June 21, 2024
5 Signs the Crypto Regulatory Tide is Shifting
Dear Subscriber,
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| By Juan Villaverde |
The news for crypto just keeps getting better.
Well, it does if you look past the volatile price action that’s been pulling prices down since last week.
And I am. As I said last week, this is typical market behavior heading into the summer. And I don’t see it lasting beyond that.
So, what’s this good news I’m talking about?
This week, the SEC decided to drop its probe into whether Ethereum (ETH, “A-”) is a security.
This is a huge win. Especially since rumors have been swirling since 2017 that Ethereum might be labeled a security by U.S. regulators due to its crowdfunded origins. And that would give regulators far more control over the No. 1 smart-contract blockchain.
Now, I never believed the SEC would succeed in labeling Ethereum a security. By the time they got around to investigating, Ethereum had evolved into a thriving, decentralized ecosystem. Calling Ethereum a security in 2024 is beyond absurd.
But hey, I’m no legal expert.
What I am, is someone who studies crypto markets. And I see a deeper significance in this decision that the market isn’t reacting to just yet …
The regulatory tide is shifting in favor of crypto assets in the U.S.
And that's a massive deal!
And the SEC dropping its investigation into Ethereum is just the tip of the iceberg:
- On the campaign trail, Presidential candidate Donald Trump turned into a staunch crypto advocate, issuing memecoins and welcoming crypto campaign contributions.
- Not to be outdone, the Biden White House followed suit. Now, Biden Administration officials have quietly signed up for a “crypto roundtable” in July.
- The U.S. House of Representatives passed a bill banning the Federal Reserve from creating a centralized central bank digital coin, or CBDC. (You can learn more about this type of digital asset in my colleague Jurica Dujmovic’s issue last week.)
- Former Speaker of the U.S. House of Representatives Paul Ryan is “urging Americans to embrace stablecoins.”
Of all these, I want to take a closer look at that last development. My take on stablecoins is that Ryan is right on the money.
There have been many attempts to launch stablecoins pegged to other fiat currencies — British pound stablecoins, euro stablecoins, even Brazilian real stablecoins! But the crypto markets’ response has always been a big yawn.
The U.S. dollar is the uncontested winner of the stablecoin market, which is great for the U.S.
Stablecoin issuers have increasingly been backing their reserves with U.S. Treasuries, specifically T-bills. In fact, stablecoin issuers have emerged as the largest new buyers of U.S. debt in recent years.
In other words, stablecoin demand represents stable demand for U.S. debt.
The impact of that cannot be overstated in a world where most large foreign holders are trying to offload their Treasuries. If the U.S. embraces stablecoins like USD Coin (USDC) or Tether (USDT), it would be the smartest move I’ve seen the U.S. government make regarding the sustainability of its massive debt load.
Bottom line? Both political parties are warming up to crypto.
Regardless of who wins the presidency this November, one thing is almost certain: The regulatory landscape has never been this favorable for crypto in the United States. And it’s only going to get better.
And while you wait for that to happen, there’s no reason you can’t make the sideways market work for you.
In fact, my colleague and DeFi expert Marija Matiฤ just found two incredible yield opportunities in DeFi offering 183% and 78%, respectively.
And she even found an opportunity that yields 30% on just stablecoins!
To learn how she finds and targets these supercharged yields, I suggest you watch her latest briefing now.
Best,
Juan Villaverde
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