Telegram losing against SEC, Square getting approval to launch bank and more | Crypto Market News
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This is basically a primary issuance platform — primary issuance meaning an issuer, someone needing to raise some money, issues not into a matching engine, but into what is called a billboard, people come in and make offers, and they fill the offers.
The bank is going to let them accept Euro and hold custody of the Euro, rather than them having to get bank accounts themselves. Like many things in crypto and Fintech, the first steps are always a bit lazy. This is a bit lazy. It’s still only a primary issuance platform, and it’s in France only. It’s regional, it’s siloed, just like the traditional markets.
As Kevin has said before, there is no reason to get into blockchain/DLT, in terms of capital markets, if you’re not going crossborder and not doing it in real time. It doesn’t solve any pain points, just makes new headlines.
For those who don’t know, MoneyGram partnered with Ripple. Part of that deal was cash, and the other part was XRP. So, they are now starting to sell some of that XRP. Maybe they were holding on to it expecting it to rise, and it started to drop. It doesn’t say much about the partnership.
Ripple does have a few pieces in their infrastructure that are probably saving MoneyGram some money, and increasing their ability to get into certain markets. Not a bad partnership, and they are selling an asset that they heard might go to zero probably.
XRP can be bought or sold with 3 clicks using CoinMetro’s SimplEX!
Kevin would definitely say that investors are seeking shelters in US Dollars. The flight to USD happens in every modern day financial crisis. Not too long ago, The Japanese Yen and the Swiss Franc were assets where people would fly to when there were times of uncertainty in the world. After the Swiss Franc debacle in 2015, depegging of the EUR, and the fact that the Japanese have been on close to 0 interest rates for 30 years, they simply aren’t the first place people go anymore. It’s the US Dollar.
Every 1–10 years, there is a cycle of “the USD is going to crumble because of this and that”. And every 1–10 years, they are proven wrong.
This is the first global crisis we have seen in any of our lives, even compared to the great depression and the World War II, there was no macro chasm that basically affects the entire world, and affects the entire world in a very similar light when it comes to the economy. That is amazing. And still, the flight was to USD.
The article also talks about Bitcoin, but Kevin doesn’t know what they are basing that on. Bitcoin hit a floor and bounced back up, but the floor could have been massive orders that had been sitting there for a year and a half. Kevin doesn’t think it was so much current buying. A large minority of those orders were old ones, sitting there for a long time. Just like stops got hit on the way down.
So far, Kevin doesn’t think that Bitcoin has proven what it is yet. Anybody that said it was a store of value, is somewhat proven incorrect. It bounced from the bottom — don’t compare it to gold, compare it to a fiat currency — and USD is definitely showing that it’s more of the store of value, in times of crisis. But perhaps not a store of value overtime.
Well, the unlimited QE (quantitative easing) is definitely unprecedented. One of the biggest things going on in the US is the fact that fractional reserve banking — which basically allows a bank to loan out a 100 times more than they have a deposit — now lets them loan out unlimited amounts of money, without having no reserve. That means the bank can have 0 money in their coffers, and loan out infinite money, and charge interest on that money. The risk associated with that is mind boggling.
The risk increases the longer this crisis stays around, and the longer they allow banks to do that. If this crisis continues for months, and banks are overleveraging on loans because they’re being forced to, and then the government is underwriting loans to small businesses in order to try and boost the economy, and the economy stays shut down for months on end, and those small businesses are now closing and going into bankruptcy, and the governments are underwriting all these loans that they then have to pay..
Many governments like the US, can simply print money into oblivion. But one thing we haven’t talked about here — what about countries that don’t have their own currency? Or don’t have their own monetary policies, where they are simply paying their value to another currency they are holding in reserve? They can’t print money. What happens when they run out? Interesting.
When this came out, Kevin said that they were going to lose. Open and shut case, they lose. But Telegram knew that the case was going to come, and they strategically waited to link Telegram to the underlying issuer of the GRAM token, so that they could delay the release, because they weren’t ready. So they actually used this to their advantage initially. But they probably knew that they were going to lose.
They are betting that they will only have to return the money to US contributors, and maybe pay a fine, but because of the size of the raise overall, it shouldn’t hurt them so much.
Kik is definitely open and shut as well, but the precedence from the Telegram case is going to help the SEC.
People see prices drop and they start to move out. The halving coming out is also going to make it difficult for non-institutional miners that aren’t in a place with capped electricity costs. In China, the price to mine a Bitcoin is roughly about 3000 USD. After the halvening, that means it’s going to cost them roughly 6000 USD. Meaning at current prices, they are still profiting, but many small miners and miners in other countries are going to have big problems when the halvening comes.
Kevin expects it to level down, but it will level out and then back up at some point. Miners will come back in, but it won’t be the institutional miners.
That was fairly understood that Square was going to get that. Jack Doarsey, Square, Twitter, etcetera, they have been running Square’s Payment Institution Money Service Business for years, their books are nice and clean and they do a resounding amount of volume. It makes sense that they were going to get a banking license, and they did.
It remains to be seen how they separate themselves from a normal bank. In reality, one would hope that these challenger banks would change the definition of what a bank is. Then maybe banking licenses wouldn’t be needed to provide banking services, without getting the license that allows them to do the things that people hate them for — like fractional reserve banking.
Square really needs to separate themselves. If they don’t, are they really making any changes?
And for the most part, Brazi’s Banking Chief is 100% correct. But in Kevin’s mind, we don’t have crypto currencies — we have crypto assets. Some of them try to act as currencies, but they don’t do a very good job at it, compared with any other standard currency like EUR, USD, GBP.
You can spend USD almost anywhere in the world, at the very minimum at an exchange house, but if you are in a tourist area, the USD will be accepted. Compare that to Bitcoin, which is the most liquid crypto asset — and you can’t spend it. Compare Bitcoin and USD in transaction times, the learning curve, the amount of people that use it, the amount of people that accept it — huge difference.
Overall, this guy is accurate now. Will he be accurate in 1, 3, 5 years from now? Maybe not. That’s where most sceptics hit a wall. That’s where Nouriel Roubini hits a wall. If you only see what is directly in front of you, and you don’t have the vision to see what’s coming, then you would never advance.
Read about the differences between Digital Currency vs Cryptocurrency.
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