The Bank of International Settlements (BIS), an alliance of the world’s central banks, has denounced Stablecoins in a recent research study released on November 8, 2023, saying that they were not a “safe store of value.”
“Not one of the Stablecoins assessed in this paper has been able to maintain their closing prices in parity with their peg,” the BIS wrote in its study.
The BIS said that fiat-backed Stablecoins maintained its peg ratio between January 2019 and September 2023 only 94 per cent of the time —far from the 100 per cent frequently claimed in project white papers. In contrast, Stablecoins backed by commodities and cryptocurrencies had much lower peg ratios—50 per cent and 77 per cent, respectively, it said.
It added that just seven Stablecoins backed by fiat have managed to maintain a departure from the peg of less than 1 per cent during the course of more than 97 per cent of their existence. Tether and USD Coin both fulfilled this requirement while all other fiat-backed Stablecoins temporarily lost their pegs more frequently and with much larger deviations, it added.
The BIS study further said that some Stablecoin issuers do not ask independent certified public accountants to review their reserves, and that when they did, these reserve reports sometimes didn’t adhere to a conventional format for reporting. “It is unclear what the implications would be for financial stability in the event of a potential run, and whether these Stablecoins could convert users’ Stablecoins at par on demand due to this lack of clarity,” BIS said.
Apparently, March saw a sudden 10 per cent depreciation of Circle’s USDC from its 1:1 exchange rate with the dollar because of its reserve deposits becoming momentarily trapped at the bankrupt Silicon Valley Bank. Since then, the Stablecoin has increased in value to par.
Within the next eight days between November 9 and November 17, 2023, all 12 of the current applications for spot Bitcoin exchange-traded funds (ETFs) could be approved by the US Securities and Exchange Commission. This also includes Grayscale’s conversion of its GBTC trust product, beginning on November 9 in the United States, Bloomberg ETF analysts James Seyffart and Eric Balchunas have said.
“Delay orders were issued by the SEC for BlackRock, Bitwise, VanEck, WisdomTree, Invesco, Fidelity & Valkyrie at the same time. If the agency wants to allow all 12 filers to launch — as we believe — this is the first available window since Grayscale’s court victory was affirmed,” Seyffart wrote in a post on November 8 on X (previously Twitter).
This short window was created since the SEC chose November 8, 2023 as the final day of the comment period when it extended the deadline for several of the outstanding spot Bitcoin ETF registrations.
US Congressman Tom Emmer, a proponent of cryptocurrency, is pushing an amendment that would prevent the US Securities and Exchange Commission (SEC) from pursuing enforcement of cryptocurrency using public dollars. Emmer has added a provision in the House GOP spending bill that would block the US securities regulator from using government funds to pursue crypto companies until the US Congress weighs in on who has jurisdiction over crypto.
Emmer attached a change to HR 4664, the federal budget, on November 8, 2023. HR 4664 is the Financial Services and General Government Appropriations Act.
The amendment, which was approved without opposition, forbids the US SEC from using funds for enforcement actions against transactions using digital assets until further legislation is passed by Congress that gives the agency the authority to do so. Though the amendment has progressed, but before it can be passed, the House budget that includes it must still pass via a reconciliation committee.
Emmer said in a statement released on November 8, 2023 that “future bad actors like FTX” can be dealt with by the Department of Justice, the Treasury, and the Treasury’s Office of Foreign Asset Control. “SEC Chair Gensler cannot continue to abuse the powers of his agency to fulfil a political agenda of driving the new and promising digital asset industry offshore,” he said