What is a "black swan" in the market and can it be curbed

A "black swan" is a hard to predict and a rare event that nevertheless has significant consequences. The theory was invented by American mathematician and economist Nassim Taleb in 2004. Almost all significant scientific discoveries, historical and political events, art and cultural achievements, such as the development and introduction of the Internet, World War I, the stock market crash in the United States in 1929, the collapse of the Soviet Union and the global economic #crisis of 2008 are "black swan" type events.

Silicon Valley Bank (SVB) declared bankruptcy.

Against this background, the cryptocurrency market also collapsed. #USDC #Stablecoin has been detached from the dollar after the closure of Silicon Valley Bank, where Circle held $3.3 billion in collateral. Bloomberg writes that this is the largest bank collapse in the U.S. since the 2008 crisis. The reason was the withdrawal by the technological startups of their funds from the bank accounts. The financial regulator in California said that the bank will get a temporary administration and insured depositors will get their money no later than Monday morning. According to Bloomberg, SVB had about $209 billion in total assets and $175 billion in deposits as of December 2022.

In the screenshot you can see the U.S. bank situation now. (March 11, 2023)

How do investors prepare for black swans?

#BlackSwans can affect almost all areas. Sometimes events occur almost instantaneously. So how do you protect yourself from their influence?

In his book, Taleb wrote that the best way to mitigate the negative influence of black swans is not to try to predict them. According to the author, it is instead necessary to develop a stable and sustainable plan that will help reduce the probability of such an event or mitigate its consequences.

Diversify capital by asset type and location

Accept that the next black swan is bound to happen

Take advantage of the opportunities that black swans provide

In 2017-2019, the economist spoke positively about #bitcoin , calling it the first organic currency. He saw the strength of digital money in the fact that it could not be controlled by central banks.

However, Taleb later changed his mind. The economist said that we can't rely on bitcoin - it won't save money from inflation. According to Taleb, cryptocurrency is not a hedging tool and does not protect against geopolitical risks. "Bitcoin is not an insurance against geopolitical events, but just the opposite."

Black Swans and other threats really do come down to risk management and its basic applications. A good formula to apply is RISK = THREAT X VULNERABILITY X CONSEQUENCE. We can use this formula combined with new advanced computing to better predict, synthesize data, and mitigate extreme events. It is never too late to start planning.

On March 20, Circle’s Director of EU Strategy & Policy, Patrick Hansen, published an article on the Circle blog discussing the impact of the Markets in Crypto-Assets Regulation (MiCA) on the European Union’s (EU) crypto industry.

The article highlights how MiCA will change the way crypto companies operate in the EU, providing them with the ability to serve the entire EU market with just one license. Before MiCA, crypto companies had to comply with the regulatory frameworks of each of the 27 member states, leading to higher costs and limiting their competitiveness compared to US or Asian counterparts.

MiCA’s implementation is expected to have several positive impacts on the EU crypto industry, including increased competitiveness and market share for regulated businesses, institutional adoption and activity, and potentially becoming a huge opportunity for economic and technological revival in the EU.

However, the success of MiCA will depend on the implementation standards and enforcement practices developed by EU supervisory authorities in the next 12-18 months. Some of MiCA’s passages carry the risk of burdening industry participants, and their full effects will only become apparent once technical implementation standards provide practical operational guidelines.

MiCA has the potential to become a globally adopted regulatory standard like the GDPR is today for privacy. The EU market is the largest internal market in the world with 450 million relatively wealthy consumers. By the sheer size of its market, MiCA will likely persuade many companies worldwide to adopt its operating standards, possibly on an international scale, in order to maintain globally streamlined operations and products. The article also notes that the longer the US regulatory vacuum for crypto-assets persists, the greater the global impact of MiCA standards will be.

In conclusion, the MiCA regulation could represent a positive boost for the EU crypto industry and the EU economy overall, but its success is highly dependent on the development of practical implementation standards. MiCA could set global standards for crypto regulation, but its practical success is the only thing that will matter at the end of the day.

#MiCA #EU #Circle #Stablecoin #azcoinnews

This article was republished from azcoinnews.com

CryptosHeadlines.com - The Leading Crypto Research Network

Terraform Labs, founded by Do Kwon, has once more accused market maker Citadel Securities of being involved in an alleged deliberate attempt to cause the depegging of its stablecoin in 2022.
Legal Action to Obtain Documents from Citadel Securities
Terraform Labs initiated a legal move on October 10, filing a motion in the U.S. District Court for the Southern District of Florida. Their aim is to compel Citadel Securities LLC to produce documents related to their trading activities during May 2022. This timeframe is noteworthy because it aligns with the depegging of Terraform Labs’ stablecoin, now known as TerraUSD Classic (USTC).

Screenshot from filing from Terraform compelling Citadel to provide additional documents. Source: courtlistener
The motion contends that this depegging incident in May 2022, which caused the stablecoin’s value to plummet, was not a result of instability in its underlying algorithm. Rather, Terraform Labs argues that the market destabilization was orchestrated by specific third-party market participants intentionally shorting the stablecoin.
In their filing, Terraform Labs refers to “publicly available evidence” suggesting that Ken Griffin, Citadel’s head, may have had plans to short the stablecoin around the time of the depeg. It’s worth noting that Citadel Securities has previously denied any trading of the TerraUSD stablecoin during May 2022.
Crucial Documents for Defense
Terraform Labs underscores the critical importance of these documents in their defense against the lawsuit brought by the U.S. Securities and Exchange Commission (SEC). Filed in February, the SEC’s lawsuit alleges that Terraform Labs, along with its founder Do Kwon, were involved in a significant crypto asset securities fraud.
The success of Terraform Labs’ defense is at stake if Citadel Securities withholds these essential documents. Should the court fail to compel Citadel to release the trading records, Terraform Labs has formally requested that the matter be transferred to the U.S. District Court for the Southern District of New York. There, Judge Rakoff will make a decision on this matter.
In a related legal development, Terraform Labs had sought permission in July to access data from the now-bankrupt crypto exchange FTX. They believed this information could play a vital role in their defense.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

#Bitcoin #CryptoNews #Stablecoin #LunaClassic #USTC

CryptosHeadlines.com - The Leading Crypto Research Network

Binance sees a big chance in Japan’s stablecoin market, which could be worth up to ¥5 trillion (around $34 billion).
Despite its ongoing legal dispute with the U.S. Securities and Exchange Commission, Binance is looking for new chances in foreign markets. They plan to introduce stablecoins tied to USD, EUR, and Japanese Yen in Japan’s growing crypto sector by 2024.
Binance is partnering with Mitsubishi UFJ Financial Group’s trust banking division for this project. MUFG’s general manager, Takeshi Chino, mentioned that both companies are collaborating on this issuance.
In June, Japan passed a law that allows licensed companies to create stablecoins. This has prompted firms like Orix Corp. to consider launching these digital tokens, which offer advantages like faster money transfers and settlements. MUFG has also been in talks with different groups about using its blockchain platform, Progmat, to make stablecoins tied to foreign currencies.
Tatsuya Saito, MUFG’s vice president of product, believes that Japan’s stablecoin market could be worth up to ¥5 trillion (around $34 billion), which is about a quarter of the estimated global market size.
To make this happen, Binance needs to get a license in Japan as a provider of electronic settlement methods. Once that’s done, users can use stablecoins for crypto trading and potentially for payment services, according to Chino.
Binance Expands Abroad
Binance has been dealing with regulatory challenges worldwide, including the US, Australia, and the UK. Despite this, the company is actively talking to regulators to clarify crypto rules. Recently, Binance reopened its Belgium operations after a 3-month regulatory pause.
There were reports suggesting that Binance might delist stablecoins in Europe by June 2024 due to the Markets in Crypto Assets (MiCA) rules coming into effect by December 2024.However, Binance’s CEO, Changpeng Zhao (CZ), clarified that there was a misunderstanding in statements made by Binance’s French legal director, Marina Parthuisot. CZ mentioned that they already have partners in Europe and plan to launch a compliant stablecoin.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

#CryptoNews #Binance #MUFG #Japan #Stablecoin

CryptosHeadlines.com - The Leading Crypto Research Network

Visa, a global payment solutions leader, is taking steps to modernize cross-border money transfers. The company is expanding its use of stablecoins and integrating the Solana blockchain.

This initiative involves collaboration with major merchant acquirers, Worldpay and Nuvei, and aims to transform financial transaction processing.

Visa has already conducted successful live pilots, allowing the seamless transfer of millions of USDC tokens across the Solana and Ethereum blockchains to settle fiat-based payments. These developments reflect Visa’s commitment to using blockchain to improve global payment efficiency.

Visa’s payment system involves intricate fund movements between the customer’s bank (issuer) and the merchant’s bank (acquirer). Visa’s treasury and settlement systems facilitate these fund transfers among nearly 15,000 financial institutions worldwide in over 25 currencies.

Visa’s Crypto Head’s Statement

Cuy Sheffield, Visa’s Head of Crypto, emphasized the company’s dedication to embracing digital currency and blockchain innovation. He explained that by leveraging stablecoins like USDC and blockchain networks like Solana and Ethereum, Visa aims to enhance cross-border settlement speed and offer modern fund transfer options.

Benefits of Solana Integration

The integration with the Solana blockchain is expected to provide faster and cost-effective settlement solutions. Solana boasts quick block times, high transaction throughput, and Visa’s move positions it as a leader in improving global cross-border payments for both consumers and businesses. This initiative showcases Visa’s commitment to industry innovation.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

#CryptoNews #cryptomarket #Visa #Solana #Stablecoin