Welcome to Chain Letter! Great to have you. Here’s what’s new in the world of blockchains and cryptocurrencies. | | Too few people use digital currencies for them to really threaten the world’s financial stability. That’s the conclusion of a new report from the Financial Stability Board (FSB), an international body that keeps tabs on the global financial system and makes recommendations to the G20. Still, the market is developing so quickly that “vigilant monitoring” is needed, the FSB warns. The primary risks posed by crypto-assets are low liquidity, the use of leverage, volatility, and technological risks like vulnerability to cyberattacks. If the financial system regulators don’t properly account for these risks and they then materialize, it could undermine confidence in financial institutions.
But the most important words in the conclusion may be the caveat that the report is “based on the available information.” Assessing risks is difficult because there is so little available data, particularly on the extent to which investors are borrowing money to buy cryptocurrency, and how exposed financial institutions are. Crypto-specific regulations could force more transparency. Until then, the FSB is developing a new “monitoring framework,” which it says is based mostly on the sliver of public data that does happen to be available. | | Here come the Asian stablecoins. Dollar-pegged crypto-tokens have dominated the stablecoin craze, but that won’t be the case for much longer. Several high-profile projects that use the Japanese yen as a peg are waiting in the wings. The latest to be announced is the GMO Japanese Yen, planned by major Japanese internet company GMO Internet. Just last month, a Hong Kong-based investment group announced plans to develop another yen-backed stablecoin, and a group of Japanese banks is supposedly developing one too, called J Coin.
Meanwhile, don’t count China out. In a recent opinion piece flagged by CoinDesk, Li Liangsong, a researcher for the China’s central bank and Wang Huaqing, a professor at China’s Fudan University argued that China should boost its research into stablecoins and consider giving financial support to issuers of yuan-pegged digital coins. The authors, writing in a magazine that Coindesk calls “a mouthpiece” of the People’s Bank of China, argue that China should be wary of dollar-pegged stablecoins, which could reinforce the dollar’s dominant role in the global financial system and negatively affect China’s currency. | | The SEC appears to be taking its ICO crackdown to the next level. Tightening the noose. That’s how Yahoo Finance describes what the US Securities and Exchange Commission has been doing recently to startups that raised money via initial coin offerings. We learned back in February that the SEC had issued “dozens” of subpoenas to cryptocurrency companies. Now the agency has subpoenaed many more, reports Yahoo, citing more than 15 anonymous industry sources.
According to the article, the agency seems to be focusing on companies that aimed to stay exempt from strict SEC regulations by selling tokens only to so-called accredited investors—individuals who either have a minimum net worth of $1 million or who made more than $200,000 annually for the past two years. Apparently, many companies failed to properly limit their ICOs in this way and so dozens have now quietly agreed to pay a fine and return money to investors. Just the latest reminder that investor protection laws in the US are no joke. | | Loose Change Fill your pockets with these newsy tidbits. | | | A new study of Bitcoin’s 32 largest holders, commonly called “whales,” suggests that on the whole their trading activity has stabilized the market rather than contributed to price volatility. (Chainalysis) | | | | Hackers have stolen nearly $1 billion worth of cryptocurrency in 2018, up nearly 250 percent compared with last year, according to new research. (Reuters) | | | | Swiss asset manager and commodities trader Tiberius Group has delayed the sale of its commodity metals-based crypto-token until December, blaming high fees imposed by credit card companies. (Bloomberg) | | | | Binance has delisted four crypto-tokens for failing to meet its “quality standard.” (ETHNews) | | | | Coinbase has added an Ethereum-based token, 0x, to its professional trading platform for the first time. (CoinDesk) | | | | Venezuelans will now have to use the nation’s cryptocurrency, the petro, to purchase passports—at a cost of four times the national monthly minimum wage. ( Bloomberg) | | | The Money Quote “Where is the value created? I can’t get my head around it.” —Jeff Jarvis, professor at the City University of New York’s Craig Newmark Graduate School for Journalism, talking about Civil, a startup trying to use the blockchain to give news consumers a better way to support quality journalism. Civil is struggling to raise money via its token sale, perhaps because its business model is hard for potential partners and users to understand. Jarvis told the Wall Street Journal that after speaking with the Civil team he’s unconvinced the project will work any better than traditional methods for paying for news. | | | |
