Posted In:

Blockchain, Bitcoin, Crypto


#278
(Un)stable Coins

Published:

Oct 20, 2018


Source:

Fintech Newsletter

Posted In:

Blockchain, Bitcoin, Crypto

Published:

Oct 20, 2018


Source:

Fintech Newsletter


Share:

A “stable coin” is a digital representation of a normal dollar / fiat unit, created to benefit from the inherent advantages of blockchain which include being peer-to-peer, digitally-native, and cryptographically secured – all while circumventing the wild volatility of other crypto-currencies such as Bitcoin.

The earliest and most ubiquitous “stable coin” to-date has been Tether, otherwise known as USDT, which is supported by the Bitfinex cyrpto-exchange. But this week, the market saw one Tether unit trade as low as 83 cents per dollar, an unsettling move for a coin that is supposed to follow the value of its underlying asset in 1 for 1 fashion.

So what can we infer from Tether becoming “untethered” from its US Dollar peg? And why did other digital assets rally in the face of the news, rather than drop as expected?

In its simplest form, the Tether drawdown was simply a run on the bank – market participants are doubting USDT’s long term viability and are irked by Bitfinex’s lack of audit to prove the existence of the US Dollar reserves that supposedly back Tether. The landscape for stable coins has also continued to become more competitive, with regulated stable coins coming online including the Gemini dollar, Paxos, Basecoin, and TrueUSD.

As these currencies have more visibility, many participants sold their Tether under the belief that it would be de-listed on exchanges in favor of one of the other “stable coin” alternatives. As a result, a counter-intuitive rally occurred driving up crypto prices nearly 10% as investors swapped out of their USDT and into other cryptos.

With Tether on such shaky ground right now, we will have to see what type of USDT "magic" that Bitfinex can pull off...

Portfolio News


Episode 162: Dee Choubey from MoneyLion - John Siracusa interviews Dee Choubey, founder and CEO of portfolio company MoneyLion. Dee discusses the founding story, re-bundling financial services for everyday Americans, and his vision for building the bank of the future. Read more

Impact alignment: client stories to manager integrity - Portfolio company Neighborly reviews common strategies for designing impact investments - particularly the need to understand the client's story and values. "It's not enough to simply check the boxes on the usual quantitative metrics." Read more

(Un)stable Coins


The Hard Fork – weekly market commentary - Portfolio company Tradeblock reviews rumors swirling around Tether's USD backing, the potential impact of interest rates on Circle's stable coin consortium, and the recent entry of university endowments into the asset class. Read more

Novogratz says Tether’s lack of transparency hurts it - As rumors around the stable coin whirl, the Galaxy founder favors custody-supported stable coins such as Gemini dollar given the increased visibility they provide to holders. Read more

Industry News


Insurers act on climate change exposure - Some insurers have started divesting the companies they deem responsible for climate change in the first place and adopting a more aggressive approach to ethical, social and governance (ESG) investing. Read more

Barclays to challenge Goldman’s Marcus in US retail banking - Barclays International has said they would “leverage Barclays’ UK knowledge and expertise” to create a current, or checking, account for its US online bank, which already offers credit cards, savings and loans to 13m customers. Read more

SEC ruling takes aim at stock-exchange profits - The SEC has unanimously ruled against Nasdaq and NYSE in a 12-year dispute over the exchanges' desire to raise prices when selling market data to Wall Street banks and traders. The ruling casts doubt on a source of revenue that has helped substitute for declining trading-fee income. Read more

After five-year stealth project, Fidelity goes big with standalone company - In a goal to make digitally-native assets more accessible to investors, Fidelity Digital Asset Services will be a place to trade and custody crypto with advisors, hedge funds, and family offices very much in mind. The offering will likely compete with NYSE's Bakkt and OTC desks run by DRW/Cumberland and Circle. Read more

Not every company is a technology company - Whilst banks fight to become “technology companies,” the FT argues that a financial institution that wants to live in the future better be in “communication services.” These days we talk to the technology hidden in our phones, our cars, our banks, our shops and our household appliances - and they talk back. Read more

Bank of England tells institutions to prepare for climate change - The BoE wants to get banks to better analyze the risks, such as what impact a flood might have on their mortgage portfolio, in ways that insurers already do. Read more

Palantir weighs IPO valued at as much as $41b, WSJ says - The enterprise AI company co-founded by Peter Thiel has engaged Morgan Stanley and Credit Suisse to potentially join a star studded cast (Uber, Lyft) of 2019 IPOs. Palantir was last valued at $20bn in its 2015 funding round. Read more

Report: Amazon captures 30% of online grocery spending - Amazon currently accounts for 30% of all online grocery spending in the U.S., according to a recent survey. No other retailer even comes close to this domination, as all other supermarkets combined make up another 30% while mass merchandisers claim 13%, other online retailers 11% and club retailers just 6%. Read more

What I loved about Paul Allen - From Bill Gates blog this week on the passing of Paul Allen, “I met Paul when I was in 7th grade, and it changed my life.” Read more

Select Financings


Adhara - South African based multi-currency liquidity management startup has raised $15m of venture financing from Consensys. Read more

Cobo - Beijing based military grade cryptocurrency hardware wallet has raised $13m Series A led by DHVC and Wu Capital. Read more

FundGuard - New York-based AI platform for investment funds raised a $4m Series Seed from Blumberg Capital and LionBird. Read more

ProducePay - Los Angeles provider of short-term financing and payments options to fresh produce farmers has raised $14m of Series B funding led by Anterra Capital. Read more


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