IMF Warns of DeFi & Stablecoin Risks, Biden Administration Taking ‘Aggressive’ Approach to Crypto

IMF Warns of DeFi and Stablecoin Risks, Biden Administration Taking ‘Aggressive’ Approach to Crypto

A senior White House official says the administration ensures a “smart and effective regulatory system” for crypto. Meanwhile, for the IMF, because DeFi is one of the main drivers of the rapid growth of stablecoins, it “warrants close attention.”

The Biden administration is ramping its regulatory scrutiny of cryptocurrency and will make a move to address a range of risks, reported the Wall Street Journal, citing a senior White House official.

Peter Harrell, senior director for international economics and competitiveness with the National Security Council at the WSJ Risk & Compliance Forum on Tuesday, said,

“You’re really seeing the administration at the beginning of what we expect will be an ongoing, quite aggressive effort to make sure we understand and address the whole range of risks that we see in the cryptocurrency space.”

At the same time, the administration seeks to position the U.S. as a leader in digital asset innovation.

According to Harrel, the agencies do think the cryptocurrency industry has “some potential benefits,” such as financial inclusion, but added, “there are clearly a whole range of risks.”

“I think you’re really seeing the administration kind of moving out on a number of different lines of work to make sure that we have a smart and effective regulatory system in place for cryptocurrency.”

A Sound Regulatory Framework

Elsewhere, the International Monetary Fund warned that the rapid growth of cryptocurrencies poses several risks to both investors and policymakers.

While the “crypto ecosystem offers an exciting new world of opportunities,” it also has its challenges in the form of risks to consumers from lack of operational or cyber resilience and anonymity and limited global standards creating data gaps for regulators, which in turn pose a threat to financial integrity, it said.

Moreover, “the advent of crypto assets and stablecoins in emerging markets and developing economies may accelerate dollarization risks,” said the IMF adding these markets can face “destabilizing capital flows” because cryptos are used to circumvent capital controls.

The report also mentions investor protection risks for DeFi, which it says is “gaining momentum by offering new services to users,” and inadequate reserves and limited disclosure for some stablecoins.

Decentralized finance (DeFi), according to the IMF, is actually one of the main drivers of the rapid growth of stablecoins as such “warrants close attention.”

“A sound regulatory framework for crypto assets, and decentralized finance markets more generally, must be a priority on the global policy agenda.”

When it comes to stablecoins, the IMF says regulations should correspond to the risks they pose and the economic functions they perform.

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Author: AnTy

National-Security Officials Warns Against Aggressive Crypto Regulation in Infrastructure Bill

National-Security Officials Warns Against Aggressive Crypto Regulation in Infrastructure Bill

National-security officials are warning that the crypto provision in the $1 trillion bipartisan infrastructure bill proposal could push illicit cryptocurrency transactions into markets where the US government has no reach, reported the WSJ.

Like some industry participants, national-security officials feel this will only add to the threat to American individuals, companies, and government agencies.

As we reported, the bill with its broad definition of “broker” that covers even miners, developers, and stakers to report the gross proceeds along with the names and addresses of the parties to the Internal Revenue Service, is currently in the House.

The IRS intends to capture billions of dollars in tax revenue through this crypto tax provision.

Given that developers, miners, and other parties do not have the required information to report, the crypto community pushed back hard against the bill and got support from some Senators.

According to crypto supporters, including market participants and now some intelligence and law-enforcement officials feel if the bill gets passed, it will drive economic activity overseas; as such, they are now “warning policy makers against overly aggressive regulations that risk exacerbating national-security hazards.”

Republican Senator from Wyoming Cynthia Lummis, an ardent supporter of cryptocurrencies and a bitcoin holder since 2013, was also involved in introducing an amendment to the bill in the Senate, which was blocked due to one single vote.

Her state has also been at the forefront of regulating the fast-evolving digital asset sector after passing crypto-friendly laws, including laying the groundwork for the chartering of Wyoming’s crypto banks, or SPDI banks — the first fully regulated financial institutions in the U.S. that hold crypto in addition to fiat currency.

“Wyoming, in fact, had so successfully innovated in this regulatory and legislative space that it was ready for prime time, in a very big way,” said Lummis in an interview, who cites Wyoming as a model for federal regulation of the $2 trillion crypto market.

According to Chris Rothfuss, a Wyoming state senator who chairs the chamber’s blockchain committee, the state needs to do something that doesn’t depend on waning industries, and “cryptocurrency provides an alternative store of value as well as the technology that diversifies our economy,” he said.

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Author: AnTy

Bitcoin is Back: On Its Way to its Longest Winning Streak of 2021 as BTC Hovers Around $40k

Aggressive spot and derivatives buying is seen on FTX and Deribit, with spot margin systems now getting super popular, while the kimchi premium goes under 1%.

The continued recovery in Bitcoin’s price has it going back above $40,000 after printing green candles for eight straight days.

With this, BTC is on course for its longest winning streak this year. In early March, Bitcoin printed seven daily candles in a row when the price went from $46k to $58k. However, it was on February 8 that the BTC price went from $38k to nearly $47k in one single monster candle.

“I hope you all caught up on sleep, because crypto is now fun again,” tweeted Sam Trabucco, a quantitative crypto trader at Alameda Research. “I legitimately *do* think people are coming around to the idea that the market’s current recovery is WAY less leverage-driven than in the past,” with spot margin systems now getting super popular, he added.

This upwards price action has been the result of the largest short squeeze ever, which came up just shy of $1 billion, as per Bybt.

However, with Binance having changed their API following the May 19th crash, they now only publish one liquidation per second; as such, the numbers are severely underrepresented. This short squeeze is expected to be far larger than $964.23 million.

Despite the upwards move, the highest Bitcoin funding rate is 0.0251% on OKEx, and on some exchanges, it is still negative.

As we reported, a divergence has been seen in the market, with FTX and Deribit recording positive funding rates right from the past weekend when price finally first started trending up while other exchanges were reporting negative funding rates. Trader CL of eGirl Capital noted,

“Def the most east-west diverging orderflow in a while.”

“FTX and Deribit buying spot and derivatives aggressively meanwhile weekly, biweekly, quarterly basis on Huobi/Okex/Binance are back to pre-pump even tho price is 6k higher in like 2 days, which hints high short/hedge demand.”

Interestingly, despite all this, the kimchi premium, the gap in crypto prices on South Korean exchanges compared to other exchanges located globally, has gone under 1% and slowly slithering into negative territory as well, shared DooWanNam of Maker.

At the peak of Bitcoin price, the kimchi premium climbed to over 20% in April.

While Korean traders are doing what they do best, buying at the top and disappearing at the bottom when prices are attractive, Cathie Wood of Ark Investment continues to add to its crypto exposure.

Amidst the return of bullishness, Wood just can’t seem to stop buying COIN stocks as after buying 113,043 shares on Monday, on Tuesday, Ark bought another 73,079 shares. With this, Coinbase continues to climb the ranks in Ark holdings, becoming the 6th most held stock now at roughly $1.5 billion.

While the market is still struggling to turn full bullish, waiting to see if the trend has been reversed, after all, companies in the space are attracting tons of fresh capital. Funds and venture capitalists are chasing crypto companies to get exposure to the industry which is leading to their insane valuations.

While Public crypto markets have started to gain traction yet again, private markets continue to see a frenzy of capital inflow, just as earlier this year.

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Author: AnTy

BTC Leaves Stocks in the Dust as The Fed Dismisses Debt: “We Won’t Be Running Out of Money”

In the past two months, the Federal Reserve has taken aggressive and unprecedented steps to mitigate the lasting damage to the US economy from the coronavirus pandemic.

Now, the central bank left its benchmark interest rate unchanged in the 0% to 0.25% range, as it said, “We’re going to not be in any hurry to withdraw these measures or to lift off. We’re going to wait until we’re quite confident that the economy is well on the road to recovery,” said Fed Chairman Jerome Powell.

The Powell-led central bank is also committing to do whatever is necessary to get the economy back where it was before the pandemic.

Powell repeated it during the Q&A session as he said, “We think our policy stance is right where it should be, for now,” and yet, “it may well be the case that the economy will need more support, from all of us, if the recovery is to be a robust one.”

As the Fed will continue “as needed,” the open-ended program of purchasing Treasuries and mortgage-backed securities will go on as well.

fed total assets

The FOMC statement on Wednesday also pointed out the following:

“The ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”

As such, the lending facilities the Fed has implemented across money markets and small businesses, the central bank along with Congress “are deploying these lending powers to an unprecedented extent,” he said.

In an unprecedented use of the Fed’s emergency powers, the Board of governors also announced nine extraordinary lending programs to make funds available to banks, companies, cities, and states.

In reaction to this, stocks rose, Dow jumped 2.6% and S&P 500 3.1% before falling today ahead of unemployment claims.

Over the past month, stocks went up 30% while Bitcoin is recording over 40% returns. Since yesterday, bitcoin is enjoying a rally which has the leading cryptocurrency surging past $9,000.

“YTD, it is outperforming equities by a sizable margin. So proving itself both as a solid risk-on asset (look at today) and as a hedge vs calamity. – we are also positive on the supply/demand impact from the upcoming halving,” said Tom Lee of Fundstart on Bitcoin’s dynamic performance this week.

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Author: AnTy

Even At Sub $200B Market Cap, Bitcoin is A Store of Value Now: Macro Trader Dan Tapiero

  • The Fed is being too “aggressive” and responding “wrongly” – chief financial economist of MUFG Union Bank
  • 200 billion bitcoin means it’s SoV now – macro trader Dan Tapiero
  • Coinbase CEO Brian Armstrong believes falling stock market and interest rate cuts may lead to growth in crypto this year

While the US stock market has been recording considerable losses despite the Federal reserve’s emergency 50 basis point rate cut, investors have piled into the safe haven asset Treasuries to combat the economic impact of the deadly coronavirus (covid-19).

The two-year Treasury yield has dropped to 0.70% while the 10-year plunged for the first time ever to below 1%. Investors have fled from the risk assets as the spreading virus threatens to derail global growth. The other safe haven asset, gold, has also been rising during this time, climbing to a 7-year high.

According to Chris Rupkey, chief financial economist for MUFG Union Bank, the Fed is being too “aggressive” and responding “wrongly” to the financial markets. “We aren’t in a recession yet,” and Fed cutting rates won’t keep it from coming. He added,

“Moving between meetings with a bigger than normal interest rate cut looks like Fed officials are panicking as much as stock market investors did last week.”

Bitcoin is a SoV

Macro trader Dan Tapiero says on Twitter,

However, this could be good for the crypto market, bitcoin especially, as the crypto asset like gold have non-negative yields.

Bitcoin currently is a store of value as Tapiero explains,

The Year of Crypto

Coinbase CEO Brian Armstrong also feels,

“A down stock market and interest rate cuts may lead to growth in crypto this year. Governments around the world are likely to look to stimulate the economy in any way they can, including using quantitative easing and expanding the money supply (printing money).”

He pointed out how China has already printed $173 billion which may lead to the movement of these finds into cryptocurrencies, which,

“Are viewed as a hedge against inflation.”

“This could be the year where the mindset of institutional investors begins to shift, from crypto as a venture bet, to crypto as a reserve currency.”

However, the crypto community was quick to point out that it isn’t crypto rather bitcoin. Today, Amstrong again took to Twitter,

It is interesting that “the CEO of the world’s most prominent Bitcoin-related company seems so skeptical of Bitcoin” said Joe Weisenthal Co-host of ‘What’d You Miss?’ on Bloomberg TV.

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Author: AnTy

Deutsche Bank Executive: Aggressive Central Banks Stance Makes Bitcoin More Enticing to Investors

  • Deutsche Bank executive believes central banks are taking aggressive monetary policies
  • Because of it, the crypto market is going to keep growing and attract more investors

One of the reasons related to Bitcoin’s (BTC) current price increase could be the aggressive policies that central banks are currently taking. This is what Deutsche Bank executive Jim Reid said during an interview with CNBC on June 26. Bitcoin has been in a bull trend during the last few months.

Central Bank Have Aggressive Policies

The head of global fundamental credit strategy at Deutsche Bank, Jim Reid, considers that if central banks operate in an aggressive way, alternative currencies such as Bitcoin could become more attractive. Mr. Reid was making reference to the speech that the chairman of the Fed, Jerome Powell, gave a few days ago regarding central banks and the possibility to cut interest rates.

The U.S. dollar (USD) dropped versus different fiat currencies arund the world and the DXY Index reached also the lowest level in over two months. For example, the U.S. dollar hit a three-month low against the euro (EUR).

Bitcoin continued to grow amid this situation and it surpassed $13,500 just a few hours ago, the highest price ever reached by Bitcoin in over a yaer. This is very positive for the digital currency that seems to be in a new bull trend towards new highs.

Reid has also mentioned that the current spike in different virtual currencies could have been influenced by the recent announcement made by Facebook about its new digital currency Libra. This project aims at helping users perform transactions and payments in a fast and easy way compared to other means of payment currently available. Moreover, it also want to offer financial services to many regions around the world that do not have access to these kinds of services.

According to data provided by Coin360, Bitcoin is currently being traded around $13721 an it has a market capitalization of $241 billion.

Reid explained that the low-interest policies that central banks are currently taking are very aggressive and he shared his negativity about it. At the same time, he mentioned that the continuous printing money of banks could lead to the end of paper money.

The European Central Bank (ECB) has also hinted that it could be cutting interest rates even further. At the moment, Deutsche Bank AG stock price is €6.5 after reaching over €112 in 2007.

All of Today’s Bitcoin Price Analysis, Chart Forecasts and Industry News

[Author Alert] The author’s opinions above are solely based on their own self-conducted research. Assume any and all authors are using, holding, trading and/or buying cryptoassets mentioned as a portion of his or her financial portfolio. Use information at your own risk, do you own research, never invest more than you are willing to lose.

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Author: Carl T