Welcome to the daily crypto news :
‘Libra Will Never See The Light Of Day’: Monetary Historian ;
Bitfinex Must Face New York Allegations Over $850M in Lost Funds, Appeals Court Rules ;
Tether Blacklists 39 Ethereum Addresses Worth Over $46 Million ;
The United States Has to Upgrade the Legacy Financial System ;
Economic historian Barry Eichengreen believes that stablecoins are either too fragile, or too expensive, to emerge as a dominant monetary form.
UC Berkeley professor Barry Eichengreen argues that Facebook’s planned Libra stablecoin faces too many “insoluble” problems, and too much resistance from governments, to ever launch.
“Libra is an interesting idea that will never see the light of day,” he told the Unitize conference on July 10.
Eichengreen asserts that the stablecoin sector is largely ignorant of monetary economics and history. He said his economic work had led to invitations “to a series of lunches at excellent San Francisco restaurants with the founders and funders of prospective stablecoins.”
“My conclusion was that my luncheon companions knew all about blockchain, but they didn't know much about monetary economics,” Eichengreen said, emphasizing they’d been unaware of past speculative attacks on pegged exchange rates.
Eichengreen said that:
“Stablecoins are either fragile — they are prone to attack and collapse if they are only partially backed or collateralized with actual dollars or dollar bank balances, or they are prohibitively expensive to scale-up if they are, in fact, fully or over-collateralized.”
Cryptocurrency exchange Bitfinex will have to face allegations from New York State that it hid millions in lost funds, according to a ruling by the State Supreme Court’s Appellate Division on Thursday.
New York prosecutors alleged in April 2019 that Bitfinex lost $850 million in client and corporate funds, and then used money from affiliated stablecoin Tether to cover the loss. Bloomberg first reported the ruling.
iFinex, which operates both Bitfinex and Tether, argued the funds had been deposited with a Panama-based company and were later seized by authorities in different countries. The firm had earlier also said that it has been working to recover the funds seized by the Portuguese, Polish and American governments.
In its decision, the appeals court rejected the argument that Tether was neither a commodity nor a security, and affirmed that the stablecoin falls under the court’s jurisdiction.
“Not even virtual currencies are above the law,” New York Attorney General Letitia James told CoinDesk in a statement.
As it’s headquartered in Hong Kong and registered in the British Virgin Islands, Bitfinex had also argued that it does not fall under the jurisdiction of state authorities and doesn’t cater to local traders.
Just after 100,000 in USDC were blacklisted by Centre, Tether blacklists 46 million Tether in Ethereum addresses.
Tether (USDT) has blacklisted 39 Ethereum addresses worth $46 million in USDT, with 24 holding a total of over 5.5 million USDT being blacklisted this year. This revelation comes on the back of Centre’s first blacklisting of an Ethereum address holding $100,000 USDC.
Ethereum researcher at Horizon Games Philippe Castonguay used Dune Analytics to create a dashboard that tracks the number of addresses blacklisted by both Centre and Tether. The largest address holds over 4.5 million USDT and was only recently blacklisted on April 5.
39 addresses blacklisted by Tether. Source: Dune Analytics
Slow-roll regulations in the United States may leave Americans behind in the financial innovations’ running.
When the United States government voted in stimulus payments to its citizens in the wake of COVID-19, to say it went well would be… categorically untrue. From delivering checks to the deceased to the simple fact that most people would have to go to a bank to cash a paper check during a viral pandemic, it became clear that our financial systems are not prepared for this.
As countless Americans struggle to stay afloat, the effects of COVID-19 have confirmed what many have suspected for years now — this system was not built to keep up with the needs of 21st-century users. Even before the coronavirus, the legacy financial system limited the capacity of the U.S. to grow in the modern financial world. Credit cards take several days to process, and when they do, small businesses are left to foot the exorbitantly high processing fees.
However, as those who are already familiar with digital assets know, a solution does exist. A digital asset system can fix many of the failings of government to rapidly and efficiently transmit money through its economy to get to those hard-to-reach spots that are underserved in the economy. In a range of financial services sectors, the legacy system could be supplanted.
Looking at the payments and transfers sector, China is perhaps the best case study for effective practice. Here, almost 800 million people already use mobile payments for a vast array of services conducted through digital payment systems run by private companies like Tencent and Alipay. These mobile payments provide a seamless user experience for Chinese citizens, many of whom were only pulled out of abject poverty in the last few decades and have limited financial literacy.