The latest #OCC guidance allowing settlement through #stablecoins is exciting but with many side effects. There are threads that link it to the #Bitcoin price and ATHs, #Tether ,#Libra , #JPMorgan #WallStreet , #DCEP. I'm watching out for 6 aspects 👇1/n
1 - What most have caught on to is that stablecoins getting linked to banks will eventually make them more regulated and justify full AML/KYC disclosures. This will eventually be required everywhere, not just in the US. Another impact would be on reserve management..2/n
2 - There are few credible audits on the reserves of stablecoins. This will have implications for the #Bitcoin price. Many are aware that Bitcoin rice pumps are often correlated to heavy #Tether minting and movements from whale wallets. 3/n
#Tether is able to freely mint in huge volumes, because the collateral backing of these tokens is not verified. A 1:1 backing to USD was assumed but a 2019 US Disctrict court case revealed that Tether has about 70% backing to the dollar, some of it being affiliate loans. 4/n
If #stablecoins will now be strictly pegged to the #dollar and monitored, we can expect a lot of pump and dump activity in token prices to subside. Which is good, but it also means the rising #ATH prices will come down as well. 5/n
3 - You think the winners are existing stablecoins but they may not be. The regulation effectively opens the gates to a host of #WallStreet stablecoins. Most banks would want to run their own #stablecoin, manage their own reserves, have an added income stream. 6/n
There will be a flurry of stablecoin creation from major banks and fintechs, those with existing market share and network effects that can increase adoption, could again dominate and crowd out the competition. Blockchain then becomes less of a free market. 7/n
4 - Enter #Libra/#Diem, slated to launch this month with an approval in Switzerland. Their focus is on retail customers, but what if they decide to start out in the US with a #wholesale/ institutional model? They can get banking charters in all states to satisfy a #STABLE Act 8/n
If this happens + #Diem gets to retail usage approvals as well, then we will move from #fintech to techfin - most banks and financial institutions will become irrelevant and #Facebook, with wholesale and retail usage, will become the biggest financial institution in the world 9/n
5 -Does this signal a move to a #digitaldollar? On the surface, it seems the opposite of that. Becuse if the #digitaldollar was coming all USD stablecoins would be made redundant, so why do it? It could perhaps work as a trial run for a wholesale version of the dollar. 10/n
6 - On the inside, a lot of this could be driven by at #geopolitics and the threat being perceived from the #DCEP and #China. As we've evidenced in our 4-part report series on the Digital Yuan, the #DCEP will not just impact the dollar but also #WallStreet. 11/n
Check out our launch event with the #IMF #Coindesk @mikejcasey Governor of the #Bahamas central bank @GovernorCBOB (world's first CBDC #sanddollar) @dgwbirch @PindarWong where we discuss soem far reaching impacts of the #DCEP and #CBDCs in general . 12/n
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