Bridgewater Associates CEO Ray Dalio Owns Bitcoin, But Cautions its ‘Greatest Risk is its Success’

We’re in the part of the cycle where gold, bitcoin, real estate, everything is going up, but with the US dollar on the verge of devaluation and inflation looming, future expected returns go down after a point, meaning there’s “no longer the incentive to buy those things.”

“I have some bitcoin,” revealed Ray Dalio, the founder, and CEO of the world’s largest hedge fund Bridgewater Associates.

Dalio revealed this during the Consensus event held by CoinDesk that was recorded on May 6, joining the herd of institutional investors warming up to cryptocurrencies.

This is because he would rather “have bitcoin than a bond” in an inflationary scenario, he said.

This makes sense given that since March 2020, the price of Bitcoin has gone from $3,800 to $65,000, and even after the recent 54% sell-off, it is trading around $37,500. Meanwhile, the yield on benchmark notes, US 10-year Treasury bonds, has only managed to move from 1.473% to 1.62%.

The yield on treasury bonds has been falling for decades, which was at 15.82% back in late 1981. Bitcoin, on the other hand, has been hitting a new ATH every cycle.

Dalio was previously skeptical about Bitcoin and later said he is learning about it and then wrote about it having the capacity to be an alternative store of value. Now, he has finally come around and invested in cryptocurrency. Recently, as we reported, Bridgewater’s chief financial officer, John Dalby, left the firm to join bitcoin custodian NYDIG.

Bitcoin looks appealing in the current environment where the US dollar is on the verge of devaluation, last seen in 1971, said Dalio. China is threatening USD’s role as the world’s reserve currency.

Here, Bitcoin with its gold-like properties is looking increasingly attractive as a savings vehicle, he said.

However, for him, the biggest concern remains regulatory crackdown. Dalio said,

“Bitcoin’s greatest risk is its success.”

Losing Control

During his interview, Dalio talked about how the greenback is in the mid of the first cycle, “debt and credit create buying power,” of the rise and fall of the global reserve currencies.

The second cycle is an “internal cohesiveness clash cycle” as both the wealth gap and political groups grow and then the rise of another great power that challenges the existing top currency.

The first cycle started as the government created buying power, a “stimulant” in the short term, but eventually, they have to pay back their debts, becoming long-term “depressants.”

So, if they need more money, they have to keep printing, and then taxes go up, leading to capital controls as happened in 1971 when President Richard Nixon took the U.S. off the gold standard, making dollar “fiat” currency, and stocks went up.

“It causes… gold, bitcoin, real estate, everything to go up because it’s really going down in dollars. And that’s the part of the cycle we’re in.”

Inflation is of importance here, especially monetary inflation that happens due to a devaluation of the currency, rather than the other one caused by supply and demand.

While pushing the prices of real estate, stocks, and cryptocurrencies up, their future expected returns would go down after a point. Once they come down to the interest rate level, “then there’s no longer the incentive to buy those things.”

However, a neutral cryptocurrency such as Bitcoin can act as gold, but the government has the capacity to control anything. And as more people start preferring Bitcoin than bonds, like him, the more savings go into BTC than into credit, “then [governments] lose control of that,” he said.

And such a situation, he said, can lead those governments to crack down on bitcoin holders, he said. Overall, it’s about technology and whoever wins this race wins it all, Dalio said.

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Author: AnTy

Chinese Publicly Listed Company Buys Bitcoin (BTC) and $17.9M Ether (ETH)

While Meitu’s Bitcoin purchase is part of the company’s asset allocation strategy, the company bought Ether in preparation to enter the blockchain industry.

China’s beauty app Meitu Inc. has become the latest corporation to invest in cryptocurrency as the company buys $22.1 million worth of Bitcoin, 379.1 BTC, and $17.9 million worth of Ether, 15,000 ETH in the open market on March 5, revealed in the Sunday evening exchange filing.

It isn’t only US companies anymore; Tesla, Square, and MicroStrategy, that are accumulating Bitcoin and Ether on their balance sheets.

The company’s crypto purchase pushed Meitu’s prices as much as 14.4% Monday before succumbing to the wide market selloff.

While the Hong Kong-listed company has bought the crypto assets only now, Meitu’s founder announced in mid-2018 that he personally bought 10k+ BTC. In recent years Cai Wensheng, Meitu’s chairman and a crypto enthusiast, has also been exploring blockchain technology.

Meitu, an app that helps touch up user-profile pictures, is a $10 billion company with 50 million daily active users that launched Hong Kong’s biggest initial public offering in 2016.

It took the crypto route as part of the company’s plan to use as much as $100 million of its cash hoard to fund crypto purchases.

The company believes the prices of digital assets have “ample room” to appreciate in value, and they can help diversify its portfolio. It also notes that cash is now “subject to depreciation pressure due to aggressive increases in money supply by central banks globally.”

Wensheng says Bitcoin has several features that potentially even render Bitcoin “as a superior form to other alternative stores of value such as gold, precious stone and real estate.”

While Bitcoin is part of the company’s asset allocation strategy, the company purchased Ether in preparation to enter the blockchain industry. The document reads,

“Blockchain technology has the potential to disrupt both existing financial and technology industries, similar to the manner in which mobile internet has disrupted the PC internet and many other offline industries.”

It further states that the company believes the blockchain industry is “still in its early stage, analogous to the mobile internet industry in circa 2005.”

Meitu is evaluating the feasibility of integrating blockchain technology in its overseas businesses, and given that Ether powers the second largest network, purchasing it was a “logical preparation,” the filing said.

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Author: AnTy

Binance Uganda Will Shut Down Its Operations Next Week; CZ Cited Lack of Users

  • Binance Uganda set to shut its doors next week.
  • Binance CEO, CZ, says closure of BinanceUG is part of a “business decision.”

After a two-long year stay in operations, Binance Uganda, one of the African outposts for the world’s largest crypto exchange, will be shutting its doors on November 11. The closure follows a mission by Binance to cut down on losses, which also sees British Isle-based exchange, Binance Jersey, shut down its businesses on November 30th.

The East African country has enjoyed the exchange’s services from the fall of 2018, offering a direct platform for Ugandans to use the Shilling to purchase cryptocurrencies. The launch of Binance UG targeted efforts to promote crypto adoption across the continent, using the country as a starting point to taking over the African market.

Why Binance UG is shutting down

In an interview explaining the recent closure of the Ugandan branch, Binance CEO, Changpeng “CZ,” Zhao explained it as a “business decision.” He further claims the platform is a loss-making center for the larger Binance.com firm as it does not “generate enough revenue to be profitable.”

However, the closure of the Ugandan and Jersey exchanges raised qualms on Binance relationship with regulators – as explained in a Forbes article. The article accuses the exchange of “conceiving of an elaborate corporate structure designed to intentionally deceive regulators and surreptitiously profit from crypto investors in the United States.”

However, CZ dismissed the FUD claiming that Binance only operates where regulators have offered a license. As the issue with regulators is set to rise once more following Binance UG closing down, CZ explained,

“Some people misinterpreted that as maybe we got into trouble with the regulator locally or something. And that’s not the case.

We do have good relationships with regulators in both areas that we have an exchange winding down. It’s just a business decision.”

Moreover, Binance.com launched support for deposits and withdrawals of the Ugandan shilling, which duplicates the functions of Binance UG. With most users switching to the main Binance platform and more services offered on it, the need for a local crypto platform does not make sense.

“All the features that Binance Uganda provides [are] now covered by Binance.com together with our fiat channel partners,” CZ said. “There’s a very minimal number of users on there, so it doesn’t make sense for us to maintain two platforms.”

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Author: Lujan Odera

Federal Reserve Chairman Jerome Powell to Speak About Digital Currencies Today

As part of a panel on “Cross-Border Payments—A Vision for the Future,” at the International Monetary Fund’s (IMF) annual meeting, Federal Reserve Chairman Jerome Powell will speak about digital currencies Monday.

The panel will start at 8 a.m. ET on Oct. 19.

During this virtual event, while discussing the potential solutions to enhance the cross-border payments, the “benefits and risks” of digital currencies and their macro-financial implications will also be covered.

“On Monday, Jay Powell gives his input on central bank digital currencies at the IMF talk listed above. Central Bank digital currencies are coming, and they will change everything… They are coming under stealth of X-border payments but it means so much more…” said former hedge fund manager Raoul Pal, CEO of Real Vision Group.

It is, however, not mentioned if Powell would be sharing his thoughts on a digital dollar.

Other panelists include Agustín Carstens, general manager of the Bank for International Settlements (BIS); Ahmed Abdulkarim Alkholifey Governor of the Saudi Arabian Monetary Authority; and Nor Shamsiah, governor of Bank Negara Malaysia with IMF Managing Director Kristalina Georgieva as the moderator.

You can watch live here:

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Author: AnTy

Coinbase Turned Over Info on 1,914 Users; 96.6% Were Criminal-based Law Enforcement Requests

As part of its commitment to be a trusted venue, Coinbase has released its first Transparency Report.

Much like other financial service providers and technology companies, Coinbase says it received requests from the law enforcement and government agencies seeking information and financial records in connection with civil, criminal, and other investigative matters in the form of subpoenas, search warrants, court orders, and other formal processes.

Because these requests are valid under the applicable laws, Coinbase must respond, wrote Paul Grewal, Chief Legal Officer at the San Francisco-based exchange, that currently serves over 38 million customers worldwide.

As per the report, the exchange received requests for information on 1,914 customers during the first six months of 2020. 58% of this request was from US agencies, and 16% was from state or local authorities like FBI, HSI, DEA, SEC, IRS, DOJ, and others.

Of the request, the majority, 96.6%, were criminal, while the rest was a civil or administrative type.

Overall, 90% of all requests came from just three jurisdictions — the US, UK, and Germany.

Coinbase Transparency Report
Source: Coinbase

“Great to see this transparency from coinbase. After some controversy re: privacy, this is a strong step forward,” said Jake Chervinsky, General Counsel at Compound. “Also worth noting, this comes from new CLO Paul Grewal (who I still think of as Judge Grewal), an extremely well-respected tech lawyer & big asset to the company.”

Coinbase also noted in the report they have been pushing back when appropriate; back in late 2017, they won against IRS over customer policy.

“I hope they’re pushing back on inappropriate gag orders as well,” said Jerry Brito, executive director of Coin Center, a DC-based crypto think tank.

“Glad to see Coinbase publishing a transparency report, joining companies like Kraken. Hopefully this becomes an industry standard,” he added.

More Reading: After US Secret Service, Coinbase Strikes a Deal with IRS to Sell its Data

Also Read: #DeleteCoinbase Trending After the Coinbase’s Deal with DEA & IRS Becomes Public

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Author: AnTy

Love it or Hate it, UNI Token Stands to Benefit from Uniswap’s Evolution

After releasing the UNI token as part of Uniswap V3, the first update for Uniswap V3 has been made on Github. It might say “trigger a new major release,” but for now, it just seems to be a tease with an IPFS deployment release.

Amidst the growing hype around Uniswap V3, such teases only push the market sentiments towards excitement, which in the DeFi world doesn’t take much to turn into euphoria.

For now, the UNI token is trading at $5.17, still in the green by 6.14%, slowly uptrending towards its ATH of over $8.

Today, with Ethereum Layer 2 solution Ethereum Optimism entering the first phase of its testament launch, Uniswap has announced itself as the early adopter, along with Synthetix and Chainlink.

Additionally, Mask Network rolled out a widget that lets users trade tokens on the biggest decentralized exchange (DEX) by volume, through its Twitter extension. The aim is to make it easier for Web 2 users to migrate to Web 3 apps.

The Question of Decentralization

The top DeFi project, with nearly $2 billion in deposits, is gaining a lot of attention these days thanks to its governance token, which was airdropped to its early adopters.

But not all of its is good; as we reported, there have been questions on the regulatory nature of the UNI token, which is also allocated to team members, advisors, and investors — Uniswap raised $11 million in a Series A round led by Andreessen Horowitz along with USV, Paradigm, Version One, Variant, Parafi Capital, SV Angel, and A.Capital.

At the time, it has been said the resources will be used to build Uniswap V3, which will “dramatically increase the flexibility and capital efficiency of the protocol.”

Besides the legal nature, the latest report from Glassnode also took a stab at the decentralized nature of the token launch, which raised a few questions.

“With the launch of its UNI token, Uniswap has branded itself as “decentralized,” but it still has a long way to go to reach this point. By giving itself a skeleton key to the protocol, Uniswap has (at least in the near term) sacrificed decentralization for the sake of control,” noted Glassnode.

But the crypto data provider also noted that the decision was “almost certainly” made with the protocol’s best interests at heart. Moreover, the control will gradually transition to the community.

“Despite the team’s lack of transparency and somewhat deceptive marketing, the UNI token remains a strong and likely extremely valuable asset,” combined with Uniswap’s impressive growth, V3 deployment in the pipeline, and activation of fee switch that will enable UNI holders to earn a portion of trading fees.

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Author: AnTy

UNI on the Move, Is Uniswap’s Governance Token Outside the Realm of US Securities Law?

Last week, the largest decentralized exchange (DEX) by trading volume, Uniswap, launched UNI as part of Uniswap V3. 400 UNI tokens were airdropped to every customer who used the platform before Sept.1st, 2020.

While some called this a “groundbreaking” token launch where customers were made the investors, some accused the project of catering to whales. Currently, UNI tokens are being held by more than 50,000 Ethereum addresses/wallets.

The token hit the peak above $8 last week only to lose more than 50% of its value during this week’s retracement. Today, UNI is back on the move, up about 25% at $4.81.

The liquidity on the popular DEX has also hit a new record this past weekend and continues to trade around $2 billion, since crashing following its copycat SushiSwap, sucking the liquidity. The volume on the exchange also sees growth, keeping above $400 million for the most part.

The community is now waiting for Uniswap V3, which will improve capital efficiency and tackle slippage. Project creator Hayden Adams has already raised the expectations of the community saying, it will be “sooo much better than all the things people are hoping it will be” and that Uniswap V3 “destroys every other AMM I’ve seen to date and it’s not even close.”

“We’re full steam ahead on V3, which is going to eat V2’s lunch,” said Haydens a few months back.

Meanwhile, what’s the legal nature?

Right at the genesis, 1 billion UNI tokens were minted, 60% of which will go to community members, 15% is already distributed through the airdrop. 21.51% will go to team members with a four-year vesting period the same as 0.69% to advisors, and the 17.80% share that goes to equity investors — Uniswap raised $11 million in June this year.

Being a governance token means, holders have control over company decisions. But with the launch also came the question if it is a security.

“There was no public solicitation for investment; it was a private offering to a few people,” is what Ethereum co-founder Vitalik Buterin has to say about this.

“If one were to also consider that the Uniswap team is well funded, backed by seasoned VCs who have most likely lent their legal, regulatory, technical and other expertise, one might also take a more careful consideration of the facts and circumstances of this particular offering and why Uni tokens may very well be outside the enforcement framework of U.S. securities laws,” wrote Phil Liu, the Chief Legal Officer at Arca.

Liu, who believes UNI tokens isn’t a security, in his argument that UNI tokens fall outside the US Securities Enforcement Framework, said the team didn’t raise money through a token offering and neither it is controlled by a central entity.

As a matter of fact, Uniswap is an open-source and fork-able network that puts the power directly into the holders’ hands.

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Author: AnTy

China Should Seize the ‘First Mover’ Advantages of Launching A CBDC: PBoC

China should aim at becoming the first country to issue digital currency as part of its efforts to internationalize the yuan and lessen its over-dependence on the world’s dollar-dominated payment system, the People’s Bank of China (Chinese central bank) said.

The commentary appearing in China Finance, a People’s Bank of China run magazine, opined that the rights and capacity to offer and control digital currencies is set to become the ‘new battlefield’ among various sovereign nations. The article also claims that issuance and the circulation of virtual currency will alter the current international financial system.

The article argues that China should aim at becoming a first mover in the digital currencies space and calls for the acceleration of the development of the country’s CBDC.

“China has many advantages and opportunities in issuing fiat digital currencies, so it should accelerate the pace to seize the first track,” says the article.

Also, the article argues that data feedback from a Chinese central bank-issued digital currency (CBDC) would be vital for the development of a national monetary policy, which is imperative for economic recovery in the post-pandemic landscape.

The article also revealed that PBoC’s digital currency research outfit had filed approximately 130 patents related to crypto applications touching on issuance, circulation, and implementation.

The People’s Bank of China’s research institute was founded in 2015 to look at the feasibility and implementation process of digital currencies, to reduce the costs of circulating fiat currency and enhance policymakers’ grip in the money supply ecosystem.

Last month, various state-run Chinese commercial banks embarked on large-scale piloting of the digital wallet, which is a step closer to the highly awaited official launch of the digital currency. PBoC revealed last month that about 400 million people are involved in the piloting program for a digital yuan.

The Chinese central bank is looking forward to using the digital yuan during the 2022 Winter Olympic Games.

The article concludes that digital yuan can help in breaking the dollar hegemony in the international monetary system.

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Author: Joseph Kibe

As Decentralized Finance Continues to Evolve, Big Four Audit Firms Will Play a Major Role in DeFi

Big four audit firms are set to be a significant part of the Decentralized Finance (DeFi) ecosystem according to the latest blockchain industry report by German-based non-profit, dGen.

The DeFi space, which has seen tremendous capital gains in TVL, will grow even more prominent in the coming decade as per dGen insights on its report. Jake Stott, the co-founder of dGen, noted that support from other financial market stakeholders would be inevitable going forward. Tom Howard, Chief Strategy Officer at Mosendo, said;

‘Over time, traditional financial institutions will have no choice but to interact with  decentralized finance tools, slowly disinter-mediating the industry from the inside out.’

Functions like verifying the authenticity of an invoice, tracking payment settlements, and insurance claims could occur faster with the help of a blockchain. Their role will be to act as an intermediary between DeFi and traditional finance.

Dubbed the ‘Decentralised Finance: Usecases & Risks for Mass Adoptionreport, dGen paid particular attention to the DeFi space. Currently, over $2.5 billion in funds is locked within DeFi based products. It is an area that has been hailed as the future of markets given almost all traditional assets are finding their way onto Ethereum based protocols. Though still at its infancy stages, dGen acknowledged this underlying potential in DeFi stating that it,

“could leapfrog the current FinTech industry, providing a new structure of financial services.”

Consequently, this optimistic narrative has gained massive support from across financial services, tech, and the academia elite. DGen’s researchers are bullish that the market could grow past the trillion-dollar mark by 2030. The report highlights that DeFi will: “Provide income for thousands of gamers, streamers, and influencers”

It will also be adopted by European financial institutions who will switch to offering “DeFi-enabled savings and pension accounts.”

A recent Q2 report by industry giant, ConsenSys, concurs on the possibility of a DeFi future given historical growth rates in the past three months. It goes on to detail that Bitcoin tokenization protocols and Yield farming frenzy are the fundamental factors behind this growth as per now.

While the DeFi space has emerged as an avenue to make better interest compared to zero percent in some jurisdictions, it continues to face security threats arising from the core infrastructures.

“Knowledge and security risks will continue to reduce, on top of a growing number of securities in the event of a hack. It appears the solutions the industry needs to scale will come from within the industry itself.”

The team is, however, optimistic the underlying issues might be resolved in as little as one year. Kain Warwick, Founder of Synthetix told dGen,

‘Insurance on DeFi is still extremely limited[…] DeFi still has significant tail risk, so insurance is likely to remain very costly in the short term, but as protocols mature, costs should come down[…] allowing for simpler and more useful insurance to emerge’.

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Author: Edwin Munyui

US Fed Chair Jerome Powell Rules Out The Private Sector in Creation of a Digital Dollar

Jerome Powell, the U.S Fed Reserve Chairman, has said that private entities should not be part of the creation process of a digital dollar. Appearing before the House Financial Services Committee on June 17, the Fed Chair highlighted that monetary policy functions should be left to the central banks regardless of the operating ecosystems.

On the digital dollar progress, Powell noted that the Fed owes it to the public to be up to speed with developments in the space. Consequently, the financial watchdog has emphasized understanding the intricacies of digital assets to evaluate their public good.

Private Entities Ruled Out of Digital Dollar Creation

Earlier this year, a digital dollar proposition was launched by the former CFTC Chairman, Christopher Giancarlo, together with other notable stakeholders in the financial services industry.

This recommendation had proposed private entities and the Fed to work together towards creating the digital dollar. According to the suggested layout, this digital currency would leverage the current U.S banking system to provide two-tiered services with the Fed’s backing.

This issue was raised as a question to Powell by Rep. Tom Emmer (R-MN) hence triggering the clarification on monetary policy functions. In his opinion, a collaboration with the private sector would invalidate the idea of the public good:

“The private sector is not involved in creating the money supply. That’s something that the central bank does. […] I don’t [think the public would welcome the idea that private employees who are not accountable solely to the public good would be responsible for something this important.”

Notably, Powell also addressed some shortcomings with the proposition of a digital dollar. One of the main concerns is striking a balance in what would be a fair oversight of the digital dollar.

According to Powell, there are a lot of questions when it comes to transactional privacy, which means it would be difficult to cap where the Fed’s control ends. However, he was keen to reassure the House Financial Services Committee that the Fed will not shy away from something beneficial to the world’s reserve currency, U.S. dollar.

China on Sunrise Phase

As the U.S continues to debate on the value proposition of a digital dollar, China has already launched a pilot for the digital renminbi (RMB). This initiative had been in the works for around five years and is quite promising, given China’s extensive use of mobile app payments such as Alipay and WeChat.

It, therefore, follows that a complete sweep up of fiat money within China’s economy in replacement with the digital yuan could soon be a reality. Despite this progress, China is not guaranteed to displace the U.S dollar as a reserve currency given its substantial market dominance. Also, the Euro is still significantly ahead of the CNY in FX markets.

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Author: Edwin Munyui