Fed Governor Waller Supporting Stablecoins; White Hats Get Behind Security Alliance

dollar-backed stablecoins

Federal Reserve Governor Christopher Waller, a Republican, spoke at a banking conference in the Bahamas last Thursday about the dominance of the U.S. dollar and saw a role for U.S. Dollar-backed stablecoins.

Noting decentralized finance’s (DeFi) inherent use of stablecoins, Waller writes, “About 99 percent of stablecoin market capitalization is linked to the U.S. dollar, meaning that crypto-assets are de facto traded in U.S. dollars. So it is likely that any expansion of trading in the DeFi world will simply strengthen the dominant role of the dollar.”

Waller makes note of Euro-backed stablecoins and the increasing use of the Chinese renminbi but concludes unequivocally, “I do not expect to see the U.S. dollar lose its status as the world’s reserve currency anytime soon, nor even see a significant decline in its primacy in trade and finance. Recent developments that some have warned could threaten that status have, if anything, strengthened it, at least so far.”

Read the speech (Feb. 15).

more tips:

    • U.S. Regulators Do Have Some Control Over Stablecoin Tether: JPMorgan (Feb. 17) – CoinDesk

what you should know: The Republican House Financial Services Committee X account tweeted in reaction to Waller on Friday, “The proliferation and adoption of well-regulated, dollar-denominated stablecoins will bolster the dollar’s status as the global reserve currency.” Waller’s statement is more fuel on the fire to support the “Clarity for Payment Stablecoins Act” [H.R.4766], which is awaiting a House floor vote.

Coinbase going up

Late Thursday, cryptocurrency platform Coinbase reported a much improved Q4 2023 earnings report. According to the Wall Street Journal, “The crypto-trading giant had $529 million of transaction revenue in the fourth quarter, a more than 80% rise over the third quarter. It attributed the jump to higher volatility and higher crypto asset prices, which means that fees based on the size of a trade also went up.” Net income for the quarter was $271 million. Read more.

The crazy thing to keep in mind is… the company had total transaction revenue of $1 billion in EVERY quarter of 2021 when Bitcoin prices reached above $60,000. So, if you think crypto markets have been improving to date, it only gets more powerful as “number goes up.”

more tips:

Security Alliance (SEAL)

A new industry initiative was launched last week called Security Alliance or SEAL.  See the website.

Bringing a coordinated approach to safeguarding the crypto landscape, the organization – led by venture firm Paradigm’s head of security – is creating a network of “white hats” (good guy developers) to take on the “black hats” (bad guy developers) targeting the crypto space.

A keystone of the network is the “Whitehat Safe Harbor Agreement” which the website explains “is a preemptive security measure for protocols, similar to a bug bounty. It is a framework specifically for active exploits, i.e. situations where a vulnerability has begun to be exploited by a malicious actor. If a protocol has adopted Safe Harbor before such an incident occurs, whitehats will have clarity on how to act in a potential rescue, and will be more likely to help intervene.” See it on GitHub.

So if your crypto project has “Safe Harbor,” you will get to tap a network of best-in-class “white hat” developers if your project runs afoul of “black hats.”

what you should know: In a tweet thread, Blockchain Association strings together a series of recent announcements which the industry organization says addresses the security and stability concerns expressed by Deputy Treasury Secretary Wally Adeyemo back in November. To date, Democratic leadership’s view on anti-crypto positioning for the 2024 general election has remained a significant roadblock. But as “number goes up,” and if it continues, Dem leadership could use initiatives such as SEAL to open itself to a more pro-crypto or even neutral stance.

illicit finance machinations

Illicit Finance Gets Another Hearing From HFS Digital Assets Subcommittee (Feb. 15) – blockchain tipsheet

Crypto attorney John Deaton weighs challenging Senator Elizabeth Warren (D, MA) (Feb. 14) – Politico

The hunt for the GOP’s crypto-money laundering plan (Feb. 15) – Punchbowl News

Money Laundering Activity Spread Across More Service Deposit Addresses in 2023, Plus New Tactics from Lazarus Group (Feb. 15) – Chainalysis


Crypto funds hit $2.5 billion weekly inflow record amid growing spot Bitcoin ETF interest (Feb. 19) – The Block

Exclusive: RW3 Ventures raises $60 million crypto VC fund with backing from Mubadala and Raptor Group (Feb. 15) – Fortune on Yahoo

Haun Ventures Leads $3.5 Million Round for New Crypto Infrastructure Startup (Feb. 15) – Unchained

still more tips

Is Warren Buffett Warming Up To Bitcoin? Berkshire Hathaway Profits Big From Crypto Investment (Feb. 16) – Benzinga

Talking DeFi; Gensler and AI Hallucinations; Blowback on FDIC Board Governance Rule (Feb. 17) – Capitol Account

Banks, Left Off Key Bitcoin ETF Role, Seek SEC Guidance Change (Feb. 15) – Bloomberg