STABLECOIN DIGEST [14.06.2019]
Regulation and monetary policy
G20 Finance Leaders Ask Global Regulators to Consider Multilateral Response to Crypto
G20 finance ministers and central bank governors have asked the Financial Stability Board (FSB) and global standard-setting organizations to monitor risks around crypto assets. The request was made in a joint communiqué published on the website of Japan’s Ministry of Finance on June 9.
Philippines’ Central Bank Will Continue to Closely Monitor Crypto, Citing Terror Financing
The governor of the Philippines’ central bank, Benjamin Diokno, has warned against the potential use of cryptocurrencies for terrorism financing and underscored that the Bangko Sentral ng Pilipinas (BSP) will continue to closely monitor their use in the country.
VP of Largest Brazilian Bank: Local Banks to Soon Introduce Unique Blockchain Platform
The vice president of Brazil's biggest bank, Bradesco, revealed that major local banks will introduce a unique blockchain platform. Minas expressed confidence in blockchain technology despite its nascent character, urging that the technology is able to “break traditional barriers,” as well as to change user behavior and the financial system.
Crypto Exchanges Are Facing Their Biggest Regulatory Hurdle Yet
Financial Action Task Force expected to adopt new guidelines. Exchanges would be required to share same user data as banks.
IBM, Hyperledger Blockchain ID System for Banks Launches in Brazil
CIP, a facilitator of Brazilian banking and financial infrastructure, has officially launched its blockchain ID platform via a partnership with IBM using Hyperledger Fabric. The identity solution, dubbed “Device ID,” will see participation from nine banks, and is reportedly integrated into Brazil’s domestic clearing system, the Brazilian Payment System (SPB).
Bank to Basics: USC Project Seeks to Disrupt Traditional Wholesale Banking
The project could well function as a catalyst for a future in which banks commonly issue their own virtual currencies, as there are not yet central bank digital currencies (CDBCs).
Skepticism as News of Secretive India Crypto Bill Breaks
Those who mine, trade or own cryptocurrency in India are currently on the edge of their seats, as rumors keep swirling around a draft regulation called the Banning Cryptocurrencies and Regulation of Official Digital Currency Bill 2019. As its ominous title indicates, the bill allegedly calls for harsh penalties of up to 10 years in jail for those who deal in crypto, clearly intending to rid the country of digital tokens.
Korea’s Biggest Bank Is Preparing to Custody Digital Assets
https://www.coindesk.com/koreas-biggest-bank-is-preparing-to-custody-digital-assets
According to a report from CoinDesk Korea, the institution is teaming up for the effort with blockchain startup Atomrigs Lab, with the two entities signing a strategic business agreement on June 10.
Lithuania to Regulate Cryptocurrency Exchange Sector With Obligatory ID Checks
https://finance.yahoo.com/news/lithuania-regulate-cryptocurrency-exchange-sector-090900009.html
Lithuania is preparing new rules to govern cryptocurrency transactions, requiring businesses to prove the identity of clients.
Analytics and opinions
STABLE CRYPTOCURRENCIES
Craig Calcaterra, Professor of Mathematics, Metropolitan State University (Minneapolis, USA).
Wulf A. Kaal, Professor of Law, University of St. Thomas School of Law (Minneapolis, USA).
Vadhindran Rao, Professor of Finance, Metropolitan State University (Minneapolis, USA)
The authors examine the emergence and proliferation of stable cryptocurrencies and their uses. After evaluating the core shortcomings associated with fiat currencies, the authors highlight the benefits of stable cryptocurrencies for monetary policymaking, overall market stability, and their bilateral impact on the emergence of decentralized commerce. The transition to digital currencies has already started. It is a matter of time until the use cases and applications of stable cryptocurrencies become more mainstream.
Why Stablecoins Stand Out in the Cryptocurrency World
Eventually, supporters say, stablecoins could be used in a variety of ways, including in the creation of payment systems for people in developing countries who don’t have access to banks. Some analysts, however, say this won’t happen soon.
“Many countries don’t have the infrastructure,” says Larry Cermak, head analyst at crypto research firm The Block. “You can’t do much with [stablecoins] unless someone accepts it. The only thing you can do is send it to people—unless you convince merchants to accept it, which isn’t happening. That’s years off.”
(In)Stability for the Blockchain: Deleveraging Spirals and Stablecoin Attacks
Ariah Klages-Mundt, Cornell University, Center for Applied Mathematics
Andreea Minca, Cornell University, Operations Research & Information Engineering
https://arxiv.org/pdf/1906.02152.pdf
A foundational paper providing a mathematical model of non-custodial stablecoins. It provides a basis to evaluate and compare schemes like DAI, Nubits, etc.
In simulations, the authors show that these systems are susceptible to high tail volatility and failure. The authors suggest design improvements that can improve long-term stability and suggest methods for solving pricing problems that arise in existing stablecoins.
STASIS: Why we should be wary of exchanges tokenizing assets
https://medium.com/stasis-blog/why-we-should-be-wary-of-exchanges-tokenizing-assets-d13e325e74d2
Exchanges choosing to tokenize assets themselves also creates potential pitfalls in terms of fungibility. For asset-backed tokens to effectively disrupt the financial sector, they need to be as fungible as the underlying assets. This has a lot to do with infrastructure.
Why Facebook’s new stable-coin might be a necessary evil
https://medium.com/swlh/why-facebooks-new-stable-coin-might-be-a-necessary-evil-832e5c831f11
There are always unintended consequences for any technological advancement that need to be worked out over time before the technology becomes ‘perfect’. To me, the new GlobalCoin seems to be another example of an imperfect solution on the road to an ultimate goal – world-wide adoption of virtual currency.
Andreas M. Antonopoulos: “Cryptos won’t be regulated”
https://cryptonomist.ch/en/2019/06/13/andreas-m-antonopoulos/
“So the stablecoins I’m most interested in are decentralised stablecoins that are backed by crypto reserves, the most famous one of which is Dai – MakerDAO but there are others emerging now, and each are trying different approaches to this mechanism. They still have risks, but they have different risk, they don’t have counterparty risks, they have software and software-vulnerability risks, and they have platform risk. So if there’s a bug in Ethereum that compromises the smart contract that the DAI is in, then that’s a problem. If there’s a bug in the DAI smart contract, that’s a problem. So we don’t know yet, but I think there’s a lot of interesting experiments happening.”
Binance Prepares to UnTether by Adopting Own Stablecoins
The biggest cryptocurrency exchange plans to reduce reliance on Tether-related volumes in the future.
What Facebook's Cryptocurrency Means: 6 Predictions
If Facebook parks the entire US dollar balance at the Federal Reserve via one of its bank partners, for example, it could earn 2.35% risk-free—that’s $235 million for every $10 billion deposited into its cryptocurrency. These profits will quickly turn into a new hot potato for Facebook politically, if not shared with users.
Source: https://twitter.com/CementDAO
Existing Projects
Coinbase Earn Now Supports Ethereum-Based Dai Stablecoin
Coinbase has added a course on MakerDao’s stablecoin Dai in its educational portal Coinbase Earn. Dai is the first stablecoin covered by Coinbase Earn, which will offer videos and quizzes to help users learn about the token, and receive some Dai for their efforts.
Coinbase Card Launches in Six European Countries
As of today, cardholders in Spain, Germany, France, Italy, Ireland and the Netherlands will be able to use the cards, which sync directly to their Coinbase accounts. The card comes as both a mobile app for iOS or Android, and as a physical card that can be used to withdraw fiat currencies from automatic teller machines.
Internal Power Struggle at MakerDAO: When Coding and Personal Interests Collide
Various views on how the platform should be managed led to the conflict of interest at the headquarters of MakerDAO. It all started with the fact that Andy Milenius, the company’s chief technology officer, left the project. Internal conflicts have been aggravated by the recently found vulnerability and trials between the key members.
Reserve partners with Chainlink to bolster the future of decentralized stablecoins
Chainlink is the industry leader in providing reliable data feeds to smart contracts.
Facebook’s ‘Stablecoin’ Punt Raises Questions for Regulators
If some central banks eventually embrace the idea, there is another crucial catch: cross-currency payments. If a global emoney system was only backed by one currency, then reserves could only be stored at one central bank. But if the dollar was used, this would promote more “dollarisation” — and no non-America country wishes to see that. Nor does Facebook, it seems: its stablecoin is likely to be tied to a basket of currencies.
Circle and Coinbase Invite More Members to Consortium Behind US Dollar Coin
Inviting more participants to join its network, Centre wrote that the consortium membership provides institutions with the right to issue or redeem USD coin. Companies and institutions that want to issue stablecoins on the Centre network must follow a number of criteria, including possession of a license and regulatory and tech compliance, among other things.
Circle to Close Its Payment App, Focus on New Financial Products
Circle is closing its payment app Circle Pay in order to develop new crypto financial services. Circle further hinted that it is delving into new blockchain-based financial products such as launching new wallet services and facilitating digital currency adoption through cryptocurrency exchange Poloniex.
Ampleforth Raises $5M in 11 Seconds in Tokinex Exchange Offering
The initial exchange offering (IEO) was the first to take place on Ethfinex and Hong Kong-based crypto exchange Bitfinex’s Tokinex platform. Ampleforth purports to be a token that is balanced around an equilibrium price target, but says that it does not qualify as a stablecoin, at least initially.
Facebook’s New Cryptocurrency, Libra, Gets Big Backers
https://www.wsj.com/articles/facebooks-new-cryptocurrency-gets-big-backers-11560463312
Visa, Mastercard, PayPal and Uber are among firms that will invest around $10 million each in consortium that will govern digital coin.
FT: Facebook Hires Standard Chartered Bank’s Head of Public Affairs for Crypto Project
https://www.ft.com/content/8440e5ee-8df7-11e9-a1c1-51bf8f989972
Per the report, Facebook hired the senior bank lobbyist in anticipation of the greater regulatory scrutiny in Europe over its plans to launch its own crypto asset and other financial services to its 2.4 billion users. Bowles will join the company in September, and will reportedly be its London-based director of public policy.
New projects, partnerships, and investments
Cashless-Bound: Japan's Transport and E-Commerce Partnership on the Fast Track
E-commerce giant Rakuten plans to incorporate its services into Japan’s premier railway firm, the East Japan Railway Company or JR East to provide electronic support for its “Suica” cards. In March, a number of publications speculated Rakuten Pay would consider incorporating cryptocurrency support on its mobile app. Given the newly announced partnership with JR East, this could mean that Japanese commuters might be able to use cryptocurrency to top up their Suica cards from next year.
Visa Launches Global Cross-Border Network Based on Certain Aspects of Blockchain
The network, called “Visa B2B Connect,” is designed to facilitate international payments made by global financial institutions by enabling direct interbanking transactions between businesses and beneficiaries. Visa B2B Connect is partially based on blockchain technology, containing elements of Hyperledger, the open source distributed ledger technology (DLT) developed by a group led by the Linux Foundation.
A Rand Backed Cryptocurrency In The Form Of A Stablecoin
A Rand-backed stablecoin would be a cryptocurrency with a stable value and purchasing power equal to that of the Rand.
Bitfinex Announces Support for OKEx Exchange Token
Cryptocurrency exchange Bitfinex is now listing two tokens from the exchange OKEx: its native utility token OKB and the stablecoin USDK.
Bitcoin Cash Gets Its First Stablecoin
https://cryptobriefing.com/bitcoin-cash-first-stablecoin/
HonestCoin (USDH) is the first regulated Stablecoin project issued on Bitcoin Cash. Unlike other stablecoins, which run on Ethereum, TRON or Bitcoin’s OMNI layer, USDH runs on SLP, a new BCH standard which provides similar functionality to ERC-20 tokens.
Paysend Hits £4.2 Million Crowdfunding Goal on Seedrs in 3 Days, Plans Stablecoin Launch
Paysend expects to launch “the Paysend Global Account,” to the public by July 2019. This will be a global current account with a multi-currency wallet that will allow customers to pay in local currency wherever they are, avoiding extra charges and complexity therefore truly building money for the future. Paysend plans to include a stablecoin issued on the Stellar blockchain to streamline the payment/transfer process.
How could a GBP-pegged stablecoin threaten UK banks?
https://coinrivet.com/gbp-stablecoin-threaten-uk-banks/
A new GBP stablecoin is about to enter the crypto market. The GBP-pegged cryptocurrency is called LBXPeg and will be launched by the London Block Exchange.