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🌐Financial Stability Report Lists Crypto & Stablecoins Among ‘Most-Cited Risks’ for Coming Year🌐
November 07, 2022
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TheĀ Financial Stability ReportĀ which is released biannually and compiled by the Board of Governors of the Federal Reserve System presents the Federal Reserve Board’s current assessment of the stability of the US financial system for a certain period. According to the Federal Reserve, the financial system is considered stable when banks, lenders, and financial markets can provide households, communities, and businesses with the financing they need to invest, grow, and participate in a well-functioning economy—and can do so even when hit byĀ unprecedentedĀ events.

In the November 2022 report, the Federal Reserve noted that since the release of the May 2022 report, the US economic outlook remains weakened, and the inflation rate remains high in the US as well as in many other countries, leading to central banks around the world responding with tightened monetary policies.

The report also includes a surveyĀ titledĀ theĀ ā€œThe Survey of Salient Risk to the Financial Sectorā€Ā in which respondents include professionals at broker-dealers, investment funds, research and advisory organizations, and academics. In comparison to the survey result included in the May 2022 report, the latest released report reveals key financial vulnerabilities noted by surveyed respondents. They include:

  • Persistent Inflation and Monetary Tightening:Ā In the May report, 68% of survey respondents cited inflation as an existing condition that presented a risk to the US financial stability. In the November report, 62% of respondents still cite inflation as a major risk to US financial stability.
  • Geopolitical Unrests:Ā Conflicts between Russia and Ukraine and the risk of military or political conflict between China and Taiwan posed concerns to financial stability. In the May as well as the November Financial Stability report, respondents noted that these conflicts could disrupt the global supply chain and weigh heavily on investor sentiments.
  • Market Fragilities:Ā Respondents pointed to developments in the financial markets that could pose risk to financial stability. Some pointed out that in the sovereign bonds market, liquidity remains a challenge. Other respondents saw potential spillovers from the scale and speed of the strengthening in the U .S . dollar, including the prospect of disorderly moves and potential actions by foreign authorities to manageĀ exchange rates, either through intervention or unanticipated shifts in monetary policy, according to the report.

Other financial systems vulnerabilities cited in the November 2022 Financial Stability Report include funding risks; the report reveals that structural vulnerabilities persist in money market funds, some mutual funds, andĀ digital assetsĀ includingĀ stablecoins.

Digital Assets and Their Effect on Financial Stability

As digital assets are becoming mainstream, their effects — cryptocurrencies and stablecoins — on financial stability cannot be overlooked. While digital assets provide a host of useful innovations, the overall ecosystem faces certain vulnerabilities and risks outside of what typically occurs in traditional finance. The speculative nature of crypto-assets makes them very volatile; the total capitalization of the crypto market has experienced big price swings in recent years.

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Stablecoins are meant to be safe-haven crypto-assets, immune to the volatility of the crypto market. The November report cited the May implosion of theĀ TerraUSDĀ stablecoin; before the crash, TerraUSD was worth about $18 billion in market capitalization. The implosion was followed by a general bearish sentiment in the crypto market leading to another well-traded stablecoin Tether (USDT) to trade briefly below its peg. Another stablecoin AcalaUSD (aUSD) also lost its peg in August after an exploit on the Acala network. The market capitalization of stablecoins continues to decline, and the stablecoin sector remains vulnerable to liquidity risks, the report states.

The report, however, stated that the turmoil in the digital assets ecosystem did not have significant effects on the traditional financial system because digital assets do not yet provide significant financial services in the broader financial sector. The Federal Reserve in the report further said there is a potential for digital assets to grow rapidly and its connection to the traditional finance sector could increase; therefore, enforcing regulations and expanding the regulatory parameters is essential to the sector.

In September, the Federal Reserve Bank of New York also released aĀ report, written by its staff authors, titled: ā€œThe Financial Stability Implications of Digital AssassetsĀ The Federal Reserve’s interest in digital assets once again proves that digital assets will slowly but surely become adopted as a key asset in the general financial market.

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Now apply that to the U.S. itself. The federal government is also a legal person. It issues debt, collects taxes, enforces laws, and signs international contracts. It operates under its ...

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Nigeria Embraces Stablecoins with New SEC Framework šŸš€

Nigeria’s Securities and Exchange Commission (SEC) has launched a groundbreaking regulatory framework under the Investment and Securities Act 2025, welcoming stablecoin businesses to Africa’s largest economy. This pivot signals a new era for digital finance! šŸŒāœØ

šŸ”‘ Key Points

šŸ”¹ Regulated Stablecoin Market šŸ“œ: The SEC’s ISA 2025 classifies stablecoins as securities, requiring licenses, reserve backing, and AML/KYC compliance. šŸ”’

šŸ”¹ Regulatory Sandbox 🧪: The Accelerated Regulatory Incubation Program (ARIP) allows startups to test stablecoin innovations under strict oversight. šŸš€

šŸ”¹ Naira Volatility Solution šŸ’°: Stablecoins, especially dollar-backed, are gaining traction among freelancers and businesses to hedge against naira fluctuations. šŸ“ˆ

šŸ”¹ Lagos as a Hub šŸ™ļø: SEC’s Dr. Emomotimi Agama envisions Lagos as the ā€œstablecoin hub of the Global South,ā€ driving cross-border trade. 🌐

šŸ”¹...

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Musk Turns On Starlink to Save Iranians from Regime’s Internet Crackdown

Elon Musk, the world’s richest man and a visionary behind SpaceX, has flipped the switch on Starlink, delivering internet to Iranians amid a brutal regime crackdown.

This move comes on the heels of Israeli strikes targeting Iran’s nuclear facilities, as the Islamic Republic cuts off online access.

The former Department of Government Efficiency chief activated Starlink satellite internet service for Iranians on Saturday following the Islamic Republic's decision to impose nationwide internet restrictions.

As the Jerusalem PostĀ reports, that the Islamic Republic’s Communications Ministry announced the move, stating, "In view of the special conditions of the country, temporary restrictions have been imposed on the country’s internet."

This action followed a series of Israeli attacks on Iranian targets.

Starlink, a SpaceX-developed satellite constellation, provides high-speed internet to regions with limited connectivity, such as remote areas or conflict zones.

Elizabeth MacDonald, a Fox News contributor, highlighted its impact, noting, "Elon Musk turning on Starlink for Iran in 2022 was a game changer. Starlink connects directly to SpaceX satellites, bypassing Iran’s ground infrastructure. That means even during government-imposed shutdowns or censorship, users can still get online, and reportedly more than 100,000 inside Iran are doing that."

During the 2022 "Woman, Life, Freedom" protests, Starlink enabled Iranians to communicate and share footage globally despite network blackouts," she added.

MacDonald also mentioned ongoing tests of "direct-to-cell" capabilities, which could allow smartphone connections without a dish, potentially expanding access and supporting free expression and protest coordination.

Musk confirmed the activation, noting on Saturday, "The beams are on."

This follows the regime’s internet shutdowns, which were triggered by Israeli military actions.

Adding to the tension, Israeli Prime Minister Benjamin Netanyahu addressed the Iranian people on Friday, urging resistance against the regime.

"Israel's fight is not against the Iranian people. Our fight is against the murderous Islamic regime that oppresses and impoverishes you,ā€ he said.

Meanwhile, Reza Pahlavi, the exiled son of Iran’s last monarch,Ā called onĀ military and security forces to abandon the regime, accusing Supreme Leader Ayatollah Ali Khamenei in a Persian-language social mediaĀ postĀ of forcing Iranians into an unwanted war.

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In the wake of hurricanes and earthquakes, Starlink has provided critical internet access to affected communities, enabling emergency communications and coordination.

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The genius entrepreneur, is throwing a lifeline to the oppressed in Iran, and the libs can’t stand it.

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GENIUS Act lets State banks conduct some business nationwide. Regulators object

The Senate passed the GENIUS Act for stablecoins last week, but significant work remains before it becomes law. The House has a different bill, the STABLE Act, with notable differences that must be reconciled. State banking regulators have raised strong objections to a provision in the GENIUS Act that would allow state banks to operate nationwide without authorization from host states or a federal regulator.

The controversial clause permits a state bank with a regulated stablecoin subsidiary to provide money transmitter and custodial services in any other state. While host states can impose consumer protection laws, they cannot require the usual authorization and oversight typically needed for out-of-state banking operations.

The Conference of State Bank Supervisors welcomed some changes in the GENIUS Act but remains adamantly opposed to this particular provision. In a statement, CSBS said:

ā€œCritical changes must be made during House consideration of the legislation to prevent unintended consequences and further mitigate financial stability risks. CSBS remains concerned with the dramatic and unsupported expansion of the authority of uninsured banks to conduct money transmission or custody activities nationwide without the approval or oversight of host state supervisors (Sec. 16(d)).ā€

The National Conference of State Legislatures expressed similar concerns in early June, stating:

ā€œWe urge you to oppose Section 16(d) and support state authority to regulate financial services in a manner that reflects local conditions, priorities and risk tolerances. Preserving the dual banking system and respecting state autonomy is essential to the safety, soundness and diversity of our nation’s financial sector.ā€

Evolution of nationwide authorization

Section 16 addresses several issues beyond stablecoins, including preventing a recurrence of the SEC’s SAB 121, which forced crypto assets held in custody onto balance sheets. However, the nationwide authorization subsection was added after the legislation cleared the Senate Banking Committee, with two significant modifications since then.

Originally, the provision applied only to special bank charters like Wyoming’s Special Purpose Depository Institutions or Connecticut’s Innovation Banks. Examples include crypto-focused Custodia Bank and crypto exchange Kraken in Wyoming, plus traditional finance player Fnality US in Connecticut. Recently the scope was expanded to cover most state chartered banks with stablecoin subsidiaries, possibly due to concerns about competitive advantages.

Simultaneously, the clause was substantially tightened. The initial version allowed state chartered banks to provide money transmission and custody services nationwide for any type of asset, which would include cryptocurrencies. Now these activities can only be conducted by the stablecoin subsidiary, and while Section 16(d) doesn’t explicitly limit services to stablecoins, the GENIUS Act currently restricts issuers to stablecoin related activities.

However, the House STABLE Act takes a more permissive approach, allowing regulators to decide which non-stablecoin activities are permitted. If the House version prevails in reconciliation, it could result in a significant expansion of allowed nationwide banking activities beyond stablecoins.

Is it that bad?

As originally drafted, the clause seemed overly permissive.

The amended clause makes sense for stablecoin issuers. They want to have a single regulator and be able to provide the stablecoin services throughout the United States. But it also leans into the perception outside of crypto that this is just another form of regulatory arbitrage.

The controversy over Section 16(d) reflects concerns about creating a regulatory gap that allows banks to operate interstate without the oversight typically required from either federal or state authorities. As the two Congressional chambers work toward reconciliation, lawmakers must decide whether stablecoin legislation should include provisions that effectively reduce traditional banking oversight requirements.

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Dubai regulator VARA classifies RWA issuance as licensed activity
Virtual Asset Regulatory Authority (VARA) leads global regulatory framework - makes RWA issuance licensed activity in Dubai.

Real-world assets (RWAs) issuance is now licensed activity in Dubai.

~ Actual law.
~ Not a legal gray zone.
~ Not a whitepaper fantasy.

RWA issuance and listing on secondary markets is defined under binding crypto regulation.

It’s execution by Dubai.

Irina HeaverĀ explained:

ā€œRWA issuance is no longer theoretical. It’s now a regulatory reality.ā€

VARA defined:

- RWAs are classified as Asset-Referenced Virtual Assets (ARVAs)

- Secondary market trading is permitted under VARA license

- Issuers need capital, audits, and legal disclosures

- Regulated broker-dealers and exchanges can now onboard and trade them

This closes the gap that killed STOs in 2018.

No more tokenization without venues.
No more assets without liquidity.

UAE is doing what Switzerland, Singapore, and Europe still haven’t:

Creating enforceable frameworks for RWA tokenization that actually work.

Matthew White, CEO of VARA, said it perfectly:

ā€œTokenization will redefine global finance in 2025.ā€

He’s not exaggerating.

$500B+ market predicted next year.

And the UAE just gave it legal rails.

~Real estate.
~Private credit.
~Shariah-compliant products.

Everything is in play.

This is how you turn hype into infrastructure.

What Dubai is doing now is 3 years ahead of everyone else.

Founders, investors, ecosystem builders:

You want to build real-world assets onchain.

Don’t waste another year waiting for clarity.

Come to Dubai.

It’s already here.

Ā 

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šŸ”— Crypto – Support via Coinbase Wallet to: [email protected]

Or Buy me a coffee: https://buymeacoffee.com/thedinarian

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Ā 

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