1/ THREAD ABOUT A HISTORIC DAY in #bitcoin: #ElSalvador president publicly announced support for legislation to make #BTC legal tender. *IF* it does become law, it wld have many secondary effects. Steel yourselves bc a big fight on this probably coming tho
2/ I dunno anything about politics in #ElSalvador, but the world is about to pressure it given what's at stake (see details below). But before turning to that, SERIOUS HATS OFF🤠to President Bukele, @JackMallers & @Blockstream for pulling this off. Guys this is REALLY big!!! 🙏👋
3/ OK let's dig in. Here's a tl;dr: *IF* #ElSalvador adopts legislation to make #bitcoin legal tender, bitcoin:
* likely gets status as "money" so treated on par w/ foreign currency by banks
* possibly gets "cash" accounting treatment under USGAAP/IFRS (solves #BTC adverse acctg)
4/ That's why this is likely gonna be a knockdown fight: it MAY be a back-door way to enable banks to handle #bitcoin + MAY solve #bitcoin's lower-of-cost-or-market acctg problem. Politicized immigration debate in US probably comes into play too. Incumbents WILL try to block this
5/ What's the big deal--what's "legal tender" anyway? It's a commercial law term (means citizens must accept "X" if offered in payment of an obligation in exchange for delivering property). Legal tender is key to commercial law, which is THE foundational layer of any legal system
6/ In 2018, some in #Wyoming wanted to make #bitcoin legal tender, as Wyoming had already done w/ gold & silver. Article 1 Section 10 of US Constitution mentions gold & silver explicitly, but making anything else legal tender in US requires amending the US constitution.
7/ So, it wasn't possible to make #bitcoin legal tender in the US without amending the US constitution. I thought at the time another country might do it though, & thereby open the door to treatment of #bitcoin as "money" under commercial law + "cash" under acctg rules.
8/ TO BE CLEAR, I'm not an accountant so making an educated guess. Accountants, please chime in!! #bitcoin is treated as an "indefinite intangible" which means lower-of-cost-or-market, but if it's a foreign currency it gets mark-to-market up & down. @michael_saylor will be happy.
9/ And, if I'm right, other corporate treasurers could also buy #bitcoin w/o facing its punitive accounting treatment--they'd now account for it like any other foreign currency. No more adverse accounting=>more companies start holding #bitcoin. But accountants, please chime in!
10/ Back to the law. Commercial law lays out the rights & obligations of parties when exchanging property + establishes a road map for judges to adjudicate disputes. @Andrea_Tosato was first to identify the REALLY REALLY BIGGIE 🎉🚀:
11/ YEP YOU GOT IT--*IF* #ElSalvador does pass legislation to recognize #bitcoin as legal tender, #BTC would v likely become *MONEY* under US commercial law (law.cornell.edu/ucc/1/1-201: "Money means a medium of exchange currently authorized or adopted by a domestic or foreign govt")
12/ What's the significance? Well, it means #bitcoin would gain special status in banking systems globally. Banks would likely treat it as any other foreign currency. #Bitcoin *MAY* get back-door favorable treatment under bank capital requirements (Basel 3, etc).
13/ The knock-on effect of #ElSalvador's announcement is that other countries may now follow. One likely candidate has always been Russia, which has been gradually de-dollarizing since before the 2008 financial crisis. Will be v interesting to watch the foreign policy moves🍿👀🧐
14/ However this plays out, it's a historic day for #Bitcoin & it advances adoption no matter how it plays out. Wonderful for all involved. Congrats to everyone--most especially to the people of #ElSalvador! 🇸🇻💪

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More from @CaitlinLong_

18 Jun
1/ NOT MUCH HAS BEEN WRITTEN yet abt this #stablecoin paper by @bankofengland June 7. I'm just getting to it. Big deal.🧐"HMT propose to bring systemic #stablecoins into BOE's regulatory remit, in line w/ its responsibilities for systemic payments systems"
2/ Yep, I've warned this is an issue central bankers have w/ #stablecoins issued by non-banks:

"A large-scale displacement of commercial bank money by new forms of digital money cld mean a higher fraction of money in economy backed by high-quality liquid assets (HQLA)."
3/ "Commercial banks would have to adapt their balance sheets in response to deposits leaving the banking system...the Bank may wish to limit migration, so financial system could adjust to the presence of new forms of digital money in an orderly fashion." Oh boy, BOE went there.
Read 13 tweets
9 Jun
🧐 Wow this is #ElSalvador’s proposed #bitcoin-as-legal-tender law, English translation
"Article 7: Every economic agent must accept #bitcoin as payment when offered to him by whoever acquires a good or service."

"Article 13: All obligations in money expressed in USD, existing before the effective date of this law, may be paid in #bitcoin."
"Art 14: ...the State will guarantee, thru the creation of a trust at the Banco de Desarrollo de ElSalvador, the automatic & instantaneous convertibility of #bitcoin to USD necessary for the alternatives provided by the State in Art 8."

Oh boy, I see practical problems here tho
Read 5 tweets
8 Jun
1/ I'M PSYCHED to announce new advisors for @AvantiBT, helping design & build services for traditional institutional investors & corporate treasurers, incl @Ford's former treasurer, Neil Schloss, Ford's ex-treasury IT head Bob Cullinan & ex-@blackrock managing director Tim Keefe.
2/ "I see @AvantiBT’s solutions as potential game changers for corporate treasurers."--Neil Schloss, ex-Treasurer of @Ford. "Avanti is building API-based payment solutions...to solve day-to-day problems by seamlessly integrating payments processes w/ treasury cash mgmt systems."
3/ It's a thrill to bring these 3 accomplished execs into @AvantiBT's fold. Tim Keefe is one of the smartest portfolio managers w/ whom I've ever worked, dating back to 1997. He's now "all-in" on #bitcoin & a founder at @LedgerstatC & partner at @OffTheChainCap.
Read 6 tweets
6 Jun
1/ WELL WRITTEN article--thx @Vlajournaliste. A couple of key points: "The assumption that #WallSt matters to #bitcoin is a fallacy because the information frontier is not in New York. It's not in Silicon Valley either. These mkts are decentralized."
2/ "It means at the end of the day that Wall Street will never be able to have [central] clearing for digital assets," she said, "because Wall Street will never be able to get its hands on a sufficient amount of the collateral to create a true clearinghouse."
3/ "She explains that 75% to 80% of #bitcoin and ether, on average, are held by individuals rather than intermediaries, and during bull markets, even less crypto is held by intermediaries." (h/t @nic__carter)
Read 7 tweets
24 May
MORE FED COMMENTS ABOUT #stablecoins. Watch this space--putting pieces together, Fed action is coming:
federalreserve.gov/newsevents/spe… #Consensus2021
"Depending on underlying arrangements, some may expose consumers and businesses to risk. If widely adopted, #stablecoins could serve as the basis of an alternative payments system oriented around new private forms of money."
"Given the network externalities associated w/ achieving scale in payments, there is a risk that the widespread use of private monies for consumer payments could fragment parts of the U.S. payment system in ways that impose burdens and raise costs for households and businesses."
Read 11 tweets
20 May
1/ IT'S CLEAR a US #crypto regulatory crackdown is starting but I'm optimistic bc most of the major players/agencies have spoken already & the policy is taking shape: it's "pay taxes, comply w/ laws & don't take shortcuts, & we'll enable the innovation." It's NOT a "#bitcoin ban"
2/ A clear chronology:🧐
* Fed releases pymt system access guidelines (5/5)
* SEC warns abt #bitcoin futures (5/11)
* Binance IRS/DOJ story in Bloomberg (5/13)
* IRS article in WSJ=warning to pay taxes (5/14)
* FDIC ice thaws--it issues its first RFI (5/17)
3/ ...continuing:
* OCC says reviewing all prior #crypto bank actions (5/18)
* Senate Banking Chairman warns OCC to clamp down on trust bank charters (5/19)
* Treasury Sec Yellen announces big IRS tax compliance push (5/20)
* Fed's Powell plans paper on payment innovation (5/20)
Read 7 tweets

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