Tether/Stablecoins are the hot air inside the Bitcoin bubble...their regulation will burst it

letitroll

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Under $30k - watch out below

Stablecoin scam looks like its going to get busted very soon......yes the scam where only 3% of a stable coins value is actually held in USD (if you even believe that) the rest is a credit fund that wouldn't get a junk rating from S&P......this little 'trick' has allowed huge liquidity to bid up crypto assets.......as effectively the Tether folks.....'print' USDT adding liquidity into the cyrto closed loop world bidding everything up........so yes bitcoin supply remains stable....but the key exchange instrument for it gets printed like Jerome Powell on speed
 

letitroll

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Hi letitroll

I thought that there had been a big investigation and nothing was found?

Is there some news?

Brendan
Hi Brendan - alot has been found and is still being found out about the shady structure of the various stablecoins. Tether the most dominant one has basically seen a drip drip of information come out about how its structured & what proportion of FIAT is held in trust and what portion is 'at risk'.

New York attorney general took them to task a few months ago:

The latest news is Yellen et al making moves to aggressively step into the space........this alone.......will see excess liquidity pulled out of the crypto closed loop deflating everthing inside it.....as tether et al cant help support the levering up of individuals in crypto world
 

tecate

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Hi letitroll

I thought that there had been a big investigation and nothing was found?

Is there some news?

Brendan
@letitroll doesn't have news - just hearsay. There's an entire separate thread on this already. The multi-year NYAG investigation reached a settlement with no admittance of wrong doing.
As I've always said, I have no desire or motivation to put Tether/Bitfinex on my christmas card list. They're a centralised entity so there can always be an element of risk on that basis. However, Tether Truthers have been going on with this (i.e. USDT is being issued to prop up btc price) for years without being able to produce a shred of evidence. Either produce the evidence or zip it.
The use of leverage in crypto is unfortunate - but that has little to do with tether. 100x leverage is available for the clowns that want to use it - via offshore exchanges. Normal market participants who take a longer term view in crypto don't care for this type of activity. However, it happens and will continue to happen and the inevitable happens every time (ultimately, those positions get liquidated).

@letitroll - you told us that bitcoin would be outlawed because of concerns about ransomware attacks. Are you now saying that you dont believe that anymore and you've switched to regulation of stablecoins as the gift that will take btc down for good?
 
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letitroll

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@letitroll - you told us that bitcoin would be outlawed because of concerns about ransomware attacks. Are you now saying that you dont believe that anymore and you've switched to regulation of stablecoins as the gift that will take btc down for good?

@tecate we did this already for like 15 pages of this thread!

I thought I made it clear. I'll explain it one more time. I said that OECD countries will ramp up regulation and controls, up to and including outlawing certain institutions and/or activities (see Binance etc.). This ramping up of regulation will remove BTC's two main use cases - rampant unconstrained levered speculation & ilicit activity.

When these two cases are removed BTC will fall in value 80-90% from its peak I think is what I said......never to reach its all time high ever again. BTC will be choked to almost lifelessness......by bureaucrats and politicians doing what they do best.......layering on rules/regulations/AML/KYC/FATCA etc etc.

Since we started our little conversation I'm very happy with how my thesis is playing out.....everyday I see the US, UK, China & EU inching its way towards exactly what I layed out for you a couple of months ago. Step outside of your crypto news bubble and smell the roses......Uncle Joe, Auntie Angela & Brother Xi are tightening the noose every day that passes.
 

letitroll

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Yep I'm calling it....and have called it......but lets be clear what exactly I'm calling before you put words in my mouth.......................Bitcoin down 80%-90% from its peak 2021 price (& never to return to that level $63k all time high again EVER!) This will happen in the next 12 months (some store of value :) )......this will be chiefly caused by coordinated G7/20 action which will reverse and choke off bitcoin's, heretofore, ignored, slow progressing integration into the traditional financial system......on ramps / off ramps as the crypto world likes to call them will be severely harshly limited/regulated. Negating its usefulness as a vehicle for at best speculation at its worst crime/tax evasion, terriorsim and ransomware.....when these use cases are removed from the BTC market.....its true "value" as a trading sardine will be revealed. The BTC 2021 hangover is gonna be beauty - trust me.

There you go see you in a year @tecate and then in five year intervals after that.....I've set my calendar to come back and visit you & @WolfeTone
@tecate .......as I said 15 pages ago.....dont want to explain it a third time....I cant be any clearer in what I'm saying

Also worth noting that I'm well over 50% of the way to my prediction of 80% drop in BTC's value within 12 months of the above post.....I expect a fairly steady drip drip drip of regulatory & control news over the coming months in US/EU/UK & China. I'd say things are actually ahead of the schedule I had in my mind. It will be a thousand cuts for BTC's value.
 
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tecate

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I thought I made it clear. I'll explain it one more time.

Your focus was on ransomware for the most part. You'd never mentioned tether ever before, much less the allegation that tether is printed in order to boost btc price.
As regards the suggestion that leverage will be driven out, I'm encouraged to think that this can be achieved. I mean, I'm unsure to what extent it can - but for any normal stakeholder in crypto, crazy leverage going away is good for everyone. However, please note that if you think that somehow nails btc price to the floor, that's not the case.
And what of leverage in the conventional market? You think there isn't any? That's not what I'm being led to believe. In fact, speculation is that its about to become an issue - which will probably bring crypto down with it - but we've been here before - I'm not going to judge it on short term events.

Since we started our little conversation I'm very happy with how my thesis is playing out.....everyday I see the US, UK, China & EU inching its way towards exactly what I layed out for you a couple of months ago. Step outside of your crypto news bubble and smell the roses......Uncle Joe, Auntie Angela & Brother Xi are tightening the noose every day that passes.
If its all the same to your good self, I'll retain the humility to accept that I could be entirely wrong and that you could be entirely right. However, I have not seen anything that suggests there's a show stopper over the longer run where btc/crypto is concerned. The good chairman has done the industry a solid. The US is now the largest geographic hub for bitcoin mining. With this redistribution, mining has become greener - much greener than the energy mix that went into your last post. Over the course of our 'little conversation', I pointed out to you that there would be many twists and turns where regulation is concerned to come - and that's what we're seeing.
What happens in the US is probably of greatest interest in all of this and I really can't see them banning it. Both houses contain enlightened people and dinasaurs but the latest installment on the subject I found encouraging on the whole. Uncle Joe will be printing more $$ - that is a given - and that will manifest itself where btc is concerned. All in good time.
 
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letitroll

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"Show stopper" @tecate....your not reading or understanding my posts.........I'm trying to help you understand that there will be no showstopper moment that the BTC crowd can rally against.......no Joe Biden in the Rose Garden saying Bitcoin is banned because of ransomware attacks....no link I can point you too....get that idea out of your head and certainly dont assign it to me or my posts.........the way 'the system' works is by slowly constricting and starving its target of oxygen using the various apparatuses of the state......DOJ, FTC, SWIFT, FED, FINRA, SEC, ECB, ESMA, FCA..........your comment on the ebbs & flows of regulation is interesting.......you havent spotted the change in the mood music since Colonial/JBS & HSE attacks.....see BTC/crypto has been a sideshow & the ebb and flow you mention is because frankly, up until this point, regulators / leaders had better things to do than take a philosophical position on BTC. The change I've detected is because national security has been threatened, more importantly US national security...........& the USA's return to multilaterlism & global institutions has brought global coordinated action back in fashion (see global minimum tax rate). I can assure you that regulators/political leaders have now been forced to take a view on BTC/cypto and that view is being led by US leadership and it isnt positive ..............Operation Constriction has begun.................I can assure you.

The only way I'm wrong on BTC's price is if indeed it really is being used mainly by people as a store of value and a medium of exchange & I've totally miscalculated how the level of speculation/illicit activity is supporting BTC's price at $63,000 and at whatever it is today $29,000.
 

tecate

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"Show stopper" @tecate....your not reading or understanding my posts.........I'm trying to help you understand that there will be no showstopper moment that the BTC crowd can rally against.......no Joe Biden in the Rose Garden saying Bitcoin is banned because of ransomware attacks....no link I can point you too....get that idea out of your head and certainly dont assign it to me or my posts.........the way 'the system' works is by slowly constricting and starving its target of oxygen using the various apparatuses of the state......DOJ, FTC, SWIFT, FED, FINRA, SEC, ECB, ESMA, FCA.
I never necessarily referred to one event, one agency or one jurisdiction exclusively over the course of our discussion. So if you'd like to take a view with regard to action being taken relative to one jurisdiction/agency or multiples, that's fine. However, you had very much led with the whole ransomware deal. If you're saying that there will be a reaction on that basis but it won't be explained away directly, I guess we'll see.


.your comment on the ebbs & flows of regulation is interesting.
I'm not sure why you're only taking notice of that now. I said that there would be every type of regulation on the way - the good (progressive), the bad & the ugly (backward). We had that with the last US administration - positives and negatives. We have that again now with the current administration. That's the game that will play out over the coming years.


you havent spotted the change in the mood music since Colonial/JBS & HSE attacks..
We've been over that - and you've been joining dots based on your own assumptions here - not on the reality. The whole ransomware deal is how superpowers kick each other in the nuts these days. As regards the HSE, its shameful that given umpteen opportunities to acknowledge HSE admin had to take responsibility for its failings, you failed to recognise that.


.see BTC/crypto has been a sideshow & the ebb and flow you mention is because frankly, up until this point, regulators / leaders had better things to do than take a philosophical position on BTC.

Don't you worry - I agree. It still only has a piddly market cap. However, the good thing is that the industry is a hell of a lot farther on these days. You've chimed back in on Yellen/Stablecoin pressures. Have a look at the work visa are doing with stablecoins. Stablecoins are not going away - they're here to stay and whilst she can cause problems in the short term, over the longer run, there is nothing that Yellen can do to stop that. USDC attestations came out yesterday. USDT attestations are due - and they all need to become increasingly more transparent in this regard. This isn't a bad thing if there are going to be centralised stablecoins in the picture. Of course, if undue pressure is placed on centralised stablecoins or centralised exchanges, then over the medium term, that may manifest itself in greater efforts re. algorithmic decentralised stablecoins and decentralised exchanges. How does one of your list of agencies take action against a protocol that runs on a decentralised and autonomous basis?


The change I've detected is because national security has been threatened, more importantly US national security...........& the USA's return to multilaterlism & global institutions has brought global coordinated action back in fashion (see global minimum tax rate). I can assure you that regulators/political leaders have now been forced to take a view on BTC/cypto and that view is being led by US leadership and it isnt positive ..............Operation Constriction has begun.................I can assure you.


If you're referring to ransomware once again, then I disagree. These are the games that superpowers play - but the cause is not bitcoin in any way, shape or form. However, if you'd like to think about national interest, think about this...
The good Chairman is a long way ahead in terms of getting his centralised crypto out into the world - and they will try and push trading partners into using it. Here's the irony - bitcoin and usd stablecoins could be front and center in representing US interests over the longer run. Their only concern re. stablecoins should be to ensure that there's no systemic risk. Beyond that, facilitating further use of the usd internationally represents US interests just fine.

The only way I'm wrong on BTC's price is if indeed it really is being used mainly by people as a store of value and a medium of exchange & I've totally miscalculated how the level of speculation/illicit activity is supporting BTC's price at $63,000 and at whatever it is today $29,000.
Not quite. You're dismissive of speculative interest as if its pure evil - presumably on the basis that you've checked this whole crypto thing out and sher, what earthly use is it to me and my buddies - these people are morons! Your scenario is not representative of everyone on the planet - and there's your mistake. Furthermore, we've discussed btc/crypto here on the basis of decentralised money and store of value. We haven't even gotten in to decentralised finance (albeit it was touched on briefly in another thread recently). Even if bitcoin doesn't play the most active of parts in this disruption, it will still be implicated.
Anything that has resembled success for the yanks in more recent times has been as a consequence of them letting innovators innovate. You think a regulator is going to put their neck out and take the blame for standing in the way of progress and handing the win to some other jurisdiction overseas? I expect plenty of wayward crap from regulators as we go along but by and large, they're not going to turn the cart upside down.
 

letitroll

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Let’s chat again @tecate at BTC $19k….when the pieces of the regulatory jigsaw are on the table more clearly…….soon after the writing will be on the wall and the move from $63k to $29k will feel almost glacial compared to the speed of the unravelling that will happen then
 

tecate

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Let’s chat again @tecate at BTC $19k….when the pieces of the regulatory jigsaw are on the table more clearly…….soon after the writing will be on the wall and the move from $63k to $29k will feel almost glacial compared to the speed of the unravelling that will happen then
I so hope you're right because I want to buy some more. :)
 

tecate

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I notice that the thread has been split off - so it's now defined by the claim that tether is being issued simply to pump bitcoin price. There are people who claim this and have claimed this for years. However, can you link to one single piece of evidence that demonstrates such wrongdoing? USDC is the next largest stablecoin by market cap - same question re. them.
Neither of the entities behind these stablecoins are on my christmas card list. If they're complete crooks, I'd like to know as much as the next guy - it would be foolish to ignore that information. Whilst USDT was incredibly significant in making the btc market workable for a number of years, I don't think it would be the end of btc if it got taken out of the equation tomorrow....but it would cause some significant short term disruption.

The problem with the Tether Truthers is they tend to belong to that 'Bitcoin must DiE' community I mentioned a couple of posts ago...which doesn't do a lot for credibility ...unless they present with evidence.
 

Dublinbay12

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Tethers and other stablecoins are vitally important to the cryptocurrency ecosystem currently. Tether is the dominant stablecoin and roughly half of all bitcoin trades are transacted using tether. Tethers dominance is reducing as competitors take market share (USD Coin for example).

Thus as Bitcoins usage increases the liquidity of tether needs to increase as well, hence more Tether is printed to support the increase in trading volume. In fact Tether increased from ~$20bln to $60bln from Jan to July 2021, $40bln of new coins were minted.

Only 3% of Tethers reserve are cash, around $30bln is commercial paper (short term corporate debt) based on statements released by Tether in May. Originally up until 2019 Tether said it held all reserves in cash, subsequently changing that to 'dollar assets'.

So there is a risk with using Tether, as it operates more like a money market fund than a pure cash reserve, and the value can deviate from 1. If people remember in 2008 these money market funds suffered liquidity events requiring the Federal reserve to step in.

Another financial crisis would therefore impact BTC as the value of Tether could dramatically reduce given it is dependent on corporate debt to maintain its value.

Ironically Tether holds some of its reserves in US Government issued Treasury Bills......
 

Duke of Marmalade

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Tether has been a big disappointment to me. My hero (introduced to me by @tecate), Professor Roubini, had promised that the New York investigation would be its denouement and following that bitcoin itself would collapse. NY did find against Tether and fined it $18m (petty cash) and banished it from its sight. But it and bitcoin survived.
As I understand Roubini's accusation, it was that Tether and Bitfinex were operating as their own central bank. Tether could print as many dollars as it liked backed by Bitfinex paper (just like the Fed and the US Treasury). And indeed with only 3% of its balance sheet in actual cash this looks very much like what it was doing (it had earlier lied to having 100% cash backing, you couldn't make it up).
I still live in hope that Roubini will be proven right in the end, that Tether will come as useless as the Lebanese pound and I think that would be even a bigger blow to bitcoin than El Musk having a change of mind.
 

Dublinbay12

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As I understand Roubini's accusation, it was that Tether and Bitfinex were operating as their own central bank. Tether could print as many dollars as it liked backed by Bitfinex paper (just like the Fed and the US Treasury). And indeed with only 3% of its balance sheet in actual cash this looks very much like what it was doing (it had earlier lied to having

Whilst they are minting new coins, they are doing it with the equivalent dollars. The nuance is that instead of holding $1 for $1 tether, they are investing the majority into commercial paper. They are essentially financing short term liabilities for corporations, and this is unsecured debt therefore there is a risk involved. As pointed out during the financial crisis the CP market fell over and investors could not get their money out. So Tether should never be confused as they equivalent of holding US dollars.

There is a conspicuous relationship between Bitfinex and Tether, I believe the founder of Tether is the CFO of Bitfinex and there have been a few loans and misrepresentation of assets and links between the two entities which led to the NY fine.

I understand that the founder of Tether is a former plastic surgeon, so I would be cautious of his experience to run a billion dollar stable coin company.
 

Dublinbay12

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Whilst USDT was incredibly significant in making the btc market workable for a number of years, I don't think it would be the end of btc if it got taken out of the equation tomorrow....but it would cause some significant short term disruption.

USDT remains incredibly significant in making the BTC market workable. Your statement infers that it was historically important but not currently, or am I misreading?

Tether and Other Stablecoins remain vitally important, just look at the last 6 months and the amount of Stable coins minted (300% supply increase of Tether) and the fact that Tether usage accounts for half of BTC transactions.
 

Brendan Burgess

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Folks

This thread is about a very specific issue - read the thread title.

I have moved the posts on other issues to the main thread


From now on, any posts containing off topic material will be deleted.

We don't want every thread to be the same.

Brendan
 

Dublinbay12

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I've just finished refreshing myself on the current situation with 'stablecoins'.

I don't like that Tether has the majority of its dollar assets not held in cash but in unsecured short term debt. This is a risk in itself but given that a large portion of BTC transactions are via Tether the risk is heightened.

In my opinion this ties BTC closer to established financial markets and therefore weakens the case for bitcoin as an alternative separate currency / store of value to fiat currencies and financial markets.

In summary Tethers assets are funding short term corporate debt and thus is at risk of loss. The risk of loss is generally considered small but this entire market was put on its knees with the collapse of Lehman brothers.

This is another risk to consider when looking at BTC and can be minimised either by stablecoins only holding cash or a reduction in the need to use Stablecoins. I can't predict or fully assess how this would impact the Bitcoin price but should a default event happen the value of tether could drop below 1 and a major liquidity provider for the market would be gone.

As of today nonetheless there is a risk.
 
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tecate

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USDT remains incredibly significant in making the BTC market workable. Your statement infers that it was historically important but not currently, or am I misreading?
Where once there was just USDT, now there are a plethora of stablecoins - and within that, CeFi and DeFi stablecoins. There is also much more strength and depth in terms of onboarding and offboarding options where crypto is concerned since back then. All of that to say that USDT going missing for whatever reason would certainly cause disruption within the industry. However, in no way would it be detrimental to bitcoin over the longer run.
 

Dublinbay12

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Where once there was just USDT, now there are a plethora of stablecoins - and within that, CeFi and DeFi stablecoins. There is also much more strength and depth in terms of onboarding and offboarding options where crypto is concerned since back then. All of that to say that USDT going missing for whatever reason would certainly cause disruption within the industry. However, in no way would it be detrimental to bitcoin over the longer run.

DeFi Stablecoins are the way forward but are still relatively immature in adoption and development and have suffered from their own liqudity events and price fluctuations.

Regarding the other stablecoins, USDT remains the dominant by market cap with USDC the next up. However, USDC follows a similar practice to USDT for allocation of its reserve assets. Thus the risk that exists with USDT also exists with USDC, the risk I defined is not mitigated by the fact of there being more stablecoins in circulation.

Stablecoins (USDT, USD, BUSD) etc remain an important part of the Bitcoin Network, for example as of today the top traded pair is BTC/USDT showing that it remains a significant component of the BTC market. Do you disagree?
 
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