Victory lap
Bitcoin soars as world of crypto celebrates Trump victory
Sometimes a chart really does say it all.
Loose change: CZ requests SEC suit is thrown out.
Coinbase CEO talks up stablecoins and smart wallets.
A new player enters the stablecoin game.
Two hundred degrees, that's why they call me Mister Fahrenheit.
The winner
Celebration: Bitcoin soared past $75,000 in early trading on Wednesday after the confirmation that the most pro-crypto presidential candidate will be re-installed in the White House come January.
The once skeptical Donald Trump courted the crypto community over the length of his campaign and now the sector will hope to reap the rewards.
All change: In the firing line is Gary Gensler, the chair of the SEC, while Trump has pledged to create a government-owned Bitcoin reserve and ensure all future Bitcoin is mined on US soil.
Meanwhile, the Elon Musk-backed Dogecoin also surged in early trading, up 18% at one point on Wednesday. Musk is likely to take up a position with the Trump administration.
Way to call it: Prediction market providers went crazy on social media with various posts overnight pointing to the likelihood of a Trump win and suggesting the powers of the mainstream networks were on the wane.
Last week, CEO and founder of Coinbase Brian Armstrong said prediction markets, along with “long-form podcasts, social media/X,” were “deciding this election.”
It isn’t just the Trump victory that will energize the crypto world. Armstrong noted on X that the US has also elected the “most pro-crypto Congress ever.”
Further reading: “The citizens of the United States spoke loudly last night.” The Pomp Letter.
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Loose change
Binance and former CEO Changpeng Zhao has again requested that a major lawsuit by the US Securities and Exchange Commission (SEC) regarding token sales be thrown out. The exchange said recent moves by the SEC to amend the original complaint is a contradiction of a previous court ruling.
Despite speculation to the contrary, Tether is not planning a blockchain of its own, so said CEO Paolo Ardoino. It is working to integrate USDT on various networks to support decentralized use cases, the boss said.
The Central Bank of Brazil is mulling a tax on stablecoin-based remittances. Local media speculated the country may be working on a licensing regime for digital assets that would cater for services such as virtual asset providing and stablecoin exchanges.
Pakistan’s central bank has unveiled a series of policy proposals to regulate digital assets and recognize cryptocurrencies as legal tender.
Coinbase Q3
Stablecoins and building blocks: Ahead of the election last week, Coinbase CEO Brian Armstrong made much of why the company was expending all the effort in terms of lobbying on behalf of crypto.
“Crypto started off as an asset class that people wanted to trade,” he told analysts on the call.
“But we actually want to increase economic freedom in the world. We want to update the financial system. We want to make it a part of people's daily lives.”
Adopt me: Part of that integration into daily life will occur, he suggested, through the widespread adoption of stablecoins.
“We’ve made a really big effort at Coinbase to integrate stablecoins into all of our different products,” he added.
“And that’s actually driven USDC growth in a major way.
Armstrong noted that the market cap of USDC has grown 45% year-to-date (Q3) to $36bn, up from $25bn at the start of this year. “And I believe it's actually now the fastest-growing US dollar-backed stablecoin, at least (of the) major ones out there,” he said.
Smart move: He said the next opportunity was payments and smart wallets. “This really revolutionizes the user interface that people go through, especially with self-custodial wallets to onboard to crypto.”
“Payments are going to flow to the path of least resistance, kind of like water,” he added.
“And these are the best payment rails in the world. I think we now have that foundation in place to see global GDP run more and more on crypto rails over the coming years.”
More stables
Stablemates: Buoyed by a regulatory vacuum and the prospect of a reset in relations with the government, fintech, crypto and digital token heavyweights, including Robinhood, Kraken and Paxos, have launched a new stablecoin.
Dubbed the Global Dollar Network (USDG), the other original partners are Anchorage Digital, Bullish, Galaxy Digital and Nuvei.
The USDG stablecoin is issued from Singapore by Paxos and aligns with the Monetary Authority of Singapore's soon-to-be-released stablecoin framework.
The reserves backing USDG consist of high-quality liquid assets, such as US dollar deposits and short-term US government securities, ensuring the stablecoin’s reliability and redeemability.
DBS, Southeast Asia’s largest bank, will be a key banking partner, handling cash management and the custody of USDG reserves.
Now is the time: Industry reaction has been bullish, with experts noting Tether’s generation of billions of dollars from a team of fewer than 100 employees is likely to spark an arms race of competition.
The $172bn stablecoin market is currently dominated by Tether (USDT) and Circle (USDC), which account for 90%.
Unlike the pair, which retain all interest earned on reserves, USDG will share reserve-generated income among network participants.
Parties who bring in greater pools of liquidity and connections stand to earn a greater slice of income, said Paxos CEO Charles Cascarilla.
“The way we have set this up is the participants are being rewarded for activity that helps grow the utility of the network,” he said. “That could be for a number of activities; different participants can be rewarded in different ways.”
The 500lb gorilla: Experts believe those “activities” could be trading, gaming or gambling, given Robinhood barged into the election wagering circus last week.
“The most interesting aspect of USDG is that these earnings are not entirely kept by the entity but rather distributed as yield to participants that help accelerate the adoption of USDG,” said Jeroen Hesp, co-founder of Jet stablecoin payments.
“This is a very smart move and likely the way forward for new market entrants to accelerate growth.”
Robinhood, known for pushing boundaries in its crypto pursuits, said it would take bets on the US presidential election via event derivative contracts.
Not on my watch: The timing of the announcement also comes on the heels of a deprioritization of stablecoin enforcement by the US Securities and Exchange Commission.
Legal experts said the court decision against the SEC in a wide-ranging case against mega exchange Binance has prompted the decision to pare back its regulatory radar.
“These developments are further evidence of what the stablecoin industry has been asserting for years: Sales of fully reserved 1:1 redeemable stablecoins are not investment contracts,” said Grant P. Fondo, partner and co-chair of law firm Goodwin’s blockchain group.
The small matter of a new US government and a potentially more friendly approach to crypto regulation is also propelling the bet by the USDG stablecoin network.
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