Tether continues to lose market dominance

Tether may currently be stable and may have seen its value return to be even with the US dollar, but this may not last long. The stablecoin held 94% of the stablecoin market at the beginning of 2018 – with only two other stablecoin competitors – and continues to lose ground. Now with eight serious stablecoins in the market, Tether’s market dominance lies at only 74% and could fall even further.

It seems like everyone wants to launch a stablecoin these days. There is the USDCoin from Circle, Paxos, TrueUSD and even Gemini Dollars. Even the Huobi exchange has gotten in on the fun, launching its HUSD stablecoin. On the surface, they appear to be solid as they’re backed by physical assets such as dollars or gold, but we have already witnessed how easily it is to see a stablecoin come unglued. Not too long ago, Tether saw its price break free from the US dollar, falling at one point to $94.

This past October, the co-founder of CoinCorner, Danny Scott, showed how easy it was for the stablecoins to not hold their value. He said at the time, “This is because they are openly traded on exchanges based on the supply and demand, meaning their price can fluctuate if people are willing to pay less or more for the currency. For example, GUSD (Gemini dollar) was pegged at $1 and actually hit $1.18. Similarly, USDT (Tether) which is pegged at $1 has fluctuated over time and is currently trading at $0.96. So do we think stablecoins are here to stay? Only time will tell, but for now we are not committing to them.”

Tether has had to deal with a series of issues that may have contributed to its decline among stablecoins. It has repeatedly refused to release audits of its holdings, stating that it would be too difficult (even though other stablecoins readily acknowledge that they can provide the data). Its new banking partner, Deltec out of Brazil, is facing an investigation for its possible involvement in a money-laundering scheme. There have also been concerns raised that the stablecoin was used to manipulate Bitcoin Core (BTC) prices last year. 

The case for stablecoins is tenuous, at best. While all cryptocurrency options are still young and the industry needs to be developed, there isn’t much call for an option that can both show volatility on its own, as well as on the asset which backs it.

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Venezuela pushes for Petro as unit of measurement for oil

Venezuela really believes in its Petro stablecoin. Despite not having a stable economy upon which to build its national cryptocurrency, it is working diligently to have Petro seen as a viable cryptocurrency – although most indications are that it will never truly get off the ground. To help it in its cause, the South American nation is now preparing to turn to the Organization of Petroleum Exporting Countries (OPEC) for support.

The Venezuelan media out TeleSur indicates that Venezuela wants OPEC to see the Petro as a unit of account for petroleum and oil. The country’s Minister for Petroleum, and president of the state-run oil company (Petroleo de Venezuela, SA), Manuel Quevado, stated, “We will use Petro in OPEC as a solid and reliable currency to market our crude in the world… We are going for growth and economic prosperity of our country giving a hand to the future since the Petro is a currency that is backed by mineral resources.”

Quevado also asserted that the Petro is a major part of the economic recovery plan of Venezuela and that all products derived from crude oil will need to be commercialized in Petro. “We are going to the growth and economic prosperity of our country giving a hand to the future since Petro is a currency that is backed by mineral resources,” he explained.

It’s hard to imagine the Petro being a legitimate solution. Venezuela is bankrupt due to the actions of one man, the “elected” president, Nicolas Maduro. If he manages the Petro space the way he did the country’s economy, there isn’t much hope for recovery.

The Petro is being criticized by opponents in Venezuela, as well as international groups. The majority of the citizens have begun to turn to other cryptocurrency offerings, such as Bitcoin Core, Bitcoin BCH and Dash, because they don’t trust the Petro, either. In fact, according to some studies, Petro is a mirror image of Dash, meaning the country couldn’t even be bothered to introduce its own alternative; it had to copy something else.

The Petro officially went on sale at the beginning of November. It is available on six different exchanges, all of which were authorized by Maduro. According to Weiss Cryptocurrency Ratings, Petro is a “worthless token.”

The Brookings Institution agrees. It asserts, “[It] is relatively unsurprising that a dictatorship with little reserve currency … has resorted to a deceitful means like introducing the petro … The petro … exists to create foreign currency reserves from thin air.”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Tether’s new banking partner already in hot water

For all of 2018, cryptocurrency enthusiasts have wanted more transparency of the Tether stablecoin. As far back as January, there have been concerns over the coin’s stability, attributed to the fact that it has not been able to hold onto auditors and hasn’t been willing to release financial reports. Most recently, Tether saw its price come unglued, even though it’s reportedly pegged to the U.S. dollar, after news broke that the bank formerly holding the funds that supposedly back the coin, Noble Bank, was having financial difficulty. Now, its new banking partner is the target of regulators, painting a grim picture for the bank, as well as Tether.

According to the Brazilian media outlet O Globo, Brazil’s Deltec Bank & Trust may have run afoul of regulators. There is an allegation circulating that the bank may have been involved in a large money-laundering scheme that involves a Brazilian government official. The official reportedly funneled $25 million through a bank in Panama and then back into Brazil through Deltec. Given that the transfer supposedly took place in a single transaction, many are wondering whether Deltec was involved in facilitating the activity or, at the very least, why it didn’t question the activity.

The investigation into the bank’s activity only further worsens Tether’s stance in the market. Earlier this week, Tether spoke highly of Deltec and said that the partnership between the two entities should be seen as legitimizing Tether. It said at the time, “This included, notably, an analysis of our compliance processes, policies and procedures; a full background check of the shareholders, ultimate beneficiaries and officers of our company; and assessments of our ability to maintain the USD-peg at any moment and our treasury management policies.”

However, that analysis now seems to have been either grossly exaggerated or is non-existent. In either case, it leaves the crypto community seriously concerned about the viability of Tether and whether or not those behind the stablecoin are actually fit to continue to manage its operations. To date, Tether has not been able to produce confirmed records indicating that it definitively holds enough fiat to cover the $1.7 billion in coins currently in circulation and the general consensus is that the funds are nonexistent.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Russia Duma said to be considering launching stablecoin

Venezuela already has its Petro stablecoin in circulation and Peru is said to be next with its PeruCoin, which is expected to be launched soon. Now, it looks like Russia might be considering its own state-backed cryptocurrency.

According to Russian media outlet Govorit Moskva, the state Duma’s Committee on Financial Markets announced this past Friday that it is discussing creating a ruble-backed stablecoin in response to an increase in household debt. Duma member and Chairman of the committee Anatoly Aksakov added in a press conference that the stablecoin would be pegged to the country’s currency on a 1-to-1 basis and that an unspecified bank would issue a set amount of tokens based on a deposit made to Russia’s central bank.

Aksakov stated, “I am convinced that a cryptocurrency will appear, but it will be a secured cryptocurrency. At some bank, a certain amount of money is deposited on the deposit, and the bank issues the appropriate amount of crypto tools. The ratio of this currency will be one to one with the ruble.”

A Russian government-issued stablecoin was first discussed earlier this year and was expected to be made available at some point in 2019. An adviser to President Vladimir Putin, Sergey Glazyev, said recently that there had not been any progress on the stablecoin, but added that its implementation would not be difficult since the framework had already been created.

The fact that a state-backed cryptocurrency could be coming to the Russian economy is more than likely a huge factor in what has seemed like a backtrack on the country’s position toward digital currency. At the beginning of September, police started seizing crypto ATMs across the country.

Later that same month, a regulatory framework for crypto had been discussed by the Duma; however, by the time it made it through the legislative channels, any reference to cryptocurrency had been removed. The cryptocurrency community has become increasingly frustrated with the apparent lack of progress for crypto regulations and decided to begin self-regulation last week. The merits of such an organization could become moot if Russia decides to completely take over the cryptocurrency industry.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Stablecoins are not cryptocurrencies, Japan’s FSA confirms

Japan’s chief financial regulator, the Financial Services Agency (FSA), has said that stablecoins are not virtual currencies under the definition provided in the Payment Services Act, in a statement that could have profound effects on how stablecoins are regulated in the country.

Cryptocurrency laws in Japan were overhauled back in April 2017 with revisions to the Payment Services Act and the Fund Settlement Law, effectively creating a new legal regime for cryptocurrency transactions and businesses.

In particular, cryptocurrencies are deemed to be a means of payment, and as a result, do not attract consumption tax. As such, there may be no obligation for firms issuing stablecoins to register for licenses, though they may need to register for issuing payment instruments.

In a statement to news.bitcoin.com, the FSA set out its position in relation to the status of stablecoins, saying, “In principle, stable coins pegged by legal currencies do not fall into the category of ‘virtual currencies’ based on the Payment Services Act.”

Instead, stablecoins were deemed to be a form of ‘prepaid payment instrument,’ which means a different set of regulations for companies issuing and facilitating stablecoin transactions, compared to those dealing in cryptocurrencies as legally defined.

“Generally speaking, companies need to register as the ‘Issuer of Prepaid Payment Instruments’ or the ‘Funds Transfer Service Providers’ based on Payment Services Act, when virtual currency broker dealers trade stable coins,” the regulator told the crypto news outlet.

The definition also means that transactions of up to JPY1 million, around $9,000, can be processed in stablecoins without the requirement for a banking license, allowing fund transfer services to operate up to that limit with a much lower compliance threshold.

According to the FSA, “When a person/an entity engages in exchange transactions of one million yen equivalent or less in the course of trade, registration as a funds transfer service provider is required. For exchange transactions exceeding one million yen, a license for banking business pursuant to the ‘Banking Act’ is required.”

Stablecoins, or fiat-pegged cryptocurrencies, are designed to tokenize fiat, through providing a price-stable cryptocurrency for transactions on chain.

The clarification from Japanese regulators will provide more certainty for those promoting stablecoins, at a time of increasing interest and development activity around stablecoin projects.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Bitfinex denies insolvency allegations

With the financial troubles of Puerto Rico-based Noble Bank, where dollar reserves of stablecoin Tether are supposedly located, cryptocurrency exchange Bitfinex has felt the need to dismiss claims of insolvency.

“Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this,” the exchange said in a blog post. To support its argument, Bitfinex showed several cryptocurrency wallets it holds for clients. Presented were $980 million worth of BTC, $394 million worth of ETH, and $203 million worth of EOS.

“How any rational party can claim insolvency when the opposite is there for all to see is interesting and, once again, perhaps indicative of a targeted campaign based on nothing but fiction,” Bitfinex said. However, it neglected to shows its balances in fiat currencies, and in Tether, which is supposedly 100% backed by the U.S. dollar.

Bitfinex’s post was a reaction to articles such as one by Medium writer ProofofResearch, who warned Bitfinex users to “remove your money now.” The article cited reports of customers unable to withdraw their fiat balances, of not being able to contact customer service, and of Bitfinex subreddits being deleted where customers claim not having received funds. “[I]t is simply unsafe for anyone to use the Bitfinex exchange or Tether since Tether is directly attached to Bitfinex,” ProofofResearch said.

Tether Limited, which issues Tether, has been linked to Bitfinex due to the same people listed in their articles of incorporation.  After reports of Bitfinex and Tether Limited no longer being clients of Noble Bank, and of the bank being badly in need of funds, Tether’s stability has been once more called into question.

But Bitfinex brushed off such concerns, stating, “Stories and allegations currently circulating mentioning an entity called Noble Bank have no impact on our operations, survivability, or solvency.”

It also noted that its fiat and cryptocurrency withdrawal services were “functioning as normal,” although “[c]omplications continue to exist for us in the domain of fiat transactions, as they do for most cryptocurrency-related organisations.”

Tether Limited has remained dodgy about being subject to an audit, though it procured the services of law firm Freeh, Sporkin & Sullivan LLP (FSS), that said, “FSS is confident that Tether’s unencumbered assets exceed the balance of fully-backed USD Tethers in circulation as of June 1st, 2018.” The same report by FSS also made the qualification that “the above confirmation of bank and Tether balances should not be construed as the results of an audit and were not conducted in accordance with Generally Accepted Auditing Standards.”

Bitfinex had been accused in 2017 of helping pump up the price of BTC to its record high of near $20,000 a coin. BTC is currently trading at about a third of its peak.

The exchange has been hacked several times. An August 2016 hack led to 120,000 BTC, worth about $70 million at the time, being stolen. Tether Limited has also been victim to a hack, with $31 million stolen from the Tether Treasury Wallet last November.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Yet another stablecoin makes its debut via London Block Exchange

A UK-based cryptocurrency exchange has launched a new stablecoin pegged to the pound sterling (GBP), the latest in a series of similar cryptocurrencies to pair one-to-one with fiat currencies.

Launched by London Block Exchange, the stablecoin will officially be known as LBXPeg. The currency will be tied to the value of the pound and backed by funds in an auditable UK bank account on a one-to-one basis.

Dubbed the ‘cryptopound,’ the exchange envisages the currency being used as a utility token, including amongst institutional investors, for facilitating fiat-equivalent peer-to-peer transactions over the blockchain, or for tokenized settlement of OTC trades.

In an interview with Business Insider ahead of the launch, LBX CEO Benjamin Dives explained a number of potential use cases: “We will be ready for the first cryptopound to be minted in the next 10 days. The primary use case will be settlement for OTC trades in the London market, then commonwealth exchanges where they don’t have fiat banking, and then securities tokens who want to pay dividends in a cryptopound.”

LBX launched back in November 2017, and has since gone on to become one of the busiest cryptocurrency exchanges in the UK. In backing the stablecoin concept with the GBP-pegged cryptopound, LBX is signalling its support for the technology and its use cases.

Pioneered by the USD-backed tether (USDT), the stablecoin concept has emerged as a highly functional application of cryptocurrency, secondary to the payments use case demonstrated by bitcoin BCH.

However, USDT has come in for some criticism, notably around a lack of transparency and accountability—criticisms LBX has said it had in mind when creating its fully transparency auditing processes and management structures.

Following the release of the cryptopound, the firm has indicated its intention to explore similar stablecoins for U.S. dollar and Euro.

The announcement from LBX follows after Goldman Sachs-backed Circle announced its USD Coin, a USD-backed stablecoin which aims to improve on the flaws identified in USDT. It comes at a time of increasing interest in stablecoins, and how they can be used in international settlement, dividend distribution, and a number of other specific use cases.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Tether bank “desperate for cash”

The stablecoin Tether may not be as stable as many have believed – not that this would be a huge surprise to some. It would appear that Puerto Rico’s Noble Bank, reportedly one of the major repositories of Tether, is having serious financial issues. As a bank that supposedly holds a 1-to-1 ratio of Tether to US dollars, the fact that the financial institution is “desperately” looking for cash raises a number of questions.

Noble Bank was first identified as being involved with Tether this past February. Since then, a large number of Tether have been produced. Since each coin must have a physical dollar behind it, the amount of dollars stored in the banks, in theory, should be extremely high.

However, Noble Bank is looking for a serious injection of funds. Two sources close to the bank have indicated that it has already contacted at least one major Tether holder in an effort to unload an unspecified amount of coins, but the holder rejected the request. One of the sources said, “If Noble doesn’t get cash soon, they will only have a few days left. They’re desperate.”

Tether might also be in a bad position. An unidentified source for a major crypto exchange told the crypto media outlet Modern Consensus that a Tether holder has been trying to dump “tens of millions of tethers,” but that the individual has not found a taker. That kind of release at once could have dire consequences on the stability of the stablecoin and could make it obsolete.

There have already been accusations of improprieties among the Tether group. On more than one occasion, reports have surfaced that the company has been releasing tethers that weren’t supported by any asset, and using them to purchase other cryptocurrencies.

Tether is also facing competition from several other stablecoins. Gemini and Paxos have introduced stablecoins recently, both of which are regulated and audited by the New York Department of Financial Services. Tether has been without an auditor since this past January and has made the questionable remark that auditing the coin is an impossibility. It would seem that, if there were one dollar for every tether, an audit would be a relatively simple process to complete. Circle also has introduced its own stablecoin. The coin itself isn’t regulated; however, Circle is.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Tether bank “desperate for cash”

The stablecoin Tether may not be as stable as many have believed – not that this would be a huge surprise to some. It would appear that Puerto Rico’s Noble Bank, reportedly one of the major repositories of Tether, is having serious financial issues. As a bank that supposedly holds a 1-to-1 ratio of Tether to US dollars, the fact that the financial institution is “desperately” looking for cash raises a number of questions.

Noble Bank was first identified as being involved with Tether this past February. Since then, a large number of Tether have been produced. Since each coin must have a physical dollar behind it, the amount of dollars stored in the banks, in theory, should be extremely high.

However, Noble Bank is looking for a serious injection of funds. Two sources close to the bank have indicated that it has already contacted at least one major Tether holder in an effort to unload an unspecified amount of coins, but the holder rejected the request. One of the sources said, “If Noble doesn’t get cash soon, they will only have a few days left. They’re desperate.”

Tether might also be in a bad position. An unidentified source for a major crypto exchange told the crypto media outlet Modern Consensus that a Tether holder has been trying to dump “tens of millions of tethers,” but that the individual has not found a taker. That kind of release at once could have dire consequences on the stability of the stablecoin and could make it obsolete.

There have already been accusations of improprieties among the Tether group. On more than one occasion, reports have surfaced that the company has been releasing tethers that weren’t supported by any asset, and using them to purchase other cryptocurrencies.

Tether is also facing competition from several other stablecoins. Gemini and Paxos have introduced stablecoins recently, both of which are regulated and audited by the New York Department of Financial Services. Tether has been without an auditor since this past January and has made the questionable remark that auditing the coin is an impossibility. It would seem that, if there were one dollar for every tether, an audit would be a relatively simple process to complete. Circle also has introduced its own stablecoin. The coin itself isn’t regulated; however, Circle is.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Circle announces new US dollar-pegged crypto, the USD Coin

Cryptocurrency wallet service and investment startup Circle has created a new cryptocurrency—the USD Coin (USDC)—which is pegged to the US dollar and backed up by physical reserves of fiat held by company.

The Goldman Sachs-backed company’s stablecoin allows the tokenization of physical currency, in a bid to serve cross-border transactions with fast settlement on a blockchain. Crucially, because the USD Coin is pegged to and matched by U.S. dollars on a one-for-one basis, its value is designed to remain stable—an important feature for institutional actors.

In a statement, Circle co-founders Jeremy Allaire and Sean Neville said that USDC would help the firm realise its vision of the future of international transactions.

“Just as HTTPS, SMTP and SIP enabled free borderless information sharing and communications, crypto assets and blockchain technology will enable us to exchange value and transact with one another in a similar way: instantly, globally, securely and at low cost,” according to the Circle executives.

Initially previewed back in May, the project has gone on to raise capital at a valuation of $3 billion, following a Series E funding round led by mining group Bitmain.

The stablecoin is distinct from other similar projects in that multiple issuers will be supported, through an open source consortium called CENTRE.

Issuers are required to hold relevant licensing and regulatory approval, but the model will allow for decentralised control of issuing USDC through consortium members.

Some 30 partners have agreed to work with the project from launch, including merchant payment service BitPay. Commenting on the project, BitPay CEO Stephen Pair said they were fully behind CENTRE and the USDC.

“BitPay has always been supportive of open source crypto communities and blockchain initiatives and likes the direction CENTRE is taking with USDC,” Pair said. “We envision a future where all digital assets and payments live on the blockchain.”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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