Stablecoin Wars, Forced Binance Conversions, and the Irony of It All – Mish Talk
Stable Wars
Stablecoins cannot pay interest or they would then be regulated as securities. And with rising interest rates, a lot of money is earning interest on stock exchanges.
A battle is underway for this money. The result is a stablecoin war as Binance moves its rivals.
Binance, the world’s largest crypto exchange, said it will automatically convert user deposits from several rival stablecoins into its own stablecoin, Binance USD, starting this month. Analysts say Binance’s move could intensify rivalries between the biggest stablecoin players, such as Tether and Circle, and generate additional revenue for Binance as its stablecoin’s market capitalization grows.
Circle Internet Financial Ltd., which issues the second-largest stablecoin, USD Coin, held $40.1 billion in short-term Treasury bills as of September 15, according to its website. The Boston-based company earned $28.5 million in interest income from USD Coin in 2021 and $100.4 million for the first six months of this year, according to a recent filing.
Circle estimated it could earn $438 million in total interest income this year and up to $2.2 billion in 2023, it said in a financial outlook presentation in February. USD Coin has a market cap of $50 billion.
Tether Holdings Ltd., the company behind the largest stablecoin with a market value of $68 billion, held $29 billion worth of US Treasuries at the end of June, according to its latest attestation. Tether also charges a 0.1% redemption fee for a minimum withdrawal of $100,000.
On Binance, many tokens and derivative contracts are still quoted and collateralized in tether. Shah wrote that Binance users might be more inclined to withdraw their Binance USD as USD Coin than tether “given the troublesome inability to convert BUSD to USDT without executing a trade.”
Tether said Binance’s move could “aim to eliminate the second-place USD Coin and replace it with Binance’s stablecoin BUSD.”
Home Audit
Tether has promised an audit for years and hasn’t delivered. Instead, it offers a “certificate”.
It’s a “believe me, the money is there” statement, of which only $29 billion is actually in US Treasuries.
The remainder can literally be anything (or nothing at all), but whatever it is (or not), it’s not as liquid as short-term US Treasuries.
Please note that a Bloomberg investigation attempted to find $69 billion in Tethers and could not.
On February 23, 2021, Coindesk announced NY AG’s $850 million probe into Bitfinex, Tether ends in $18.5 million settlement
The New York Attorney General’s Office (NYAG) has settled with Bitfinex a 22-month investigation into whether the cryptocurrency exchange was seeking to cover the loss of $850 million in client and company funds held by a payment processor.
The NYAG office announced the settlement on Tuesday, officially ending the investigation that began in April 2019. Under the terms of the settlement, Bitfinex and Tether will not admit any wrongdoing but will pay $18.5 million and provide quarterly reports outlining the composition of Tether’s reserves for the next two years. More importantly, these reports will match the information Tether has already provided the NYAG about its reserves. The NYAG will not bring any fees as part of the settlement.
The settlement does not imply the absence of guilt nor does it imply that the money is really there.
Indeed, the conclusion was no.
Events in El Salvador
It’s Max Keizer and Stacy Herbert with Nayib Bukele, President of El Salvador.
Bukele adopted bitcoin as legal tender to the dismay of the United States, other developed countries, and the IMF.
Arguably, this alone is enough to encourage Bukele. He’s running for president again, but it’s unconstitutional. After Bukele filled in the pitch, he approved it again.
A Gallup poll gave Bukele an 85% approval rating and a 95% safety rating. So who am I to oppose his running for president again?
That aside, isn’t there a better way to change the Constitution than to pack the courts.
Billboard in Austin
Ben Hunt on Bitcoin
Ben Hunt on “Bitcoin!”
Note “Bitcoin” and “Bitcoin!” are not the same thing.
Unfortunately, it pays off. I’ll ask Hunt if he can unlock it.
Scroll to continue
A Hint at Hunt’s Thoughts on “Bitcoin!”
You versus “you!”
Noting the importance of the “!” in Hunt’s previous writings (without having read or subscribed to Hunt), I commented on June 18, 2022 The Crypto Crash and Why It’s Impossible For “You!” collect
Memes of the day
The idea of the day that just aired looks like this: 1 BTC = 1 BTC.
I’ve seen this in maybe a hundred Tweets lately. Yes, really great. And one US digital dollar = one US digital dollar. They are all the same.
$1=$1 is just as brilliant.
“I can’t go below $20,000”
Several people tweeted that Bitcoin couldn’t go below $20,000 as they saw the order flow.
Damn, it seems the order feeds didn’t care what those jerks thought.
“Bitcoin doesn’t care what you think”
This is of course true, given that Bitcoin cannot think at all.
Here’s another “brilliant” truism.
Bitcoin doesn’t care where Bitcoin believers think the price of Bitcoin is heading.
Stable Coins
The supposedly stablecoin LUNA has gone to $0.
Many others are heading in this direction.
“You” can withdraw money, but “You!” Can not
- What is the difference?
- Are you an individual
- You! is the collective
On an individual level, “You” can still get the current bid for one Bitcoin ($17,600 as I type)
But you!” can’t get the currently quoted bid. If everyone tried to sell, the price would drop to $500 or whatever the marginal buyers are willing to pay.
In the future, “You” might be able to get over $20,000 tomorrow for one bitcoin, but “You!” certainly not.
But hey, it’s okay because I have great authority that $1 BTC = $1 BTC and nothing else matters because “Bitcoin is Money” and “Money Always Goes Up”.
You against you! is not just about Bitcoin. The same goes for Tesla, Apple, gold and silver. Many imaginary riches have already exploded and more are to come.
cult hero worship
Money always goes up
Bitcoin will rise forever
“Bitcoin will go up forever like money is supposed to unless you don’t know what money is.”
What a hoot.
Irony of the day
Luna, a stablecoin, went to zero. Tether is less than 50% backed by US Treasuries.
Bitcoin and the crypto space was founded as an anti-dollar alternative.
But competition in the crypto space is heating up for unaudited tokens that are partially or allegedly backed not by dollars, but derivatives of dollars.
That’s worth another hoot.
Finally, other than barter, the only way to do anything with Bitcoin is to exchange it for dollars, euros, or other fiat currencies.
If you think you are buying things directly with Bitcoin from a merchant, you are wrong. It is extremely likely that the trader will convert this Bitcoin into dollars or euros by putting pressure on the price of Bitcoin in the process.
Always think “you!” can cash”?
“You!” can not. Bitcoin is far too volatile to be used as a currency, definitely relegating its use as speculative gambling.
This post is from MishTalk.Com
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