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Crypto’s New Hero: Stablecoins Can Save America

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Crypto is no longer the wild wild West as prominent figures in the DC establishment, seem to find a silver bullet to stave off a looming debt crisis: stablecoins. Paul Ryan’s recent piece on WSJ has shed light on the strategic importance of stablecoins in maintaining the US financial system.

The U.S. is headed toward a predictable yet avoidable debt crisis…With no fiscal solution in sight, the crisis is likely to start with a failed Treasury auction forcing an ugly surgery on the budget. As the economy contracts, the dollar will suffer a major confidence shock, further imperiling prospects for growth. We might start by taking stablecoins seriously.

Quoting data from the Treasury Department and DeFi Llama, Ryan noted that dollar-backed stablecoins are becoming a significant purchaser of U.S. government debt. If fiat-backed dollar stablecoin issuers were a country, they would rank just outside the top 10 in countries holding Treasurys—smaller than Hong Kong but larger than Saudi Arabia. As the crypto sector continues to grow, stablecoins could become one of the largest purchasers of U.S. government debt and a reliable source of new demand.

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Crypto's New Hero: Stablecoins Can Save America 2

Following the WSJ post, crypto proponents believe that if the government allows it US private industry will dollarize every country on the planet via stablecoins, and domestic stablecoin companies can potentially buy all the debt the US needs to issue. If there was a Manhattan project for US dollar hegemony to maintain, this would be the top idea, wrote a user.

Post-Petrodollar Era: Can Crypto and Stablecoins Support US Economy?

The discussion comes after the Petrodollar agreement between oil-rich Saudi Arabia and the U.S. expired on June 9 with no renewal in sight. “Petrodollar” refers to the dollar’s role in crude oil transactions. Although the end of the agreement doesn’t imply the abrupt end of dollar payment, it could lead to Saudis selling oil in other currencies.

This could spell trouble for a U.S. government that relies on dollar dominance to support its borrowing and spending. For instance, China has been courting oil-rich nations like Saudi Arabia to accept yuan for oil, and the latter has reportedly shown openness to the idea. Moreover, Saudi Arabia’s membership in the BRICS bloc this year will likely strengthen the two countries’ economic ties.

With the evolving global financial landscape, stablecoins might be a vital tool for maintaining US economic stability and dominance.

FTX Begins Search For Potential Buyers To Fund Its Relaunch

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FTX’s new CEO John Ray III has initiated the process of reaching out to potential participants in the exchange’s revival.

According to the report by WSJ, the bankrupt trading firm is negotiating with investors about supporting a potential reboot through setups like a joint venture, citing people familiar with the conversations.

The relaunch plan was first revealed in April by FTX lawyers after the recovery of a $7.3 billion fund.

As earlier reported, these assets included $2 billion in cash, $4.3 billion in Class A cryptocurrencies, $300 million in securities, and $600 million in investment receivables, etc.

The exchange’s lead counsel, Andy Dietderich, informed the court then that selecting this course of action would necessitate obtaining a large sum of money.

Additionally, he disclosed that there was internal disagreement within the business regarding whether the cash should come from the FTX estate or other outside sources.

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FTX Begins Search For Potential Buyers To Fund Its Relaunch 4

In May, the exchange filed avoidance actions to try and recoup about $4 billion that Genesis and non-debtor affiliates had received, so that these funds might be distributed to all other creditors of the FTX Debtors in the Chapter 11 Cases.

Then, on June 22, it requested more than $700 million from K5 Global, Mount Olympus Capital, and SGN Albany Capital, three investment companies owned by former CEO Bankman-Fried.

FTX’s New CEO Doubles Down On Transparency And Fund Recovery

Just the other day, FTX published its second report, detailing the mishandling of customer deposits by the former management team and the staggering $8.7 billion amount it owed to the exchange debtors.

The release of this report, according to John J. Ray III, who is also the Chief Restructuring Officer of FTX Debtors, is in consistent with their dedication to openness and the difficulties they have faced in their pursuit of maximum recovery.

Ray stressed their commitment to continuing their analysis and disclosing discoveries as they move forward in their efforts to preserve as much value for creditors as possible,

So far, the new management at FTX has secured almost $7 billion in assets since the bankruptcy filing, which they can utilize to reimburse consumers whose funds were frozen when the crypto exchange crashed back in Nov 2022.

WSJ Claims Crypto Has An Insider Trading Problem; Binance & FTX Denies It

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A Wall Street Journal article on insider trading in crypto platforms has caused quite a stir. Citing publicly available data, the article claimed that several anonymous crypto investors profited from inside knowledge of when tokens would be listed on exchanges.

It then takes back to August 2021 when one unknown crypto wallet had acquired a stake worth $360,000 of Gnosis coins, days before Binance revealed via a blog post that it would list Gnosis, to be traded among its users.

Shortly after the announcement, the wallet took advantage of the token’s rising price and began liquidating it entirely. As per an analysis performed by Argus Inc, the anon wallet netted a profit of about $140,000 and a return of roughly 40%.

The same wallet also exhibited similar patterns with at least three other tokens.

The report further said that the wallet was among 46 that purchased a combined $17.3 million worth of tokens that were listed shortly after on Coinbase, Binance, and FTX. However, the identity of the wallet’s owners remains unknown.

Crypto Exchanges’ Reaction To The WSJ Report

Spokespersons from both Binance and FTX said they are studying the analysis before confirming the trading activity in Argus’s report didn’t violate their policies. Coinbase maintained it has compliance policies in place which prohibit employees from trading on privileged information.

A Binance representative divulged that employees have a 90-day hold on any investments they make and that leaders in the company are mandated to report any trading activity on a quarterly basis.

“There is a longstanding process in place, including internal systems, that our security team follows to investigate and hold those accountable that have engaged in this type of behavior, immediate termination being minimal repercussion,” she said.

The spokesperson also said none of the wallet addresses were linked to its employees

In an email sent to WSJ, FTX CEO Sam Bankman-Fried a.k.a SBF wrote that the firm has a zero tolerance policy toward employees from trading on or sharing information related to upcoming token listings.

“The trading highlighted in Argus’s analysis didn’t result from any substantive violations of company policy,” SBF added.