September 22, 2022 / Unchained Daily / Laura Shin
Daily Bits✍️✍️✍️
- Tether, the issuer of the largest stablecoin USDT, is being ordered to provide documents to back its issuance.
- Arbitrum, a layer 2 on Ethereum, paid a 400 ETH (approximately half a million dollars) bug bounty.
- Jesse Powell, CEO of crypto exchange Kraken, will step down from his role.
- Crypto exchange CoinFLEX announced an official restructuring proposal.
- The Federal Reserve increased the interest rate 75 basis points, settting off a ton of volatility in the markets.
- Bitcoin miner Riot sued Northern Data over Whinstone acquisition.
- NFT marketplace OpenSea incorporated OpenRarity, a tool to analyze the rarity of a particular NFT.
Today in Crypto Adoption…
- Boba Network, an Ethereum layer 2 scaling solution, integrated with Avalanche.
- CoinCorner partnered with Seed Group to offer bitcoin trading in Dubai and the Middle East.
The $$$ Corner…
- Crypto analytics firm Messari (disclosure: sponsor of Unchained) raised $35 million in a series B round.
- Vulcan Forged, a blockchain gaming studio, announced an $8 million series A funding round.
What Do You Meme?
What’s Poppin’?
New Regulation Could Make Some Stablecoins Ilegal
According to Bloomberg, the House has prepared a draft legislation that would make algorithmic stablecoins illegal for two years.
Bloomberg obtained a draft copy of the bill, which aims to regulate stablecoins. Under this version, the government is banning the creation of new “endogenously collateralized stablecoins”. The word “endogenously” is the key here, and it refers to stablecoins that are produced within the system.
The failed TerraUSD would fall under this category, as it was collateralized by LUNA, a token created inside the system with the whole purpose of maintaining the fixed price of the UST stablecoin. The Terra ecosystem collapsed catastrophically in May, but there are others that have the same mechanism, or at least share some commonalities.
One other thing to highlight is that the bill would ban the creation of new stablecoins for the next two years. In the meantime, agencies like the Federal Reserve and the Securities and Exchange Commission will be in charge of studying these endogenously collateralized tokens. In addition, the draft legislation would allow banks and nonbanks to issue stablecoins.
The bill could be brought up for a vote as soon as next week.
In a congressional hearing held yesterday, JP Morgan Chase CEO Jamie Dimon said he is a “major skeptic” on digital assets and thinks that stablecoins should be “properly regulated.”
Stablecoins have a market capitalization of $150 million, but over 90% of it is held by fiat-backed centralized tokens: Tether’s USDT, Circle’s USDC, and Binance’s BUSD.
In related news, the European Union seems to have finalized its MiCA (markets in crypto assets) bill. A leaked version of the bill was obtained by The Block. According to this version, stablecoins will not have many limitations, but there’s room for more regulation on DeFi and NFTs.
Recommended Reads
- nader on blockchains, their use cases, challenges, and solutions
- Eric Wall on Bitcoin’s security model
- Viktor DeFi on institutional lending
On The Pod…
In a heated debate, Eric Wall, crypto blogger and investor, and Justin Bons, founder and chief investment officer of Cyber Capital, discuss Bitcoin’s security model, whether there are fundamental flaws in its design, and which is the best consensus mechanism. Show highlights:
- why Justin stopped believing in Bitcoin and why he calls it “technically one of the worst cryptocurrencies”
- how Eric’s views on Bitcoin changed over time
- the problems they see with Bitcoin’s security
- why Eric attacks BTC maximalism, even when he is a Bitcoiner
- how the Bitcoin community will change in the next decades, and why the security problem is a challenge that could be solved
- whether BTC should increase its inflation and whether that would break the store of value proposition
- why Justin thinks that BTC fails as money and won’t play a relevant role in the future
- what happened around the time of the blocksize debate back in 2015-2017
- whether there’s something wrong with Bitcoin’s culture and why Eric compares it to a doomsday cult
- why Ethereum has external dependencies that can impose systemic risks, according to Eric
- whether proof of stake or proof of work is a better consensus mechanism
- whether Ethereum is more censorship resistant than Bitcoin
- why BTC is a speculative asset and what Justin believes is needed for crypto to finally flourish
Book Update
My book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, which is all about Ethereum and the 2017 ICO mania, is now available!
You can purchase it here: http://bit.ly/cryptopians
