they can always come back when the regulatory climate changes eventually (They eventually will, you can’t bottle up the crypto-aspirations of one-fifth of humanity 😉 )The other interesting point to note – unlike a traditional exchange, a crypto exchange is a far more potent/far-reaching location for value interchange. A user can do with a crypto wallet pretty much everything he can do with an exchange, with out any of the regulatory scrutiny. The waller provider could even have a fiat on-ramp if the geography permits. Which is one reason why it makes sense to move location to a place like Singapore and also focus on the wallet play.
“Lobbying for Friendly Regulation” Yesterday, a coalition of cryptocurrency startups led by Ripple announced that they would be using the services of Klein/Johnson Group, a lobbyist group, to push for friendlier and more supportive crypto and blockchain regulations. This comes at a time when regulatory authorities are actively cracking down on ICOs and security tokens.
“SEC vs 1Broker” US-based crypto trading platform Coinbase has announced its plan to launch Coinbase Bundle, a basket of cryptocurrencies investors will be able to acquire for as little as $25.
Today’s NAV is $1.25, roughly 28% up since launch.
You can express your interest in 108 Token Series II here. This will be an open-ended, rolling vehicle.
How Network Theory Predicts the Value of Bitcoin by MIT Technology Review
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