Monitoring the Crypto Bubble

Where do you think we are in the crypto bubble?

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Tether is only 3% backed by cash per Tether. The rest of the backing is unknown.

USDC attests to having approved investments backing them but no official audit has been done.

Maybe this is why regulation is coming?

I suspect Bitcoin price will go down on when regulation arrives.
 
Stablecoins should have be audited if they claim to be backed by reserves. None of the stablecoins have provided a recent audit.

Seems suspicious to not want to be audited and prove that your stablecoin is legit.
 
tdtwedt said:
Stablecoins should have be audited if they claim to be backed by reserves. None of the stablecoins have provided a recent audit.
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That's one of the regulations you're expecting? Fair enough, banks and other institutions do need clarity around the risks involved before they can pile in to the market.

In the event that Circle and Tether et al are audited as part of a new regulatory framework, if the audits agree with the existing published independent accountant's reports then it would likely push the price of crypto assets higher. Of course, if the audits find that Tether and Circle have been fraudulent, then it would have a negative impact on the market until the issue is resolved.

Any other specific regulations?

Cross border transactions is an interesting one. Particularly as it relates to the USD. Any comment on that?
 
No. That is my only requirement.

Any cross-border transaction will be monitored somehow by somebody in order to catch tax dodgers.
 
tdtwedt said:
Any cross-border transaction will be monitored somehow by somebody in order to catch tax dodgers.
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The use of USD denominated stablecoins for cross border transactions poses a perceived* threat to USD dominance in the world. This is what Powell is most concerned with.

*edited
 
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Per your chart the US bonds are being monetized by the Fed. It wouldn't take much for foreign countries to dump US debt like Russia already has.
 
I would say dumping US debt is an act of financial aggression, and would never be comtemplated by US allies. Russia has done so, but they aren't allies, and China dumping would be an act of war. I think China, instead, just don't roll over their US debt, but I could be mistaken
 
tdtwedt said:
Per your chart the US bonds are being monetized by the Fed.
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Remittances from The Fed to Treasury fall far short of the debt issued.

tdtwedt said:
It wouldn't take much for foreign countries to dump US debt like Russia already has.
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Russia's holdings were pretty small compared to worldwide standards, the sale made no difference at all to the bond market. The same would apply to most countries if for some strange reason they decided to sell their US Treasury bonds.

Now if China or Japan tried it, it would create an avalanche of ever lower prices, that's if they could find enough buyers, the end result being that these countries would carry huge losses.
 
Polar.bear.Stacker said:
China dumping would be an act of war.
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Upon themselves.

David Llewellyn-Smith said:
The yuan would soar against the USD and its exports to the US would take a caning. Moreover, competitively devaluing against everybody else would lose China their support. China’s supposed leadership in the free trade values battle would become a running joke and giving everyone an excuse to join US tariffs.

Worse, as Michael Pettis has pointed out many time, for China every external Treasury asset has a corresponding domestic liability. To reverse this suddenly would effectively deliver China a domestic fiscal credit crunch, crashing investment and destabilising its own vast debt mountain.

In these circumstances the result is more likely to end in a huge boost to US Treasury buying as markets crash even as Chinese domestic demand craters. Even more ill-advised.
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https://www.macrobusiness.com.au/2018/04/can-china-dump-us-treasuries-live/
 
This is from today. It adds to the discussion because they did not answer the questions on the interview. They said any audit would be months away.

Do you defend their answers?
 
tdtwedt said:
Do you defend their answers?
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I’m happy with their answers:

1. the market obviously trusts them because it’s the 3rd biggest crypto, and

2. like a gazillion other private companies they have a policy of privacy around their commercial partnerships
 
If they are the third largest crypto because of fraud then that is a problem. They claim they are for transparency but it does not appear so by their actions.

To claim privacy to escape an audit is suspicious.
 
tdtwedt said:
If they are the third largest crypto because of fraud then that is a problem.
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Which is why they said the market has spoken and obviously trusts them otherwise they wouldn’t have grown to become the 3rd largest crypto.


tdtwedt said:
They claim they are for transparency but it does not appear so by their actions.
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Not transparent enough for you and other critics. Plenty transparent for the holders of the $62 odd billion on the market.
 
How can the market make a proper decision without a true accounting of their reserves. Do you think the investors in Enron and Madoff's fund knew what they were getting into before the truth came out?
 
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