The focus of the crypto market is on regulations, banks, and mayors

We have been discussing the problem of the potential regulation of the so-called stable currency stablecoins) and its expected impact on the broadly understood cryptocurrency market. Stable currencies are essential for the cryptocurrency market as they act as gears in the context of decentralized applications and overall market liquidity due to the fact that the most liquid pairs are traded in stable currencies. The market capitalization of currency stabilization increased by about 4,5-fold to USD 134 billion on a year-to-day basis, drawing the attention of regulators. The long-awaited report on currency stabilization was published last week by the so-called presidential working group President's Working Group, PWG) of the Biden administration. The report itself relatively positively it referred to the potential role of currency stabilization in the society of the future, including supporting the faster, more efficient and more inclusive payment options described in the report. Surprisingly, the report also included a detailed description of decentralized finance (DeFi) and the functioning of stabilized currencies as an essential part of the growing market for decentralized applications. 

About the author

Mads Eberhardt, Cryptocurrency Market Analyst, Sax Banks. Cryptocurrency Market Analyst at Saxo Bank. He gained experience as a trader at Bitcoin Suisse AG and founder http://BetterCoins.dk (website taken over by Coinify).

Regulators' attention has drawn not only to the issue of currency stabilization, but also to decentralized finance, indicating a potential continued interest in them in the future, which in turn could have a significant impact on the market. Finally, the report briefly mentioned dai, a fully decentralized stable currency based on other cryptocurrencies. An interesting point about DAI is that regulators are much more limited in imposing regulation because DAI is a fully decentralized currency, requiring no fiat money in the bank account, as is the case with the largest issuers of stabilized currencies - Tether and USDC. Recommendations included in the report they only concern Tether, USDC and other fiat currencies. It is not known how regulators intend to regulate fully decentralized stabilized currencies such as dai.

With respect to stabilized currencies that are convertible to fiat money, the report called on Congress to quickly and comprehensively regulate this issue, as "the lack of adequate supervision poses a risk to users and the wider system", as she pointed out the American Secretary of the Treasury Janet L. Yellen. The report recommends in particular that the issuance of stable currencies should be limited to banks only. The emissions would then to some extent be covered by the traditional regulatory framework, which would ultimately give the relevant US government agencies more control over emissions. Both Tether and USDC responded positively to this recommendation as it would essentially provide regulatory clarity. USDC company she stated recentlythat it intends to become a full-fledged domestic commercial bank. The company Tether, on the other hand, was located many times under the scrutiny of regulatory authorities; recently the US Commodity Futures Commission (Commodity Futures Trading Commission, CFTC) imposed a fine of USD 41 million on her.

Banks are attracting to cryptocurrencies

Over the past year, a number of large banks such as JPMorgan Chase, Goldman Sachs, BNY Mellon and Morgan Stanley entered the crypto market by launching various cryptocurrency-related offers. Last week, the above-mentioned entities were joined by Siam Commercial Bank, the oldest and largest bank in Thailand in terms of market capitalization, announcing your intention acquisition of 51% of shares in the Thai cryptocurrency exchange Bitkub. The purchase price is THB 17,85 billion, or approximately $ 536,7 million. Bitkub is one of the largest exchanges in Thailand. It is one of the few exchanges in the country that operates with the approval of regulatory authorities. President of the bank, Arthid Nanthawithaya, he declared that the takeover will allow the bank to enter "A new competitive arena to emerge very soon in the next three to five years". The acquisition is subject to approval by the Thai Securities and Exchange Commission and the Thai Central Bank.

Australia's largest bank, CommonWealth Bank of Australia, also announced last week intention to allow clients to trade cryptocurrencies through their app. It is the first major Australian bank to allow its clients to trade cryptocurrencies including bitcoin, ethereum and litecoin. The bank intends to offer this product to customers in 2022.

Race for a payout in bitcoins

Regulation and banking aside, the mayors of the US cities started outdo each other in informing, that they will receive their salary in bitcoins to promote their cities virtually as cryptocurrency supporters. Longtime cryptocurrency supporter Francis Suarez, the mayor of Miami, was the first to announce this, declaring that his next payout would be in bitcoin. Subsequently, the newly elected New York City Mayor Eric Adams announced that intends to take its first three Bitcoin payouts, announcing: "New York will become a cryptocurrency center (...) ”. Eric adams he added then, that children should learn about cryptocurrencies in school. Finally, Mayor of Tampa, Florida, Jane Castor announced on Friday that she was willing to accept a payout in bitcoin.