When it comes to large supranational financial organisations, there is none that has quite the reputation of the IMF. Whether it’s “saving” countries from fiscal ruin or extending “life lines” to those on the brink, the IMF stands ready.
And, this international loan shark has a lot to say about crypto.
That’s because it recently released a report that went into great detail about how governments could regulate crypto and stablecoins. And, given that governments usually tend to bow at the altar of the IMF’s“recommendations”, this report is essential reading.
However, for those of you who want the most important and salient points up front, then that’s exactly what I am going to cover in my video today. I will be breaking down the report and explaining exactly what it could mean for upcoming global regulations – good and bad.
You can watch that video here.
📊 My Personal Portfolio 📊
Have sold some of my DOT and put this into ATOM. If you watched my recent crypto market update, you will have seen me talk about some of the recent updates that are coming to the Cosmos ecosystem. One of those updates is interchain staking, which could further drive demand and lock up some of ATOM’s supply. This is all price positive.
There are no other updates and my portfolio is currently:
BTC 36.82% | ETH 35.78% | SOL 8.13% | ATOM 6.51% | USDC 4.23% | DOT 2.41% | MATIC 1.47% | ADA 1.38% | RUNE 1.30% | NEAR 1.26% | INJ 0.71%
📈Guy’s Forward Guidance 📈
Let’s start with a crypto-specific factor that seems to have flown under everyone’s radar. Next week, the Financial Stability Board or FSB (ironically the same name as Russia’s version of the CIA), will be releasing its recommendations for global crypto regulations. If other global financial institutions are anything to go by, then compliance with these regulations will be about as voluntary as any orders coming from Russia’s FSB. Guess the name works.
In all seriousness, the timing of the (financial) FSB’s global crypto regulation recommendations is suspect, given that the United States’ own Financial Stability Oversight Council or FSOC published its own crypto regulation recommendations last week. According to CoinDesk, this massive report contained all the stuff you’d expect: concerns about volatility, calls for clearer securities designations in crypto, and a focus on financial stability.
This is significant because many international financial institutions such as the FSB exist to ensure that US dominance of the financial system continues. Look no further than the FATF for evidence of that. As such, it’s likely that the FSOC’s recommendations will be eerily similar to those of the FSB when they’re released next week. What’s scary is the FSOC’s report includes limits on retail investors in crypto, something we’ve been warning about.
The thing is that for these anti-retail regulations to be put in place, there needs to be some sort of catalyst – another massive crypto crash that wipes out all the retail investors who have continued to hold since the crypto and stock market crash in May. On that note, some of you might recall that Treasury Secretary Janet Yellen called for stablecoin regulation on the same day that Terra’s UST went to zero. Could we see another ‘coincidence’ this week?
Conspiracies aside, there’s one big macro factor you need to be on the lookout for. That’s the inflation figures for September, as per the CPI in the United States. These statistics are set to be released this Thursday, 13th October. Investors are concerned that the Fed will hike rates even more aggressively in the face of another high CPI print. This is because employment statistics somehow came in strong on Friday. This caused the markets to crash.
In sum, it looks like we’re headed for a perfect storm. I know I’ve been calling for a black swan event in recent mailers, and I’m still convinced we will see one. I just don’t know what or when. The reason I’m so convinced is because the markets seem to have priced in all the other issues going on around the world (energy crisis, war in Ukraine, inflation, etc.). This tells me that something unexpected needs to happen for retail investors to be truly shaken out.
Hint: you’ll know when that black swan has come when you think it’s the end of the world.
🛑 MakerDAO Signs A Deal With The Devil 🛑
As many of you will know, MakerDAO’s DAI is the largest decentralised stablecoin in cryptocurrency, at least in theory. DAI can be minted by depositing an amount of cryptocurrency that is worth more than the amount of DAI being borrowed. Right now most of the DAI in circulation are backed by Circle’s USDC, which is centrally controlled, hence why I say DAI is in theory the largest decentralised stablecoin.
Logically, DAI’s being collateralised mostly by USDC means that Circle technically has the power to destroy MakerDAO. All it would need to do is freeze or seize all the USDC in the protocol, and it would instantly go insolvent. Although this is unlikely to happen, since MakerDAO creates lots of demand for USDC, Circle’s move to freeze USDC during the Tornado Cash fiasco led to fears that DAI could be affected too.
MakerDAO co-founder Rune Christensen even went as far as pushing for the protocol to convert all of its USDC into ETH and accept a depegging of DAI if necessary to maintain the protocol’s decentralisation (big respect). The thing is that MakerDAO is a, well… DAO, meaning that it’s up to the MKR token holders to decide what the protocol does. It’s not clear how MKR’s governance power is distributed, but stats suggest voting power is concentrated.
This is further evidenced by the contentious proposals that have recently been tabled to MakerDAO. For example, there were three proposals in July that wanted to centralise MakerDAO’s governance. All three proposals were shut down by a narrow majority of votes (which required a record high MKR voter turnout). Coinbase also proposed in September that MakerDAO deposit its USDC with the exchange. Thankfully, this didn’t happen.
There were a couple of problematic proposals which did pass, however. The first was a proposal to partner with a traditional bank to make it possible to borrow actual USD using crypto collateral in MakerDAO. More recently, MakerDAO passed a proposal that will see 500 million dollars worth of the assets collateralising DAI invested in US government debt and corporate debt. This is where the slope gets really slippery.
If you watched our video about the assets backing stablecoins, you’ll know that the centralised stablecoins in circulation are backed mostly by US government debt. If MakerDAO’s DAI becomes mostly backed by US government debt, this would therefore make it no different from centralised stablecoins like USDC. In fact they would be nearly identical, since MakerDAO is buying US debt through Blackrock, which backs Circle.
To be fair, 500 million dollars is a drop in the bucket compared to the 7.6 billion dollars of crypto locked in MakerDAO. Even so, it leaves the door open to more allocations into traditional assets, which are custodied by corrupt, centralised entities on Wall Street. Moreover, it opens the door to US regulators demanding that all stablecoins must be backed by ‘cash equivalents’ (AKA government debt) or else be banned. Will MakerDAO comply?
Say, could such a declaration be the catalyst for the crypto crash I was talking about earlier?
⚠️ Influencer Crackdown ⚠️
This week we saw reality TV star Kim Kardashian agree to pay the U.S. Securities and Exchange Commission (SEC) a penalty of $1.26 million in order to settle the charges imposed on her for promoting the EthereumMax token.
While Kardashian had marked her tweet with a “#AD” at the end, the SEC deemed this to be an insufficient disclosure. The SEC emphasised that US laws require Kardashian to not only disclose the nature of the endorsement, but also the source and the exact monetary compensation received for doing so.
Now, unless you’ve been taking a week-long social media detox, you likely knew most of what I’ve said so far already. However, I reckon very few of us actually understand the deeper implications of this move by the SEC.
Keep in mind that Kardashian isn’t the first celebrity to promote a crypto token, nor is she the last. We’ve seen Floyd Mayweather, Logan Paul, Paul Pierce, DJ Khaled and numerous other celebrities promote cryptocurrencies and NFTs over the past few years. So why did the SEC impose a $1.26 million penalty on Kardashian for an undisclosed, paid endorsement of $250,000? That’s almost 5 times the money she received for promoting EMAX.
Well, in the words of Gary Gensler, the case was to serve “as a reminder to celebrities and others” about the requirements of disclosure under the law and of the care that needs to be exercised by investors when looking to celebrities for investment advice. Sounds to me like this is just the tip of the iceberg. The SEC, as well as the CFTC, have been stirring the waters more than ever over the past year when it comes to regulation and crackdowns in the crypto space.
Given recent developments in the regulatory sphere, I wouldn’t be surprised if the SEC mandates influencers to declare publicly the wallet addresses they use to receive payments for crypto promotions in the future. I suspect we’re likely to see more influencers fall under the gavel of the legal system over the course of next year. And rightly so.
Getting paid for shilling your favourite project might seem like a great way to be financially rewarded for spreading the “crypto good news.” But as we’ve heard from Uncle Ben – “With great power (influence), comes great responsibility.”
While I’m no fan of centralised control or regulatory overlords, I’ll be the first to admit that there is indeed a need for some checks and balances on the industry, especially when it comes to the promotion of crypto projects.
And frankly, the checks and balances currently in place can be a bit lacking, mostly due to the somewhat borderless and accessible nature of the internet. Countries need to issue proper guidance or an updated rulebook when it comes to online promotions or influencer marketing.
The online jungle can be a hard place to navigate, but the decentralised ethos of crypto is even more so. This is partly why the Coin Bureau doesn’t indulge in paid promotions or sponsored content and why we’re very mindful of the projects we do cover. The last thing we want is for one of our viewers to be blindsided by the information we’ve failed to cover in our research.
I will be covering the Kim Kardashian SEC suit in a video later this week, so keep your eyes open for that.
🔥 Deal of The Week 🔥
The history of crypto is littered with horror stories about people losing their private keys to water, fire, or even the cleaner throwing away that all-important bit of paper. So, that is why savvy crypto holders usually get a metal seed wallet and engrave those seed words.
I’ve actually got a pretty snazzy metal Coin Bureau seed wallet in my store. Fun fact: it’s mandatory in the CB office for all the team to use these to secure their crypto stack.
If you want to do the same then why not head to the Coin Bureau store?
🔮 Video Pipeline 🔮
- Congress Stock Trading Ban: What it Means
- Biden, the SPR & OPEC: A Dangerous Game
- SEC Vs Kim Kardashian: What’s going on?
- How inflation crushes the environment & economy!
- China’s 20th CCP Congress: Eastern dragon awakening?
🏆 What’s New At CoinBureau.com This Week? 🏆
✅ How to stake Cardano’s ADA with Ledger Hardware Wallet
That’s all for this week. We’d like to thank you all for your continued support of our work. We simply could not do it without you guys.
Guy your crypto guy