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

Risk-on Sentiment Sending Bitcoin, Ether, & Gold Higher as President Biden Declares ‘We Can’t Let Up’

Risk-on Sentiment Sending Bitcoin, Ether, & Gold Higher as President Biden Declares ‘We Can’t Let Up’

While the S&P 500 hit a new record high after the disappointing jobs report, the market is now expecting Bitcoin to make its way past $70k and Ether to get ready to hit several new levels.

President Joe Biden called on lawmakers this week to approve his massive infrastructure and jobs package following the disappointing jobs report.

While economists were forecasting 1 million new jobs and an unemployment rate of 5.8%, the actual results were a huge letdown, with nonfarm payrolls increasing by only 266,000 in April and the unemployment rate rising to 6.1% even as states began relaxing coronavirus restrictions.

“We can’t let up. This jobs report makes that clear. We’ve got too much work to do,” Biden said in remarks at the White House. “We have to build back better.”

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Meanwhile, Republicans and business owners are complaining that federal unemployment benefits are preventing laid-off workers from taking new jobs. Congress added $300 per week to state benefits.

“Today’s disappointing jobs report is a result of the federal government incentivizing people to stay at home and seek enhanced unemployment benefits rather than finding a job, even as employers are actively looking for more workers,” Sen. Kevin Cramer (R-N.D.) said in a statement.

Biden’s proposed American Jobs Plan calls for spending over $2 trillion to rebuild the roads, bridges, and airports along with the long-term care for the elderly and the disabled. His other proposal, the American Families Plan, is spending nearly as much to provide cheaper child care, free pre-kindergarten, and paid family and medical leave.

Biden’s dovish call and disappointing employment report pushed the S&P 500 to a new record high. While the US dollar index continues its way downwards to 90, gold is finally showing some strength, aiming for $1,850 per ounce.

Bitcoin also surged to $59,400, and although it is yet to be seen if it will continue to new highs, the market is calling for the momentum to take us to $70k. Ether is also keeping the bulls around $3,550, ready to double here.

Amidst the risk-on sentiment, the Fed warned of the increasing threats these rising asset prices are posing to the financial system. In its semiannual Financial Stability Report, the central bank said future dangers are rising, in particular, should the aggressive run on stocks tail off.

“Asset prices may be vulnerable to significant declines should risk appetite fall,” is the central bank’s wonderful judgment on the market.

As for crypto, SEC’s new commissioner Gary Gensler said more protections are needed amidst the rise in “crypto tokens.” “We need to update and freshen our rules,” he said.

Cryptocurrencies were especially ripe for regulation to help eliminate fraud, manipulation, and other bad actors, he said.

“Bringing investment protection to that market is relevant if this is going to continue, and it brings confidence and trust to the overall markets.”

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Author: AnTy

Pro-Crypto Elad Roisman Replaces Jay Clayton as Interim SEC Chairman

Pro-Crypto Elad Roisman Replaces Jay Clayton as Interim SEC Chairman

President-elect Joe Biden will be picking the permanent successor to Cayton who left the agency on Wednesday.

Pro-crypto Elad Roisman has been appointed the new SEC Chairman after former Chairman Jay Clayton announced on Wednesday that it was his last day.

“Congratulations, Chairman Roisman! I look forward to your leadership of the SEC,” is how ‘Crypto Mom’ Hester Peirce announced the new appointment.

Roisman was appointed as an SEC commissioner in Sept. 2018 by President Donald Trump.

At the time of his appointment, Roisman had said at a Senate Banking Committee hearing that the SEC “must examine and re-examine its rules, regulations, and guidelines to ensure that they are still working as intended to accomplish the SEC’s mission,” as recently manifested in the area of “new investments and technologies such as initial coin offerings and blockchain.”

“He’s pro-crypto, so bitcoin ETF chances much higher now..” said Eric Balchunas, a senior ETF analyst for Bloomberg Intelligence, in a now-deleted tweet.

However, President-elect Joe Biden will be picking the permanent successor to Cayton. Biden will be sworn in as US President in less than a month on January 20.

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Author: AnTy

Bitcoin and MMT Critic Janet Yellen Picked as Treasury Secretary by Biden

President-elect Joe Biden has chosen former Federal Reserve Chairwoman Janet Yellen to become the next Treasury Secretary. Yellen, an economist, if confirmed by the Senate, will become the first woman to hold the position.

This holds meaning for the crypto market as Jake Chervinksy, a General Counsel at Compound Finance, said,

“This is the single most important decision for the next four years of US crypto policy. The next Treasury Secretary will have enormous influence on whether the right to financial privacy is upheld or sacrificed to mass surveillance & forced custodianship.”

For Wall Street, it could be good news as just last month she said the US needs to “continue extraordinary fiscal support.”

Yellen had been at the forefront of policy-making for three decades, which means nobody knows the Fed better than her. Not only will she be a great Treasury Secretary, but she will also help the government achieve its objective of increased coordination between monetary and fiscal policy, said crypto trader and economist Alex Kruger.

But not only Yellen is not a fan of MMT, having said that its proponents are “confused,” but she is not really a bitcoin proponent either.

Back in December 2017, at the height of the bull run, she called Bitcoin a “highly speculative asset.”

“Bitcoin, at this time, plays a very small role in the payment system. It is not a stable source of value, and it does not constitute legal tender,” she said at the time, adding that while the Fed is researching it, “I think to my mind, limited benefits from introducing it, a limited need for it and some substantial concerns.”

During Yellen’s testimony before the House Financial Services Committee in July 2017, someone photobombed her with the “Buy Bitcoin” sign.

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In Oct. 2018, while explaining why BTC is not a useful form of currency, Yellen shared that she received “a gift of bitcoins.” Raz Suprovici, the founder of the bitcoin gifting service Biterica, had sent 0.0031642 BTC, worth about $20 at that time, which has now increased to roughly $60, to Yellen to make her understand it better.

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Author: AnTy