Crypto regulation in the world: weekly digest #101
The EU
As we wrote earlier, The European Union's Markets in Crypto-Assets (MiCA) regulation, set to take effect on June 30, 2024, is causing major crypto exchanges to delist certain stablecoins in order to comply with the new rules.
Uphold will end support for six stablecoins - Tether (USDT), Dai (DAI), Frax (FRAX), Gemini Dollar (GUSD), Pax Dollar (USDP), and TrueUSD (TUSD) - by July 1, 2024. Users must convert these to other cryptocurrencies by June 28.
Binance has categorized its stablecoins into "regulated" and "unauthorized" groups to align with MiCA, though it has not finalized specifics yet. The exchange plans to limit availability of unauthorized stablecoins for EEA users on certain products.
OKX delisted Tether (USDT) trading pairs for European Economic Area (EEA) users in March 2023, ahead of MiCA, stating only EUR and USDC pairs would be accessible.
Kraken is considering delisting Tether's USDT stablecoin in Europe due to MiCA's new requirements for fiat-backed stablecoin issuers to register as electronic money institutions and meet other standards.
MiCA places stricter regulations on stablecoins, requiring 1:1 reserve ratios, third-party custody of assets, and quarterly reporting for larger issuers. The rules aim to increase consumer confidence by ensuring stablecoins can reliably serve as a store of value and means of payment.
While challenging for some issuers, especially those based outside the EU, the new framework could ultimately provide a safer ecosystem for stablecoin users in Europe. Exchanges are taking steps to comply with MiCA ahead of its full implementation by the end of 2024.
Hong Kong
Tether, the largest stablecoin issuer, has launched a new gold-backed stablecoin called Alloy (aUSDT). Alloy is designed to track the value of the US dollar while being overcollateralized by Tether Gold (XAUt), a token representing ownership of physical gold stored in Switzerland.
Users can mint aUSDT by depositing XAUt as collateral through Ethereum-compatible smart contracts. This allows holders to maintain exposure to gold while using a dollar-referenced tethered asset for transactions. Alloy aims to provide stability and security by combining the strengths of a stable unit of account with the reliability of gold.
Alloy is part of Tether's broader strategy to diversify beyond its flagship USDT stablecoin and expand into digital asset tokenization. The platform will enable the creation of various tethered assets, including yield-bearing products.
While Alloy faces some skepticism and competition from other synthetic dollar projects, its high liquidity and Tether's market dominance could give it an edge. The success of Alloy will depend on its market reception and broader adoption of gold-backed digital assets.
In summary, Tether's Alloy represents a significant innovation in the stablecoin market, combining the stability of gold with the utility of a synthetic dollar. As the crypto landscape evolves, Alloy stands poised to play a role in shaping the future of digital finance.
USA
The highly anticipated launch of spot Ethereum ETFs is expected to occur on July 2nd, 2024, according to Bloomberg. The SEC has approved 19b-4 forms for eight Ethereum ETF issuers, including BlackRock, Fidelity, and VanEck, but must still approve the S1 forms before the ETFs can officially begin trading.
While the SEC has hinted at potential approval of Ethereum ETFs during the summer, experts have differing opinions on the likelihood of approval by the key May 23rd deadline. Some analysts believe the chance of approval by May is as high as 70%, while others are more skeptical, estimating the chance is less than 50%.
Overall, the consensus seems to be that Ethereum ETFs will likely be approved this year, but the exact timing remains uncertain. The launch of spot Ethereum ETFs is anticipated to attract substantial institutional capital, potentially leading to a 60% rally in ETH prices, similar to the market reaction seen after spot Bitcoin ETFs were approved.
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