Measuring The #Crypto Regulatory Fallout: Celsius, Vauld, Voyager, Three Arrows, Terra, Tether, etc.
The collapse of Terra’s stablecoin in May triggered an ongoing fallout as crypto lenders including Celsius, Vauld, and Voyager freeze withdrawals to conserve liquidity. Concerns regarding stablecoins have spilled over to downward price pressure on leading cryptocurrencies, particularly Bitcoin .
Policymakers are responding. The policy reaction function demonstrates graphically the value of measuring notional volumes when seeking to identify regulatory policy risks.
Policy action levels regarding cryptocurrency remained muted during May and June, amid the stablecoin implosion
While policy activity targeted to stablecoins skyrocketed:
Stablecoin policy activity during June was not just elevated and volatile
it was also broadly distributed across major jurisdictions. From the United States (CFTC, Fed. Gov. Waller, Fed Chairman Powell to four major European central banks (Riskbank, Bundesbank, Bank of England, Banque de France), to the Bank of Canada and ESMA. The European Union also famously finalized its MiCA (Markets in Crypto Assets) legislation. Consider:
The Bank of England’s Andrew Hauser made clear that the UK policy regarding systemically significant stablecoins as a practical matter probably means those tokens will need to be "issued by a bank, or by a non-bank that: is subject to rigorous central bank regulation and supervision."
The European Systemic Risk Board has determined that the potential systemic and financial stability risks related to crypto assets require the articulation of a regulatory policy framework "as a matter of urgency."
The European Securities and Markets Authority used its June Report on Trends, Risks and Vulnerabilities to signal financial market structural shifts and “fragilities” include increased risks associated with crypto asset “business models and financial engineering.”
CFTC Commissioner Pham at the end of May equated stablecoins and algorithmic stablecoins to the kind of “opaque, complex financial products” that triggered the 2008 financial crisis. She also noted that if the SEC concludes these instruments are not securities, then “the CFTC probably has some regulatory touchpoint over” these instruments. She also co-authored an op-ed with SEC Commissioner Pierce to made the case for expanding the CFTC’s jurisdiction in order to promote “more growth in compliant digital asset markets with adequate protections for the retail public.”
PolicyScope data feeds regarding cryptocurrency (DCVS 1) and CBDC (DCVSC 2) enable users to spot these and other regulatory policy shifts as they occur, without depending on third party bloggers and media outlets.
How To Use Our PolicyScope Data
The 5-Minute Morning Scan
Analysts and portfolio managers using our digital currency policy volatility signals receive notice of policy activity upticks withing 24 hours. This quantitative data delivers direct links to underlying publicy available source documents before the news cycle has had a chance to deliver this information to the mainstream public. This allows our users to develop an informational advantage as well as unique insights without the bias shown throughout news media outlets.
Implementing a 5-minute daily scan into your schedule allows strategists and portfolio managers to spot policy shifts that might not have been spotted using a nonobjective source. Our V3 Bloomberg Terminal App users additionally can search specific lexicons/tags such as stablecoins to generate an interactive time series for that specific issue. Volatility spikes and inflection points (where action exceeds media coverage) accelerate access to unique insights before the noise of the news cycle swamps your position.
DCVS policy data is available to professional investors through API data feeds and through the V3 Bloomberg Terminal App. Investment analysts, research directors, strategists, and advocates can access the data as well as the underlying language data through interactive dashboards.