It’s fascinating how things change. Donald Trump is President-Elect and bitcoin’s price soars to over $80,000. Quite predictable as he will be the crypto-President, as mentioned in July, but maybe a forecast of a bitcoin price of $100,000+ by year-end is not so outrageous after all.
Then, what intrigued me, is two stories. The first is about stablecoin Tether and how it may rule out Howard Lutnick, billionaire CEO of Cantor Fitzgerald, from becoming Treasury Secretary; and the second is the launch of a new stablecoin by cryptocurrency titans including Robinhood, Kraken and Galaxy Digital.
First the new crypto government. We all know that Elon Musk is very pro-crypto, and it now appears he may get an instrumental role in the new Administration. Then there’s Donald Trump who, thanks to NFTs, is likely to be the new crypto-President. Then there’s Howard Lutnick, billionaire CEO of Cantor Fitzgerald.
Howard is being touted as the next Treasury Secretary, but it makes you wonder how a candidate could become Treasury Secretary in the next American Presidency when one of his key asset classes – the stablecoin Tether – is under investigation by the Treasury and likely to be subject to sanctions. An advisory note published by the Financial Crimes Enforcement Network, a bureau within the Treasury, clearly states that they believe Mexico-based transnational criminal organisations (TCOs) are increasingly buying equipment and chemicals from Chinese suppliers through virtual currencies, such as Tether:
“This supplemental advisory highlights how Mexico-based transnational criminal organizations (TCOs) purchase fentanyl precursor chemicals, pill presses, die molds, and other manufacturing equipment primarily originating from companies located in the People’s Republic of China (PRC) to synthesize illicit fentanyl and other synthetic opioids in Mexico before the substances enter the illicit drug market in the United States … [using] virtual currency, including bitcoin, ether, monero, and tether, among others. Virtual currency payments are often sent to persons affiliated with PRC-based suppliers or secondary money transmitters with hosted wallets at virtual asset service providers.”
Sanctions would prohibit people and companies from doing business with the cryptocurrency for fear of punishment by the U.S. government, and yet Mr. Lutnick has been promoting Tether in media interviews. By way of example, Mr. Lutnick told Bloomberg News that “there’s a company that I like, it’s called Tether … I manage many, many of their assets” in January 2024.
However, as The Washington Post reports, it should be OK. Talking with Avik Roy, founder of the Foundation for Research on Equal Opportunity, a think tank that promotes free markets, said Mr. Lutnick’s firm had been helping Tether to rely more heavily on conventional financial assets – exactly what Tether should be doing, from the perspective of government regulators.
“Lutnick has been doing some of the underlying infrastructure for Tether and others, but that’s a good thing. If you’re a regulator, I would think you would want regulated entities like Cantor Fitzgerald to be the ones providing backing for Tether,” says Mr. Roy.
I guess the net:net that made me sit back is that between Donald Trump, Howard Lutnick and the likely appointment of Elon Musk, the next American government is going to be drowning in cryptocurrency multibillionaires. Nice.
Then, just to add some fuel to the fire, is the announcement last week of the Global Dollar Network through an alliance of cryptocurrency platforms including Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos and Robinhood. The Global Dollar Network is an open network designed to accelerate and reward global stablecoin adoption, with the aim to accelerate usage of stablecoins worldwide and promote an asset that provides proportionate economic benefits to its partners.
At the heart of the network is the Global Dollar (USDG), a new, safe and trusted stablecoin issued out of Singapore by Paxos that is substantively compliant with the Monetary Authority of Singapore’s upcoming stablecoin framework. DBS Bank – “Southeast Asia’s largest bank by assets and recognised as the Safest Bank in Asia for 16 consecutive years by Global Finance” – will serve as the primary banking partner for cash management and custody of USDG reserves.
The thing you need to remember is that stablecoins are very different to a bitcoin or ETH, as they are tied to the value of the US dollar for trading digitally. Nevertheless, the times are definitely changing and the answer? Ah, the answer my friend is blowin’ in the wind.
