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27th October 2024 > > WSJ.

tl;dr

WSJ times its latest attack on cryptos for a Friday afternoon to maximise the negative price impact.


Market Snap


Market Wrap

The spot BTC ETFs have seen a net inflow of $3.4bn in the last eleven business days, with just one day of net outflows in that time. This is institutional money, make no mistake about that. The next round of quarterly reporting by investment firms of their holdings of BTC ETFs on behalf of their clients is going to be mightily interesting.


Curious Cryptos’ Meme Corner


Curious Cryptos’ Commentary – Wall Street Journal

WSJ reported on Friday afternoon that the US government is investigating Tether, issuer of the largest stablecoin USDT, for “… possible violations of anti-money-laundering and sanctions rules”.


In some respects, USDT is the biggest weakest link in the crypto eco-sphere. With a market cap of $120bn, a collapse of USDT would be catastrophic for crypto prices, in the short term. The CCC and Tether have had a long-running dispute over the quality of the collateral it keeps to back the issuance of Tether, a battle that has resolved in the CCC’s favour with greater disclosure of the assets, and a marked improvement in the quality of those assets.


What is not in dispute is the phenomenal success of Tether, a company that employs a mere 85 people to produce $5.2bn of profit in the first six months of this year alone. That equates to an annualised profit of over $120mm per employee per annum. My, that is one decent-sized bonus pool.


The source of this extraordinary money generation is the yield on the underlying assets, yield that is kept by Tether. Simply holding USDT in your self-custodial wallet will not give you any income, in contrast to keeping fiat dollars in the bank, or buying money-market instruments. You can of course earn income by lending USDT to any one of a number of defi protocols. Kamino for instance (https://app.kamino.finance/) is currently paying 2.2% on deposits of USDT, though the rates do fluctuate frequently.


The report by WSJ caused an immediate and painful correction to the price of BTC, losing 5% in a very short space of time.


To the naysayers in Warren’s anti-crypto army (better described as an anti-freedom and anti-liberty army), and indeed others in government who are annoyed with themselves they haven’t already personally loaded up on a crypto stash, targeting Tether must look very attractive indeed. What Warren fails to realise is that such a setback would be merely temporary, for the crypto market has taken many disastrous events in its stride, only to re-emerge yet stronger still.


I would also point out that it would be strange indeed if the authorities weren’t continually looking at all the stablecoins. It would be a dereliction of their duty if that wasn’t happening.


So, should we be worried about the health of USDT, and the corporate practice of Tether? Indeed, we should, but only in the short-term.


Next up from the WSJ, the US government is suing the ECB for deliberately supporting money launderers, whilst also facilitating drug dealers and terrorists, by printing the EUR 500 note.

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