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Deep Dive into Crypto Predictions, FTX, SBF insights and whats next by Michelle Whitedove
From One of Michelles Final Reports To Humanity From Spirit
February 21, 2023
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From Nov 20, 2022 report,  this is an excerpt of the 33 pages:

There’s so much to cover, but I want to start right out of the gates and share something I hope you know…CRYPTOS NEED USCryptos are to be for the people and when it is all said and done history will show how important they are. 

Look at the big picture.  This is relevant, really important, the Vatican has called in all the money, gold and placeholders (debts) and the governments have no money. Well, they do, but it is hidden, it's underground. The “powers that be” want all the little people to work, but the people aren't working. The powers that be want everyone working so they are trying to make everyone poor so they have to work like little ants. The “powers that be” don’t want the cryptos or the average person gaining financial independence …so what do they do, they are trying to crash everything. We cannot let them do it. If we get a great reset, we are done, it is over. Here’s the secret that “they” don’t know. Great Spirit keeps blocking the “powers that be” from gaining complete control over the cryptos. The “powers that be” thought they had this pretty much sewn up, but it has all blown up, people are learning what is going on, and so much is going to be exposed.  Sure they have slowed down cryptos once again with their manipulation, but this tough lesson (about trusting others with your cryptos, which many people needed to learn) will only strengthen cryptos in the long run. Out with the bad, in with the good. 

I want to touch on the FTX, Sam Bankman Fried (SBF) crime.  SBF.  He's tainted.  He's dark.  He's the epitome of evil, hell, you know what I mean. He is the epitome of gluttony and greed, and he wanted the whole world, and all the people in it. He wanted to be, instead of a Hitler, he wanted to be where everybody would just come to him, and I don't know, praise him and kiss the ring, so to speak. And then the thing was--there were the dark ones coming through him.  You know I'm talking in code. No, I have no mercy for him. You know me, I fight the dark.  You know what; I can see that they don’t know where to put him right now.  They are trying to figure it out. 

I see that he will end up in jail or dead.  Everyone will know if he ends up dead that he was taken out.  They are in a pickle with this.  He's involved in pretty much all funds.  He thought he was going to run.  Well, both his parents are Stanford lawyers, and both involved heavily in politics. And then his partner- that was running another branch of the company, her father is the chairman of MIT economics. And Gary Gensler, who's the SEC chairman, used to work for him. This guy, Sam Bankman-Fried, was meeting with Gary Gensler. This is, why didn’t anyone ask me about this guy?  Maybe we could have outed him.  I need questions, specific questions to catch specific people.  Otherwise I get the general warning that “something huge in 30 to 60 days which has big impact on the markets” and with no reference point I can’t get the whole picture.  This guy (SBF) and all of them connected to him are so bad.  Really, evil.  So many were in on it.  The house is getting cleaned.  Let me see a picture of that Gary Gensler guy, the SEC guy.  I need to see the eyes. Hold on. 

Yes.  He is involved.  He's just a shallow hole. There's nothing in him.  He's just made up. The government and the powers that be are trying to get in, to manipulate it, but they keep getting blocked at different points. And if they had been allowed to keep this Ponzi scheme going, they would've taken all the cryptos down eventually.  If this didn't happen, we would all be done for. It would be war everywhere, throughout the world.  And I know that seems like a big leap, but cryptos are one of the only things that can stop the massive global corruption “They” don’t like cryptos because anything truly decentralized shows the cracks in the system.  Maybe that is why I could not get the specifics on this, it was so big it needed to blow up and if everyone knew then it wouldn’t have happened the way it needed to.  Remember this, crypto markets will not die.  Nothing ever dies. Nothing ever dies. Nothing ever dies. Nothing dies.

And Russia, they're just, well, this will sound crazy, they might be the ones that end up doing something good when it comes to blocking some of the bad actors trying to end cryptos.  Let’s come back to that later because it is important.  Everybody's looking at the map, right?  Think of any world leader.  They are all playing their chess game and moving pieces around.  They all know things are heating up and heading towards an inflection point.  They know things are wobbling and the people are only going to take so much.  It is like all of the world leaders are jockeying for position.  It’s like “The Game of Thrones.”  They are a bunch of hyenas.   

All of us, the good people, I feel like we have about three to five years to figure out where to put all this money in all the people that are peaceful, and then spread them out.

The powers that be have really screwed up.  The powers that be do not like the cryptos.  Why?  Because it was money that was formed by the people in some kind of crazy way. And then the government's like, "Well, wait a minute. Oh, the people are sitting home figuring the game out.”  And the gov’t is sitting there going, "Oh, the people are starting to play chess and they want to be kings and queens instead of pawns.”  Here’s the good news, if we stick with it, “they” cannot stop it.  “They” will keep trying to control it and slow it though.  We have to hang in there.  There is a lot more going on here than a temporary drop in the market. 

“They” know that all the people everywhere are going to go, "Okay, we're all tired of being boxed in, so we're all going to come out." And if we all come out and we all fight (peaceful protest), we all know what's going to happen.   These idiots don't know what to do with everything they have stolen.  They have all the money--they all got so greedy that they depleted Wall Street, they depleted the cryptos. They depleted the land. They depleted the people. They depleted everything. They depleted everything. Our government sold us out to China.  China's the enemy.  I am not talking about the average Chinese person either.  I am talking about the CCP.  I love all people who are good.  I do not care about race, gender, ethnicity or politics…I care about good people. But the CCP has infiltrated us.  They infiltrated us through money.  Our leaders sold us out.   I'm just so mad. I've just been a mix of emotions of anger, sad, tears, you name it. But you know me, I'm a warrior. You guys are warriors too.

Sorry, I know that was a lot to start out with.  Let me slow up and break things down:  

While these corrective phases are painful to live through, they are vital to expose and wash away the fraud.  They also wash away the remaining people who can’t hang on.  That is why we call them “corrective.”  They correct the fraud and bloat and shake out the tourists. 

If we were still running hot, FTX and other scams would not get exposed.  Down markets expose the bad actors. 

There is something very important I want to bring up again.  It isn’t sexy, but there is a reason that from the time I first got into cryptos I published that I keep only 50% of my liquid assets in crypto and the other 20% in US Dollars and around 30% in precious metals.  Even though I predicted that the market would not get better until very late this year or early into next year, when I miss something specific like the LUNA or FTX crashes and cryptos fall, we have been hedged and you may have noticed your US Dollars going up in value relative to other currencies, cryptos, and precious metals.  Soon precious metals will go up relative to US Dollars.  Soon cryptos will go up relative to the US Dollar, but I always have my “liquid assets” spread out (diversified over multiple asset classes) to draw off of in case I want to redistribute or in case of emergency.  Also, as you guys know, I do not consider real estate and business as part of my “liquid assets.”

Some people are getting scared and selling all of their cryptos to put money in their bank account.  Well, what happens when the banks wobble?  What happens when there is a bank holiday?  A centralized crypto exchange is not good, but banks also present risk.  Why?  Because they are centralized and really they are a huge ponzi.  Centralized = Risk!  I don’t keep my money on exchanges (other than some at Caleb and Brown, but not much) and I don’t keep money, other than bill paying money in the bank.  Some people get emotional and flustered when I say that and ask what their options are.  Cold storage of cryptos, precious metals in your own control.  US Dollars outside of the bank.  You have to be smart.  You have to be creative.  You have to do some research.  You have to be self-reliant.  And I know I have shared this 100 times or more over the years, but I am going to say it again right now.  Have US dollars cash in hand.  Have a means to barter.  Have some credit.  Have some precious metals in hand.  Have backup power.  Have some food and water (maybe one to 3 months) and have a network of reliable people you trust.  Have a means, even if only small, to do some gardening/planting to grow even a little bit of vegetables and or fruit.

AGAIN, the biggest gift is picking a handful of the winning projects (coins) and then hanging on and/or increasing your position (total number of coins) when the market is correcting. 

Keeping that in mind, lots of people look at me and say “oh, she’s the best in the world and should have all the answers.” I’m sorry, but that is not how it works.  God never gives just one person all the answers and God doesn’t give a critical invention or solution to just one person.  Spirit always gives vital information to a handful of people for a redundancy, you know for a backup in case someone gets taken out or drops the ball.  You know, a type of diversification if you will.  That is the model I follow when it comes to putting my betting money in cryptos;  I diversify. 

Sam Bankman-Fried (SBF)?  What is the story with this guy?  The NY Times did an article presenting him as pretty much a good guy with autism that got in over his head.  Is that the case?   NO!  LIKE I STARTED SAYING AT THE BEGINNING OF THIS REPORT, IT IS THE OPPOSITE OF THE NARRATIVE THEY ARE TRYING TO SPIN.  He is evil.  Why am I seeing celebrities, this doesn’t make sense.  Oh, there were lots of celebrities involved?  Well, put that aside because that is not the main show.  What is really going on is they were used to promote it.  This is all a massive premeditated crime--this guy, he is a Bernie Madoff type of guy.  This is an Enron type of situation, but worse, this reaches to the highest levels and around the globe.  From Ukraine money laundering to Political power funding to the SEC to pretty much everywhere.  It was a methodical attempt to control cryptos.  And this little evil genius and the gang are still working to cover their tracks.  I predict, even though he is connected and part of a much bigger scheme that he will, at some point in the future, either be taken out or do jail time.  He is not walking free in the long run.  No.  I mean, talk about the universe giving us warnings…look at the name “Madoff” (as in he made off with all your money) and “bankman fried” (as in the bank man got fried).  Talk about cosmic satire.  You can’t make this stuff up.

FTX in bankruptcy.  Will people get any of their money back?  This pisses me off.  Sorry, but this was just pure evil and you know that people will only get pennies on the dollar and it will take a lot of time.  It just makes me sick.

Can the contagion from FTX spread even further?  Yes the contagion has spread and will until the ripple effects of this bring us to the bottom. But it won’t end cryptos.  This is going to spread to a couple of more big players.  They are already scrambling in the background.  I don’t get names.  I don’t get names.  Just batten down the hatches and minimize your third party risk.  All the traders out there need to be careful because they are the ones who play on the exchanges and it is a riskier time than ever for leaving money on exchanges and trading platforms.  And the ripsaw volatility will wipe out the leverage traders.  You might see prices drop but hardly anyone gets the good deals because of exchange problems.  You already know this as we’ve been publishing about potential exchange problems for years.  Literally every year for 4 years we’ve predicted people would not be able to get money in or out in super high volume times and at peaks of mania and fear AND this has played out over and over.  Thank you spirit for that vital information as it has kept so many of us safe. 

 

CRYPTOS I Love

🎯Bitcoin Bottom Price?  Some people are projecting Bitcoin (currently around  $16,500 on the 17th of November) continuing to fall all the way down to as low as $3,500.  No.  I do not see that at all.  While I don’t get a bottom number, I get a NO to $3,500.  Now all Spirit is showing me is the target of $120K to $125K.

🎯Cardano.  Ranked 8 and about .33.  They aren’t going anywhere, they are here for the long run.  Years and years ago when I shared it would overtake Ethereum in the future, people just laughed at me, but more and more people will start seeing that is possible.  It will happen.  Sure it will take time, but Cardano will be the top doggie one day.  It is in my TOP 5 for a reason. 

🎯Ethereum Bottom Price?  Ethereum is around $1,200.  Some are projecting it will continue to drop as low as $300 to $400.  I don’t get a bottom number, but I see it going as high as even over $20K in the future.  So maybe it could drop 50%, but I don’t know.  On the other hand, what I’m focused on is that I see it will go up close to 18 X higher from where it is today.  So would I buy it even though it is dropping?  Just a little each couple of weeks or each month, you bet, but that is because I just dollar cost average in some discretionary money when I have it.  I don’t try to time it.   

🎯Persistence.  Ranked 200 and about .57.  People are learning how important decentralized smart defi contracts are and Persistence has been building and getting ready for this.  With the FTX and other centralized problems, pretty soon people will realize that solutions already exist and Persistence will have their day in the sun.  They just have to keep working hard on getting exposure and marketing and partnering with the right projects.  They are working hard and building and they are legit.  It is very rare thing to find a legit gem like Persistence so early in the game.  Still, to this day, virtually nobody knows about them, but we do!   

🎯Polkadot.  Ranked 11 and about $5.73.  It was around $50 at one time.  It has a nice 10 X run in 2021 from where you first rated it Purple.  How about now?  It is important, you know, it is designed to allow all of the different chains to work together.  That is how it will play out in the future.  We won’t have a bunch of separate pieces that don’t function together like it is right now in the early stages of crypto.  In time, it will all be connected and it will seem seamless to the average person. 

🎯Theta.  Ranked 46 and about .91.  Like all of the others that are good and trying to get through this rough market, they are all going "Crap. What do we do?" They're regrouping.  Spirit says that Theta's not out of the game. They're regrouping. Let's put it this way. Theta is resting right now, to recover. They have to work their way back up now.  And they will. They will.  Big mainnet will happen soon and that is important.  People who aren’t paying attention just cannot understand why this has been a top pick of mine for so long, but they just keep building and building and building.  You hear pundits and “talking heads” who wax poetic about how cryptos have no use case and they say silly things like “cryptos are a solution looking for a problem to solve, there is no use.”  Well, people who say things like that are not dialed into what is happening.  Theta has a huge “use case” and will see large scale adoption over time.  It just takes time. 

Predictions for 2023.  What do I think cryptos will look like in 2023? We're rebuilding and we're making progress.   

When will cryptos be super super good again? Like mania good?  I don’t get a year, but it feels 2024’ish, but we can have some unexpected runs before then, like some good periods in 2023.  Bottom line, not to sound like a broken record, I just can’t time it precisely.  I keep saying that and some people keep wanting me to give it a try. 

Parting message.  I want everybody to ... I want them to know, from me, word for word, that God looks out for each of you --sending you love and laughter and joy.  Now it's time for them to dig in and be busy and working, because we have to rebuild.  One of the first messages I was to share today was “cryptos need the people” and it is also the closing message spirit wants me to share.   

The powers that be are trying to hold all of the keys. The government's trying to get in. They can't, so they're trying to make it commercialized and over regulated.  But there's a big block. And guess who's going to help block it? It's really messed up and hard to comprehend, but I figured it out. I know this is going to sound absolutely insane to you, but somehow, Russia stops the one world gov’t total reset ... Russia somehow finds some common sense, and says, "Nope."  

Yeah, we have three to five years here, to play around with this stuff, for people to really get their act together and I’m not just talking about money.  I’m talking about on the spiritual side, on the side of light, and living healthy and good and clean.  Greed and gluttony need to go bye bye.  It needs to be about love, not money.  I understand that money is important, but any who make it their primary mission or focus will continue to run into problems.   I know you guys understand that it's not about the money, honey.  It’s not about the dollar. It's about love and family and true friends. And that's where you grow.  And love is the only thing you take with you when you depart


Love's the only thing-- that's what some have forgotten,

Michelle Whitedove
17 Nov 2022

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The SEC Can Learn From the IRS in Making Regulation Simpler for Crypto

The IRS has relied on voluntary disclosure programs to bring taxpayers into compliance rather than imposing punitive actions upfront. A similar model should be applied to crypto regulation as well, says Miles Fuller, Director of Government Solutions, TaxBit.

In February, the Department of Government Efficiency (DOGE) began soliciting public input pertaining to the U.S. Securities and Exchange Commission (SEC) — a move suggesting reform at the agency is imminent.

Since then, the SEC, in line with President Trump, has taken a far less adversarial stance towards the cryptocurrency industry, as evidenced by the appointment of crypto-friendly personnel and the abandonment of numerous lawsuits and investigations into crypto companies. But DOGE has the potential to implement further change, and interest in the SEC signals growing pressure towards regulators to reassess their approach to digital assets.

In response to the request for public input, Paul Grewal, Chief Legal Officer at Coinbase — one of the companies no longer facing a lawsuit from the SEC — proposed a policy requiring the SEC to reimburse legal costs for companies that successfully challenge enforcement efforts. The motivation for his suggestion is obvious, but the impact of DOGE on crypto will likely be a bit broader.

As Joel Khalili summarized in Wired, the SEC’s recent retreat from lawsuits represents “an early signal of the agency’s intent to work arm in arm with the industry to come up with a set of rules to govern crypto transactions and products.”

As things currently stand, the SEC’s lack of proactive guidance makes it difficult for businesses to plan long-term compliance strategies, and their enforcement actions often come after years of operation, leaving companies and their investors exposed to unforeseen legal risks. Going forward, this will likely change.

Clear Compliance Over Reactive Enforcement

Relying on enforcement instead of proactive guidance has forced companies like Coinbase, Ripple, and Celsius to spend millions in litigation to clarify their regulatory standing. But in one case against Debt Box, the SEC admitted to inaccuracies in its statements, leading a court to order the SEC to cover the company’s legal expenses — a preview of Coinbase’s suggestion. The ruling cast doubt on the agency’s credibility and highlighted concerns over its enforcement practices.

In the future, expect to see regulatory agencies – including the SEC – under increased pressure to align with the U.S. Treasury’s approach, which prioritizes clear compliance pathways over reactive enforcement. The Treasury’s digital asset guidelines are far more structured and address key areas like tax reporting, compliance and AML measures. Standardized definitions of what constitutes a security in the crypto space are essential for helping companies structure their products appropriately from the outset.

A Balancing Act

In addition to taking notes from the Treasury, the SEC can also look to the IRS for inspiration. A “safe harbor” provision for early-stage projects could encourage innovation while ensuring compliance over time, similar to proposals previously discussed by SEC Commissioner Hester Peirce. The IRS already embraced this approach, issuing temporary transitional relief for crypto taxpayers in January 2025.

The IRS historically relied on voluntary disclosure programs to bring taxpayers into compliance rather than imposing punitive actions upfront. A similar model should be applied to crypto regulation as well.

While some people assume regulation inherently hinders innovation, the opposite can be true. This is because clearly defined guardrails will entice more risk-averse entities to enter the ecosystem and help it grow. A light regulatory touch requires robust backend enforcement and can lead to unnecessary friction between regulators and businesses.

Altogether, better coordination between the SEC, Treasury, and IRS would help prevent regulatory conflicts and streamline compliance obligations for digital asset companies and stakeholders. The Treasury’s digital asset guidelines already offer a strong foundation for this type of cross-agency alignment. The current regulatory uncertainty and the SEC’s reactive enforcement approach stifles growth, while a clearer, more coordinated framework would benefit the entire ecosystem.

The Bottom Line

Between the DOGE’s request for input, the new administration's broader commitment to digital asset reform, and Coinbase’s proposal, the stage is set for reforms aiming to make regulatory oversight more predictable. While we are in the early stages of the new administration, changes are already occurring at a staggering pace. It’s clear that DOGE’s influence on SEC policies will make an impact – especially with public discourse on these issues further strengthening the case for clearer guidelines rather than regulation by enforcement.

Of course, it’s worth noting that DOGE’s plans for the SEC will likely extend beyond crypto, just as efforts to regulate the industry extend beyond the SEC. Ultimately, it would be beneficial for the new administration, in conjunction with Congress, to create a legislative framework for the industry, so enterprises and individual taxpayers alike understand what constitutes a commodity, security, and digital asset. In other words, we must learn to walk before we run. In the meantime, the SEC should adopt a strategy that can foster growth while maintaining investor protections.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

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Are same brand stablecoins fungible in different regions?

Many countries are introducing stablecoin laws, each with their own requirements, especially regarding reserves. If the same stablecoin brand is issued in multiple jurisdictions using the same brand, is it fungible (or entirely interchangeable)? There’s the practical fungibility versus the legal one, especially if a stablecoin collapses.

Highlights:

  • Each jurisdiction imposes different reserve composition and redemption rules for stablecoins
  • Multi jurisdiction issuers use arrangements between regions to harmonize reserves
  • Issuers cannot precisely track how many tokens circulate in each region due to secondary market transfers
  • Formal crisis plans will determine outcomes during stress events
  • During a collapse, holders in specific regions could face different recovery rates depending on local reserve adequacy.

While the biggest use case for stablecoins is currently for cryptocurrency transactions, there’s a growing appreciation of their benefits for cross border payments. Plus, the infrastructure to support this is expanding, with Stripe’s acquisition of Bridge being one of many examples. After passing the $200 billion issuance mark in December 2024, many predict it won’t be long before stablecoins reach the trillion mark. Citi recently estimated a base case of $1.6 trillion by 2030, with a bullish estimate of $3.7 trillion.

Defining fungibility

The definition of ‘fungible’ according to the Oxford Dictionary:

“Of a product or commodity that has been contracted for: that can be replaced by another identical item without breaking the terms of the contract. More generally: interchangeable, replaceable.”

What’s notable about this definition is that stablecoins issued in different jurisdictions will likely have separate contracts.

The core fungibility issue arises because a resident of one jurisdiction might receive a payment that involves a token that’s technically issued in another jurisdiction. In the examples we’re discussing, these are the same brand of tokens.

Technically, EU crypto exchanges may be breaking the rules

Imagine a global stablecoin, let’s call it GlobalCoin, issued in two jurisdictions e.g. Japan and EU each meeting local requirements. Clifford Chance partner, Diego Ballon Ossio, highlighted that this is potentially problematic in the EU. He noted that, “technically the EU issuer or exchange should have something in place to avoid the Japanese version of that coin to be listed, exchanged, and traded in the EU. Because it’s not exactly the same coin, particularly if say liquidity requirements differ.”

He gave the example of someone from Japan paying an EU resident with GlobalCoin via an EU cryptocurrency exchange. From the user’s perspective, a GlobalCoin is a GlobalCoin, they can’t differentiate where it was issued.

Mr Ballon Ossio continued, “If that coin was used in an exchange, that exchange is now admitting to trading a coin that technically hasn’t been approved because the Japanese version wasn’t approved. And actually you would not be allowed to offer that coin because that coin is being sold as an e-money token, but it’s actually been issued by a non-EU issuer.”

The EU’s MICA regulations don’t deal with this situation. There’s a pragmatic approach involving the issuers rebalancing the books between the jurisdictions, which isn’t perfect. It will work 99.99% of the time, but will be tricky in a de-peg event.

USDC is the first prominent example

The most prominent example of a stablecoin that’s issued in multiple jurisdictions is Circle’s USDC, which is primarily issued in the United States. While this article references USDC a few times, the content and issues are not specific to Circle or USDC.

Circle has EU emoney and MiCAR licenses and issues USDC in France under European rules. The EU version of USDC has a separate issuer, different terms (ie. a separate contract) and ringfenced reserves. For example, all EU USDC stablecoin holders can directly redeem the stablecoin with Circle SAS, provided they go through KYC and compliance procedures. In the US, only larger entities and distributors (primary participants) can redeem directly. The UK has changed its planned approach and now intends to allow redemption only via primary participants.

Jurisdictions have different reserve requirements

Looking at its reserves, in the United States the USDC stablecoin keeps around 15% of its reserves in bank deposits, according to Circle’s transparency reports. USDC temporarily lost its dollar peg when Silicon Valley Bank collapsed in 2023 holding $3.3 billion of USDC reserves. Before that, Circle kept around a quarter of its reserves at banks. Even 15% is more than most stablecoin issuers, in part because holders of other stablecoins often switch to USDC to off ramp. For example, Tether only keeps around 0.1% at banks.

Turning to EU’s MiCAR, it requires smaller coins to keep 30% of their reserves in cash, and larger ones 60%. The regulations attempt to address the risks by limiting the amount held by a single bank.

Another example is Japan, which currently requires 100% of stablecoin reserves to be held in bank accounts, although it’s exploring changing the rules to support government bonds.

In the case of Circle, it also has a license in Singapore. For its Singapore issuance, all reserves are held in a trust account at Standard Chartered Singapore.

Estimating regional stablecoin issuance

Each jurisdiction expects stablecoin reserves to be held onshore in the proportions required by law. Yet stablecoins are bearer tokens where most transactions take place in secondary markets, so issuers don’t know the identity of all their coin holders, or where they are based.

In order to rebalance the books between the regions, they have to estimate the regional figures. Europe has provided guidelines for how to do this for foreign currency coins, which involves getting reports from local crypto asset service providers (CASPs), including crypto exchanges and custodians. CASPs have to provide the issuer with reports on a daily basis. Self hosted wallets tend to be glossed over and these might be retail or institutional.

That said, if a large liquidity provider uses a coin issued in the US to pay for a multi billion Bitcoin transaction in the EU, that will move a lot of coins. However, some of these institutional wallets are traceable, although there is an increasing tendency for larger players to attempt to cover their tracks.

If jurisdictions don’t prescribe rules, then issuers will likely make estimates using issuance and redemption figures via primary participants (distributors).

In the case of USDC, in its MiCAR whitepaper it notes that it will rebalance the reserves between the two current jurisdictions. As one of the risks, the European USDC whitepaper says:

“Dual Issuer Risk. Circle LLC and Circle SAS have entered into a contractual arrangement to rebalance their respective reserves in the event that one reserve is no longer able to meet its liabilities. The Circle SAS Recovery Plan and Redemption Plan will take into account these intra-company considerations and outline a uniform and coordinated approach by both issuers in order to be able to cover any outstanding liabilities and satisfy redemptions in a prompt and equitable way.” 

What happens if the GlobalCoin stablecoin fails?

As we’ve shown, stablecoin issuers can make best efforts to ensure the reserves are sitting in the correct jurisdiction. But they won’t know precisely how many stablecoins are held in each jurisdiction until everyone wants to redeem simultaneously. So what happens if GlobalCoin fails?

There are two ways this will be addressed. One is by having a plan in place, and the EU requires emoney token (stablecoin) issuers to have both recovery and redemption plans. However, these are not public documents. Mr Ballon Ossio was willing to speculate what the contents might include. If there were a shortfall, the treatment is likely to be similar to a client assets framework. This would usually spread the loss across a single class of asset holders. In other words, if there was a 10% shortfall in reserves, then a US dollar stablecoin would be worth 90 cents for redemption purposes.

A second path is for regulators in jurisdictions to have mutual agreements. Mr Ballon Ossio highlighted that in the banking world there’s the Basel Committee framework for banks. However, just looking at the US draft stablecoin regulations, MiCAR and Japanese regulations, the requirements for redemption and holding liquid bank balances are vastly different. While Basel implementations differ between jurisdictions, there’s more homogeneity compared to stablecoins.

This fungibility topic probably won’t matter for 99.99% of the time. As more and more jurisdictions pass legislation, there’s more need for laws to provide legal clarity on this topic, especially given cross border payments are a key stablecoin use case. Hopefully it will be a very long time before there’s a need to explore what happens in the 0.01% scenario: a failure of a multi-jurisdiction stablecoin.

Source

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