Global Crypto News by Killerwhale
Welcome to the Global Crypto News hub! Articles by Killerwhale go over the news you may have missed that involves crypto, but had a real world effect. Sit back, relax, and enjoy! News is gathered throughout the week and posted every Saturday!
PayPal announces their own stablecoin
After authorizing in 2020 crypto-assets trading and purchasing on the platform for US clients, the corporation has now revealed the development of its own stablecoin $PYUSD, which is backed by US Dollar and will be deployed as a ERC-20 token on the Ethereum blockchain. The purpose is straightforward : “Focusing on Education, Understanding and Adoption of Digital Currencies” to both retail stores and customers as well as constituting the long-awaited connection between Web3 and fiat currencies.
According to Dan Schulman, president and CEO of PayPal; "The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.S. dollar."
The stablecoin is expected to be used to facilitate cross-border payments, to provide liquidity for DeFi applications, and to make it easier for users to purchase goods and services with crypto-assets. PayPal has stated that the stablecoin will be fully compliant with all applicable regulations. As a matter of fact, Paxos, a leading stablecoin issuer, will be issuing the $PYUSD stablecoin. It is widely recognized to have originated the Binance USD stablecoin. The company, which has an American banking license, also has its own stablecoin, the Pax Dollar ($USDP).
Paxos will maintain the stability of the $PYUSD price by backing each stablecoin with “U.S. dollar deposits, U.S. Treasuries and similar cash equivalents.” Paxos assures that the aforementioned methods will always allow one PYUSD to be traded for one dollar. There is an analogous dollar held in reserve for every stablecoin generated on the blockchain. In order to reassure users, Paxos has agreed to release a monthly report on the reserves after PayPal USD beginning in September 2023 as well as publishing “a public third-party attestation of the value of PayPal USD reserve assets. The attestation will be issued by an independent third-party accounting firm and conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants (AICPA).”
"Our commitment to responsible innovation and compliance, as well as our track record of delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD," said Schulman.
This announcement by PayPal is a significant development in the adoption of digital currencies. It is the first time that a major payment processor has launched its own stablecoin. The $PYUSD stablecoin is expected to play a major role in the growth of digital payments and the adoption of crypto-assets and it didn't take long for the news to trigger reactions. The crypto community is mainly opposed to a "centralized" form of stablecoins. The PYUSD code, according to one observer, would feature functions for freezing assets and clearing a user's balance with the "wipeFrozenAddress'' function. This is due to the centralized nature of the ERC-20 token and its need to evolve in a controlled environment where political leaders distrust stablecoins. However it is known that USDT also has a freeze function which has already been called to suspend hackers’ addresses. Even so, PayPal’s token has anyway sparked the interest of legislators such as House Financial Service Committee Chairman Patrick McHenry.
“This announcement is a clear signal that stablecoins - if issued within a clear regulatory framework - hold great promise as a pillar of our 21st century payment system.”
Therefore it appears that official regulators and authorities are less wary of businesses originating in traditional finance than of native organizations. Without a doubt, the destiny of the first stablecoin issued by a large financial institution will be closely monitored by all parties involved.
South Korea indicts Bitsonic CEO
Based on local reports, the alleged scheme began in January 2019 and featured manipulation of computer systems along with false price and volume inflation of certain crypto-assets. This crypto scam allegedly persisted until May 2021, a few months before the exchange announced its formal closure.
Jinwook Shin was arrested on August 7th and as reported by trusted local sources, the Bitsonic’s CEO is charged with allegations ranging from forgery to breaching other penal regulations. According to reports, police have also charged the exchange's Vice President with business obstruction.
The revelation that the Bitsonic CEO continued to solicit investments and deposits from new clients even while liquidity woes began to strike the exchange and withdrawal services were suspended is even more alarming. This demonstrates a worrisome breach of trust between the exchange and its users, as individuals were duped into using the platform under false pretenses.
It's also noteworthy that Bitsonic ceased operations in August 2021, with the exchange attributing its demise to various endogenous, but mostly exogenous, struggles. In parallel at the time of the event, South Korean authorities tightened their restrictions against fraudulent activities in the crypto-currency sector, shutting down 11 local crypto-currency sites considered to be engaging in illegal acts.
South Korea has taken action to improve its regulatory and investigative frameworks in response to a rising tide of crime and illicit flows tied to cryptocurrency. The country has established an inter-agency investigation unit dedicated to reducing cryptocurrency-related crime. This endeavor is a direct response to the recent rise of illegal behavior in the Korean market, which has resulted in financial losses for investors and raised questions about the overall security, transparency, and trustworthiness of the crypto-currency ecosystem.
The trial of Bitsonic's CEO will undoubtedly be widely followed by the crypto community as well as regulators. The outcome of this case will most certainly have considerable consequences for the integrity of the crypto-currency sector, particularly in Korea, as well as for the mechanisms put in place to combat fraudulent behavior.
The end of Neoliberalism?
A new liberal era—are we there yet? On the other hand, are we heading toward a form of governmental structure where the state assumes an increasingly proactive position? How can we reconsider the function of government in our contemporary societies?
In the USA several audacious projects, unimaginable under previous administrations, have been attempted by the Biden administration. The most significant one is the Infrastructure Investment and Jobs Act, which has allocated $1.2 trillion to investments in the electrical system, clean water, broadband access, and transportation. The Chips and Science Act also allocates $280 billion for domestic research and production of semiconductors. Last but not least, the Inflation Reduction Act (IRA) allocates $400 billion for green innovation. The belief that the relationship between governments and markets required a thorough revaluation was at the core of these legislative actions.
Historically absolutely prohibited, the Biden administration has adopted the reasoning and rhetoric of an industrial approach which is highly interventionist and does not require any effort to be recognized. These actions have drawn positive criticism from all around the world, including Europe, where comparable regulations have been suggested, and Asia, where they have been viewed as an effort to prevent China's economic rise. Are we thus at the forefront of something new? Are we changing the way we govern so that the governing body assumes an increased proactive role?
As a matter of fact, in the United States, and consequently in other parts of the world, we are currently at a turning point. The dissolution of the neoliberal system has created previously unimaginable political opportunities. The US government has now decided to deploy instruments such as antitrust, player regulation of monopolistic actors, and tax policy meant to promote the labor market that were previously completely excluded from the old Reagan, Clinton, and Obama models.
In retrospect, the global financial crisis that occurred between 2008 and 2009 undermined the hegemony and reputation of neoliberalism. Even though it took some time for the protest to become visible, by the middle of the decade, the movement's course was obvious. Both the left and the right rebelled against neoliberalism. On the right, it started in 2010 with the Tea Party and drastically picked up speed in 2016 with Trump's election as president. With the ascent of Bernie Sanders in the US in 2016, the left-wing rebellion that began with the Occupy Wall Street movement in 2011 gained momentum with Black Lives Matter in 2014.
The Covid pandemic and the current conflict between Russia and Ukraine, which we would once have considered exogenous to the global economy but which are now endogenous to it, are also responsible for this decline in confidence in the neoliberal political order.
One of the key features of the neoliberal era is that supply chains can be infinitely extended around the world, and the two aforementioned instances show the exact opposite. The fragility of the supply chain was originally made public by COVID. The second was Russia's invasion of Ukraine, which made Europe realize how heavily it was dependent on oil and gas from a nation that suddenly faced an existential danger.
It is no longer valid to argue that markets should be allowed to make decisions in circumstances like this, where resource availability is crucial. Governments should, on the other hand, be the ones to make market interventions. Faced with the fear of such scenarios, governments in many countries began to consider intervening in the economy to secure the supply of essential materials and goods. In other words, the project to rethink the relationship between states and markets has been given a new urgency.
Biden's administration is mainly part of this changement in the US, as more progressist actors are acquiring high political and economic functions in the government and at the white house. Moreover, Government intervention in capitalist activities of investment, production, and labor is being pushed by politicians and social movements on both the right and the left. Some favor placing the entire system in the service of the general welfare. Roosevelt's New Deal's guiding principle has reappeared.
The decline of neoliberalism and the rise of a new form of government intervention in the global economy is likely to have a significant impact on the crypto ecosystem. Governments are likely to become more interested in regulating cryptocurrencies and manipulating the cryptomarket in order to protect consumers, prevent fraud, and mitigate financial risks.
For example, governments could impose regulations on cryptocurrency exchanges, mining operations, and other crypto-related businesses. They could also use their control over the money supply to influence the price action of crypto-assets.
As a matter of fact, the US government has already taken a number of steps to regulate cryptocurrencies, including: the Financial Crimes Enforcement Network (FinCEN) which has issued guidance classifying cryptocurrencies as "virtual currencies" and requiring cryptocurrency exchanges to register with FinCEN, as well as, the Commodity Futures Trading Commission (CFTC) has asserted jurisdiction over certain cryptocurrency derivatives products.
Across the Pacific, China has taken a much more aggressive approach to regulating cryptocurrencies, banning cryptocurrency mining and exchanges in 2021, along with South Korea which has imposed a number of regulations on cryptocurrency exchanges, including requiring them to register with the government and to obtain a license to operate. Additionally, India is considering a major ban on cryptocurrencies, but has not yet taken any definitive action.
These are just a few examples of the real government regulation that is already happening in the crypto-ecosystem all over the world. As the crypto ecosystem is still in its early stages of development, it is not yet clear how it will be regulated in the long term. However, it is clear that government regulation will play a major role in shaping its development and that we are likely to see more government regulation in the future, as governments grapple with the implications of this new technology. It is important to be aware of the potential for government regulation and how it could impact your investment strategy so as to plan accordingly.