Stablecoins and the innate control reflex

plus, BTC layering vehicles, markets, confidence, Japan and more

“The simplification of anything is always sensational.” – G. K. Chesterton ||

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IN THIS NEWSLETTER:

• The BTC layering trend gathers momentum

• Stablecoins and the innate control reflex

• Macro-Crypto Bits: markets, confidence, Japan

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WHAT I’M WATCHING:

Stablecoins and the innate control reflex

Former CFTC Chair Chris Giancarlo has penned an op-ed for the Financial Times that argues for values-based design of open systems. Digital instruments based on the dollar, he insists, should “reflect democratic values of freedom from unwarranted surveillance, censorship and control by both governments and commercial firms.”

And, he urges that we seriously consider “how to preserve the universal values for which the dollar has historically stood.”

We could just laugh at the naivete about both design and the dollar, especially coming from a former financial markets regulator. But zooming out, we should be alarmed.

It’s not just the inappropriate sanctimony – we all know the US dollar gets up to some bad stuff all around the world. Always has, always will.

No, it’s also the bewildering assumption that decentralized networks can be controlled. The idea of banning access to governments or firms you don’t like goes against the very ethos.

Bewildering (especially from someone known as a long-time crypto advocate), but also worrying, as where does that assumption come from? Perhaps from a place of elite familiarity with control. I’m sure Giancarlo means well, and he comes across as a decent person – but he obviously doesn’t realize what his assumptions say about his perhaps unconscious intentions regarding stablecoin networks.

Compliance is one thing – we can begrudgingly accept that regulators have to do their thing. But values-based access? That sketches out a gated system that will end up looking much like the one crypto was created to bypass. Put differently, it will create a gated network used by those “in favour” with the US, while foreign institutions and individuals who value independence and resilience will use stablecoins on other rails.

Giancarlo ends with:

“If we get the values right, the value of the dollar will be sustained for decades to come.”

It wasn’t that long ago that the US started limiting access to SWIFT based on values, a move that not only kickstarted a scramble to develop alternatives but also arguably intensified a global questioning of dollar supremacy.

Insisting that US stablecoin networks have “values” brings additional scrutiny to the meaning of that word, and sheds doubt on the actual interest of US regulators in open networks. Maybe the unspoken intent is that they won’t be so open after all.

The BTC layering trend gathers momentum

The volume (both in quantity and noise) of BTC Treasury announcements is getting to the stage when I can no longer dismiss them as businesses riding a narrative to rescue waning interest, or as hypesters hoping to leverage BTC momentum to benefit their own freshly minted assets.

I mean, those assumptions still hold, but I now have to recognize that this is itself generating its own momentum.

Don’t get me wrong, I’m not against businesses holding BTC in their treasuries – for years, I’ve argued that it makes a lot of sense for those who understand that the value of the US dollar relative to hard assets is inevitably downward. And BTC’s digital nature means that treasurers can convert the asset into dollars or any other currency 24/7/365.

BTC in corporate treasuries makes sense – it is a pristine asset that can’t be messed up by supply changes, bad management, forgery or substitution.

And the buying pressure from corporates will further support BTC’s floor while helping to fuel this cycle’s upswing.

But the flood of businesses either making a big public fuss of their BTC purchases or making it their entire reason for being does set off some hype alarms.