Continuing with our topic du jour of stablecoins, we had mentioned that collateralized stablecoin providers will have to jump through hoops to close the loop with the traditional banks on the fiat side. We had also noted how secretive Tether (USDT) was, as it necessarily needed to be, regarding its banking relationships. Now comes news that Noble bank, the Puerto Rican bank that holds a large chunk of the USD underpinning USDT might be facing an old fashioned liquidity crisis and its viability as a going concern is contingent on additional funding coming through very shortly.
Depending on how this plays out, this could end up badly for USDT as well as for the broader crypto markets. Bitcoin prices have closely tracked Tether supply, and there have been allegations of manipulation against Tether, and multiple agencies continue to investigate the company. The last thing the still convalescing crypto market needs is choppiness ensuing from the collapse of a traditional bank that holds USD that underpins cryptocurrency pegged to USD issued by a secretive company; it would be ironic as we pass the tenth anniversary of the Lehman crisis.
Some of the old-timers might even see an interesting parallel between the design go Tether (or any collateralized stablecoin) and that of a cash CDO or asset-backed CDO. On the assets side, you have receivables, in the form of cash-generating or yield-bearing assets. On the liabilities side, you have creditors that you owe money to, in return for bearing risk. In the case of USDT, there is no real risk here, technically. This is (or was) supposed to be a straight-forward collateralization.
However, just as in the case of traditional CDOs a decade ago, there are always unknown unknowns, especially as complexity increases. Even the Lehman crisis was heralded initially by a couple of small (in context) hedge funds with connections to Bear Stearns after some wrong bets on the housing marker. Will the Puerto Rican bank here prove to be a canary in the coal-mine or will this just be minor blip as we enter a potential bull-run in cryptos heading into the last quarter? We will find out soon enough.Oh, btw, Huobi launched a social network for crypto market participants. This could get interesting. How many coins are your likes worth?
“Pound-based Crypto” Following the continued flurry of new stablecoin issues, UK-based startup London Block Exchange has announced its plan to issue a new UK pound based stablecoin. The firm, which currently runs a cryptocurrency OTC trading desk, has already gone ahead and recruited the services of a banking partner as well as a 3rd party auditing firm.
“JVCEA to Push for More Regulation” The Japan Virtual Currency Exchange Association (JVCEA), Japan’s self-regulating cryptocurrency group is looking at stricter regulations, following the recent Zaif hack which led to a loss of $59 million in BTC, BCH and MONA. The JVCEA has been proactive in introducing new regulation including a recent 4x leverage cap on trading platforms to impede high margin trading.
“Launch of StellarX” StellarX, a new cryptocurrency exchange based on Stellar, the world’s 3rd-most-valued cryptocurrency by market cap, officially launched last Friday. The exchange developers claim that it costs nothing to trade on the exchange since all network fees are refunded to users.
“Taking a Break (Forever?)” In a strange and sudden move, Li Xiaoli, a Chinese Bitcoin billionaire and blockchain investor has reportedly retired from investing in the cryptocurrency space. Li is the founder of BitFund, a Beijing-based crypto-focused venture capital fund and has been associated with some hugely successful blockchain-based projects, including BitShares.
“First Hotel to Accept Cryptocurrency” The first of its kind, a new hotel called the Ethereum Hotel will start accepting cryptocurrencies as payment. The bold move comes despite the Chinese regulators’ stern stance against the use or promotion of any cryptocurrency products which has also prompted daily-use apps such as WeChat to safeguard against any related activity on their platforms.
Today’s NAV is ~$1.29, up roughly 32% since launch.
You can express your interest in 108 Token Series II here. This will be an open-ended, rolling vehicle.
EOS Goddess of the Crypto Dawn by Hackernoon