Welcome to Yaka Stuff, our weekly newsletter that covers news, industry perspectives, and updates from the Hard Yaka ecosystem. Check out our last report here.
This week:
Tether at risk
Chart of the week
Hong Kong isn’t happy with Sam Altman’s Worldcoin
Stuff happens
1. Tether at risk
A new JPMorgan research report warns of a potential crackdown on stablecoins that aren’t aligned with regulators.
Here’s Coindesk:
The increasing dominance of stablecoin tether (USDT) is bad for the wider crypto ecosystem, JPMorgan (JPM) said in a research report Thursday.
The bank said it views the "increasing concentration in tether over the past year as a negative for the stablecoin universe and the crypto ecosystem more broadly.
Stablecoins are facing regulatory risk across multiple jurisdictions, and “tether is mostly at risk given its lack of regulatory compliance and transparency,” analysts led by Nikolaos Panigirtzoglou wrote.
There is an opportunity for other stablecoins, however, as issuers that have been more aligned with existing regulations could benefit from any resulting crackdown and take market share, the bank said.
USD Coin (USDC), which has filed to sell shares to the public in the U.S., could be one such beneficiary, as it "appears to be looking to expand across jurisdictions and to be proactively preparing for the upcoming stablecoin regulations," the report said.
Paolo Ardoino wasn’t thrilled with that take, naturally. Here’s Bloomberg:
“Tether’s market domination may be a ‘negative’ for competitors including those in the banking industry wishing for similar success but it’s never been a negative for the markets that need us the most,” Paolo Ardoino, chief executive of Tether, said in a statement. “We’ve always worked closely with global regulators to educate them on the technology and provide guidance on how they must think about it.”
The JPMorgan report only added further fuel to the fire after the UN’s report last week, calling Tether the “preferred choice” for criminal activity in Asia. From the report:
USDT on the TRON blockchain has become a preferred choice for crypto money launderers in East and Southeast Asia due to its stability and the ease, anonymity, and low fees of its transactions. Law enforcement and financial intelligence authorities in
the region have reported USDT among the most popular cryptocurrencies used by organized crime groups in the region, particularly those involved in the regional cyberfraud industry, demonstrated by a surging volume of cases and unauthorized online gambling and cryptocurrency exchange platforms offering undergroud USDT-based services.
Meanwhile, Tether continues to kill it. Here’s Axios:
Details: The attestation shows that the group had $97 billion in assets and $91.6 billion in liabilities on the last day of last year.
The figures are nearly entirely tied to the stablecoin.
Of note: The attestation, by BDO Italia, strictly covers the group's assets and liabilities on the day of Dec. 31, 2023. It says nothing about any time before or after that.
For years now the company has released similar quarterly attestations in lieu of a complete audit.
By the numbers: The report shows Tether holding $82 billion in cash equivalents, which is about $9.6 billion short of the USDT supply on Dec 31.
It shows three categories of cash-equivalent assets that amount to billions: U.S. Treasuries ($63 billion), overnight reverse-repurchase agreements ($9.4 billion) and money market funds ($8.3 billion).
It's non-cash equivalent holdings included $3.5 billion in precious metals and $2.8 billion in bitcoin. The category also includes secured loans, corporate bonds and other investments.
…
The post notes approximately $1 billion in operating profits, primarily from interest on U.S. Treasuries, and $1.85 billion from appreciation in its reserves of bitcoin and precious metals.
2. Chart of the week
Source: JPMorgan
3. Hong Kong isn’t happy with Sam Altman’s Worldcoin
From their Privacy Commissioner’s statement (via Mitja Simcic):
The Office of the Privacy Commissioner for Personal Data (PCPD) executed court warrants this afternoon and entered six premises of the Worldcoin project located at Yau Ma Tei, Kwun Tong, Wan Chai, Cyperport, Central and Causeway Bay to carry out investigations.
The PCPD is concerned that the operation of Worldcoin in Hong Kong involves serious risks to personal data privacy, and believes that the collection and processing of sensitive personal data by the relevant organisation may be in contravention of the requirements of the Personal Data (Privacy) Ordinance (PDPO). With a view to protecting the personal data privacy of members of the public, the PCPD has proactively commenced an investigation against Worldcoin in accordance with established procedures.
4. Stuff happens
Thailand's SEC Breaks New Ground in 2024 With Crypto-Friendly Rules
Bipartisan Congressional group tries to repeal controversial SEC crypto custody policy
FTX’s Missing $400 Million Were Stolen in SIM-Swapping Hack, DOJ Says
Six takeaways from a contentious online child safety hearing.
New York Community Bancorp Stock Plunges 38%, Reigniting Fears for Regional Banks
Labour Wants UK to Be a Securities Tokenization Hub and Advance Digital Pound Work
Ripple's XRP Drops 5% After Executive Is Hacked, Sparking Rumors of Network Breach
UK looks increasingly isolated in its anti-crypto ETF stance