Crypto Weekly: Regulation, banks, and mayors seek attention

Crypto Weekly: Regulation, banks, and mayors seek attention

Cryptocurrencies 10 minutes to read
Mads Eberhardt

Cryptocurrency Analyst

Summary:  The crypto market has undoubtedly been the subject of growing attention the past year, which has arguably placed the industry in the eyes of regulators, banks, and surprisingly US mayors.


Biden administration urges regulation on stablecoins

For some time, we have discussed potential stablecoin regulation, and the impact it could have on the broader crypto market. Stablecoins are essential for the crypto market as they serve as the cogwheels in decentralized applications and the overall liquidity of the market due to the most liquid pairs being quoted in stablecoins. The market capitalization of stablecoins having grown by around 4.5 times year-to-date reaching $134bn catching the attention of regulators. Last week the highly anticipated report on stablecoins by the Biden administration’s President’s Working Group (PWG) was released. The report itself was fairly positive on the role stablecoins can play in society going forward by supporting faster, more efficient, and more inclusive payment options, as described by the report. Somewhat surprisingly, the report moreover described decentralized finance (DeFi) thoroughly, and how stablecoins act as an essential part of the growing market of decentralized applications.

Not only have stablecoins caught the attention of regulators but also decentralized finance, emphasizing that we will likely see further attention on decentralized finance going forward, which can highly influence the market. On a final note, the report shortly mentioned Dai, a fully decentralized stablecoins, backed upon other cryptocurrencies. The interesting matter concerning Dai is that regulators are substantially more constrained on regulation as Dai is fully backed decentralized, not by holding fiat in a bank account such as the largest stablecoins issuers Tether and USDC do. The recommendations of the report only applies to Tether, USDC, and other fiat-redeemable stablecoins. By what means regulators intend to regulate fully decentralized stablecoins such as Dai remains uncertain.

In regards to fiat-redeemable stablecoins, the report urged the Congress to promptly comprehensively regulate those as “the absence of appropriate oversight presents risks to users and the broader system”, as pointed out by Secretary of the Treasury Janet L. Yellen. Most notably, the report recommends that stablecoins issuance is limited to solely banks. By limiting it to banks, the issuance will to some degree be covered by the traditional regulatory framework, effectively giving respective US government agencies greater jurisdiction over the issuance. Both Tether and USDC were rather positive on the recommendation as it essentially gives regulatory clarity. The latter has recently stated that it intends to become a full-reserve national commercial bank. The first mentioned Tether has multiple times been in a negative spotlight of regulators, recently being fined $41mn by the Commodity Futures Trading Commission (CFTC).

Banks are embracing crypto

During the past year, we have witnessed several large banks such as JPMorgan Chase, Goldman Sachs, BNY Mellon, and Morgan Stanley making their entry into the crypto market with various crypto-related offerings. Last week, Thailand’s oldest and largest bank by market capitalization, Siam Commercial Bank, joined the aforementioned banks by announcing its intention to acquire a 51% stake in Thailand-based crypto exchange Bitkub. The acquisition comes with a price tag of THB 17.85bn, or roughly $536.7mn. Bitkub is one of the largest exchanges in Thailand. It is one of the few exchanges in the country operating with regulatory approval. The bank’s chief executive officer, Arthid Nanthawithaya, said the acquisition will help the bank enter a “new competitive arena that will emerge very quickly in the next three to five years.” The acquisition is subject to approval from the Thai Securities and Exchange Commission and the country’s central bank.

Australia’s largest bank, CommonWealth Bank of Australia, also announced last week its intention to let clients trade cryptocurrencies through its app. It is the first major bank in Australia to enable clients to trade cryptocurrencies, which include Bitcoin, Ethereum, and Litecoin. The bank intends to launch the product broadly to clients during 2022.

A race to get paid in Bitcoin

Regulation and banks aside, some US mayors have said in the public race that they will receive their salary in Bitcoin to virtually promote their cities as crypto advocates. First, the long-time crypto advocate Francis Suarez, serving as Miami’s mayor, stated that he will take his next paycheck in Bitcoin. Following in his footsteps, the newly-elected mayor of New York City Eric Adams announced that he will be paid entirely in Bitcoin for his first three paychecks with the following statement: “NYC is going to be the center of the cryptocurrency…”. Eric Adams later stated that schools should teach students the topic of cryptocurrencies. To top it off, the mayor of Tampa in Florida Jane Castor announced on Friday that she is willing to accept a paycheck in Bitcoin.
Source: Saxo Group
Source: Saxo Group

Quarterly Outlook

01 /

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...

Disclaimer

The Saxo Group entities each provide execution-only service, and access to analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Inspiration Disclaimer and (v) Notices applying to Trade Inspiration, Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular, no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Trading in financial instruments carries risk, and may not be suitable for you. Past performance is not indicative of future performance. Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/en-sg/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Markets or its affiliates.

Saxo Markets
88 Market Street
CapitaSpring #31-01
Singapore 048948

Contact Saxo

Select region

Singapore
Singapore

Saxo Capital Markets Pte Ltd ('Saxo Markets') is a company authorised and regulated by the Monetary Authority of Singapore (MAS) [Co. Reg. No.: 200601141M ] and is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms & Risk Warning to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products such as Margin FX products may result in your losses exceeding your initial deposits. Saxo Markets does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Markets does not take into account an individual’s needs, objectives or financial situation.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-sg/about-us/awards.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website are not intended for residents of the United States, Malaysia and Japan. Please click here to view our full disclaimer.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.