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cryptocurrencies: US regulators racing toward first major rules on cryptocurrency

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WASHINGTON: After cryptocurrency largely stood aside for years as cryptocurrency evolved from a digital curiosity to a volatile but widely accepted innovation, federal regulators are scrambling to address the potential risks to consumers and financial markets.

Their concern has only grown as both new and established businesses have rushed to find ways to capitalize on the massive wealth in cryptocurrency being injected into the traditional financial system through quasi-banking services such as interest-bearing accounts and loans.

Now the Treasury Department and other agencies are urgently moving towards a first target for tighter regulation: a fast-growing product called stablecoin.

Stablecoins are issued by a variety of companies, currently only slightly regulated by a patchwork of government rules, and serve as a kind of bridge between the cryptocurrency markets and the traditional economy.

The value of a stablecoin is supposedly pegged one-to-one to the US dollar, gold, or some other stable asset. The idea is to make it easier for people who own cryptocurrencies – notorious for their frequent fluctuations in price – to conduct transactions like buying goods and services or earning interest on their crypto holdings.

The use of stablecoins is growing rapidly and regulators are increasingly concerned that they are in fact not stable and could lead to a bank run in the digital age. This year alone, dollar-linked stablecoins such as Tether Token, USD Coin and Pax Dollar have risen from $ 30 billion in circulation in January to around $ 125 billion in mid-September.

“It is important that the agencies act quickly to ensure there is an adequate US regulatory framework in place,” said Nellie Liang, an undersecretary of state for the Treasury Department who leads the effort, in a statement.

The Biden administration’s push to exercise some control over stablecoins marks the tip of what is likely to be a much broader debate about the government’s role in regulating cryptocurrencies – an issue that is a growing concern in Washington.

“I saw a fool’s gold rush up close in the run-up to the 2008 financial crisis,” said Michael Hsu, the currency’s acting auditor, on Tuesday. “It feels like we are on the cusp of another with cryptocurrencies.”

Widely known as a speculative instrument, cryptocurrency is increasingly starting to transform banking and finance, leading to discussions about whether governments should issue their own digital currencies to complement or eventually replace their traditional currencies.

Stablecoins are now underpinning a growing proportion of cryptocurrency transactions worldwide, at a time when the total value of outstanding crypto tokens like Bitcoin is around $ 2 trillion – roughly the same value as all of the US dollars in circulation.

The regulatory push has sparked a wave of lobbying from cryptocurrency executives. They have lined up in a series of virtual and face-to-face meetings with banking and financial regulators over the past few weeks to shape the new rules, while largely recognizing that some form of federal oversight is now inevitable.

Regulators are concerned about whether stablecoin firms have enough cash to back the value of the currency they issue.

In addition to cash and short-term government bonds – which are considered safe and easy to redeem – for example, the issuers of the stablecoins USDT and USDC, at least until recently, also held currency reserves such as unsecured corporate debt, which is much riskier and, especially in times of financial turmoil, it is more difficult to quickly convert to cash. This “commercial paper” is intertwined with other important parts of the financial system.

Treasury officials also want assurances that the stablecoin firms have the technical capacity to handle large transactional spikes so they don’t create a chain reaction of trouble when large numbers of customers try to cash out their holdings.

Problems have already occurred. The Solana blockchain, a relatively new network that has seen an “skyrocketing” number of stablecoin transactions, suffered a 17-hour outage on September 14 or sell during the crash.

Federal officials said in interviews that they are considering using the far-reaching powers created under the Dodd-Frank Act, enacted after the 2008 financial crisis, to initiate a review and potentially declare stablecoins “systemically important.” Result they would likely subject to stringent federal regulations.

“Regulators really start to worry more as the risks to society increase,” said Jeremy D. Allaire, CEO of Circle, a payments and digital currency company that helped develop USD coins. “You can of course see that the regulators want to find ways to counter these risks.”

USD Coin has grown about 750 percent this year, with about $ 30 billion in circulation. It is forecast to hit more than $ 200 billion at its current growth rate by the end of 2023, Allaire said.

The first step that the Treasury Department is likely to take is to publish a report with recommendations in the fall. In interviews, industry executives, lobbyists and regulators gave an overview of what they expect to be addressed in these recommendations, which form a template for potential regulations to be drafted in the coming year.

The rules, they said, will likely dictate that the reserves are always liquid enough to meet redemption requests, and that the software systems that process these transactions are robust enough to avoid crashes and severe slowdowns while doing bulk transactions.

They predicted that there will also be requirements for the process of creating new stablecoins, security systems to protect privacy and data, and consumer protection measures. Regardless, the Treasury Department is also preparing to enact rules designed to prevent cryptocurrencies from being used for illegal activities such as money laundering and tax evasion.

Some steps have already been taken to crack down on the sector.

The most popular stablecoin in the world is USDT, issued by Tether based in Hong Kong; it currently represents more than half of the global stablecoin supply. New York state regulators opened a fraud investigation against Tether in 2019, an investigation that concluded this year with an agreement prohibiting the company from doing business with customers in New York and instructing it to periodically disclose what types of Currency reserves prop up its stablecoin.

Circle has already announced that it will voluntarily shift its reserves into more liquid funds starting this month.

The new rules will spawn winners and losers, with some industry players better able to accept them than others who may have to change their business models to bring them into line.

The stablecoin issuer Paxos, for example, supports the step to regulate stablecoins. But it is against the use of the powers created under the Dodd-Frank Act of 2010, which allows a body called the Financial Stability Oversight Council to be made up of the Treasury Secretary, the Chairman of the Federal Reserve, and 13 other leading financial regulators Federal and state level consists of financial experts – to effectively extend its reach to stablecoins by declaring stablecoin activities or companies as “systemically relevant”.

But at Circle, the CEO said he had no objection to the designation.

“At this point, large, fully-reserve, asset-backed dollar stablecoins that can be used across the Internet will have this systemic name,” said Allaire of Circle.

Another option would be to create a new type of banking charter for stablecoin issuers that addresses many of the regulatory concerns.

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Cryptocurrency

Facebook’s Novi, Worldcoin, BTC ETF, Mastercard crypto

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1. Introduction of the first US futures-based Bitcoin ETF

2. Senators call out on Facebook, Novi. to turn off

Also on Tuesday, Senate Democrats wrote a letter to Mark Zuckerberg, CEO of Facebook, to get the social media giant to end its Novi digital wallet project.

The letter received from Sens. Brian Schatz, D-HI .; Sherrod Brown, D-Ohio .; Elizabeth Warren, D-Mass .; and others came after Facebook launched its Novi pilot program in the US and Guatemala on Tuesday.

“Facebook cannot be trusted to manage a payment system or digital currency when its existing ability to manage risk and keep consumers safe has proven to be utterly inadequate,” the letter said. “We urge you to immediately hire your Novi pilot and make a commitment not to bring Diem to market.”

Diem, renamed from Libra, is Facebook’s stopped digital currency project. However, instead of using Diem, Facebook announced it would be using a stablecoin called the Paxos Dollar. Novi would allow users to send and receive money using the Paxos dollar, with Coinbase as their custodian partner.

3. Worldcoin scans people’s eyes in exchange for free cryptocurrency

Silicon Valley tech millionaire Sam Altman has launched a new startup called Worldcoin that claims it will provide free cryptocurrency to those who verify their accounts through an iris scan.

Worldcoin says it has shipped its scanning devices to people in 12 countries.

Once users log in by scanning their irises, the image is encrypted and converted into a unique code, while the original data is erased to protect users’ privacy, Worldcoin told CNBC. Afterwards, the users will receive the cryptocurrency from Worldcoin for free.

Worldcoin has accumulated over 100,000 users worldwide and is adding 700 more every week. The start-up aims to reach 1 billion users by 2023.

4. Robinhood’s crypto wallet waiting list exceeds 1 million customers

During CNBC’s Disruptor 50 summit on Thursday, Robinhood CEO Vlad Tenev said that the trading app’s crypto wallet waiting list is more than 1 million customers.

“You can have a wallet, you can send people cryptocurrencies from that wallet to their wallet,” Tenev said. “The technology has certain advantages that somehow make it globally and by default available, and that makes it very interesting.”

Last month, Robinhood announced that it was testing a wallet feature that would allow investors to trade, send, and receive cryptocurrencies. Users can also move cryptocurrencies in and out of the Robinhood app.

5. Mastercard says that every bank or merchant in its network will soon be able to offer crypto services

On Monday, CNBC reported that Mastercard will soon allow banks and merchants on its payment network to incorporate cryptocurrency into their products.

These include bitcoin wallets, as well as credit and debit cards, which users can use to earn cryptocurrency rewards or spend cryptocurrency.

Mastercard partners with Bakkt, a digital asset platform that provides custody services to those who sign up.

6. Nigeria’s Central Bank Digital Currency Goes Live

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Cryptocurrency

New Ethereum-to-Cardano Bridge Will Provide NFT Creators Eco-friendly Options

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Bondly announced a new functionality on the Cardano blockchain aimed at creators. Energy consumption has been a major issue on the Ethereum network, especially given the increased use of the blockchain in recent months. The developers behind the project have been working to bring the network to proof-of-stake, but that’s still a year away.

In the meantime, the Ethereum blockchain is still using a proof-of-work mechanism that takes a lot of energy to confirm transactions on the network. So Bondly has introduced a new solution for NFT makers who may be looking for more sustainable and environmentally friendly options for their creations. At the same time, however, you don’t want to lose the NFTs that they already minted on the Ethereum blockchain.

Related reading |

Bridges between two worlds

In his announcement, Bondly says his official Ethereum-to-Cardano bridge will allow developers to choose a greener blockchain for their NFTs. This bridge allows creators to move their NFT creations from the Ethereum blockchain to the Cardano blockchain.

In terms of energy efficiency, the Cardano blockchain is four million times more efficient than Bitcoin. Ethereum is said to consume Columbia’s energy equivalent, while Cardano’s energy consumption is equivalent to that of a single family home. This will create a greener, greener network for creators who are concerned about the environmental impact of blockchain usage.

Related reading | Cardano loses 3rd place in the Crypto Top 10, why it can drop even more

Bondly announced that through this partnership with IOG NFT creators, it will provide a way to easily transfer NFTs imprinted on the Ethereum blockchain to Cardano without the risk of losing a transaction or paying high fees for wire transfers.

Cheaper on Cardano

Aside from their work on an environmentally friendly blockchain, the creators don’t have to worry about the high fees that the Ethereum network has become known for. With the bulk of NFT minting happening on Ethereum, network fees have skyrocketed, drying up smaller creators who can’t afford these high fees. However, this is not the case with Cardano.

ADA price struggles at $ 2.13 | Source: ADAUSD on TradingView.com

The network prides itself on having low fees for every transaction carried out on the blockchain. In addition, the network also provides NFT builders with price predictability and stable transaction costs, eliminating ever-increasing fees and the fear of lost transactions due to insufficient gas charges to cover a transaction.

The bridge is slated to launch in 2022 and to celebrate its launch, Bondly will be releasing a special series of eco-friendly NFTs on the network. Harry Liu, CEO of Bondly, said; “The creation of a cross-chain NFT bridge between Ethereum and Cardano marks a crucial moment in the transition from legacy blockchain technology to one of the most anticipated “third generation” networks. As one of the pioneers of the NFT movement, we continue to play a key role in building the infrastructure that will usher in the next phase of the NFT evolution. “

Related reading | Cardano enters the Babbage era after the Alonzo HFC milestone

Liu isn’t the only one who loves the bridge. Cardano founder Charles Hoskinson expressed support for the project. “We built Cardano with energy efficiency in mind, which is why this partnership with Bondly is so critical,” said Hoskinson. “We believe that blockchain will only achieve mass adoption if end users have a seamless experience regardless of which blockchain they are using, whatever bridges like this one will achieve.”

The founder has always believed that interoperability will be the future of the blockchain industry and that stance is reinforced with the new partnership with Bondly.

Featured image from Bitcoinist, chart from TradingView.com

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Cryptocurrency panel discusses innovation, investment opportunities – Oakland News Now

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Oakland news now –

Cryptocurrency Panel Discusses Innovation, Investment Opportunities

– YouTube channel video with the logo in the top left corner of the video. OaklandNewsNow.com is the original blog post for this type of video blog content.

Crytpo #bitcoin #investingincrypto #YFAMS #YahooAMS Jennifer Schonberger from Yahoo Finance hosts a comprehensive discussion on cryptocurrency with three …

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Note from Zennie62Media and OaklandNewsNow.com: This video blog post demonstrates the full and live operation of the latest updated version of an experimental Zennie62Media, Inc. network for video blogging systems for mobile media launched in June 2018 by Zennie62Media, Inc .s new and innovative approach to news media production. What we call “The Third Wave of Media”. The uploaded video is from a YouTube channel. When the YouTube video channel for Yahoo Finance uploads a video, it is automatically uploaded to the Oakland News Now site and Zennie62’s own social media pages and formatted automatically. The overall goal here is, in addition to our smartphone-enabled real-time reporting of news, interviews, observations and events anywhere in the world and within seconds, not hours – the use of the existing YouTube social graphic on any topic in the world. Now messages are reported with the smartphone and also by advertising current content on YouTube: There is no need for heavy and expensive cameras or even a laptop or a camera team to film what is already on YouTube. The secondary goal is faster and very inexpensive production and distribution of media content. We found that there is a discrepancy between post length and time to product and revenue generated. This means that the problem is much smaller, but by no means solved. Zennie62Media is constantly working to improve the system’s network encoding and is looking for interested content and media technology partners.

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