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Bitcoin Fair Value Newsletter - Issue #3

Hello all! As usual things are moving fast in the world of finance.
Lets dive right into this weeks key news events…

This weeks news...
Securities and Exchange Commission chairman Gary Gensler indicated Tuesday that crypto lending and staking platforms that hold custody of user funds could fall under U.S. securities laws and, as a result, his agency’s oversight.
A recent SEC spat with Coinbase over its Lend product suggested to many that crypto lending platforms would need to register with the SEC sooner rather than later.
The concern for the traditional system is so high that Gensler even more recently referred to stablecoins as “casino chips.” - source
What does this mean for Bitcoin and the internet economy?
The path to clear cut rules and regulations in the USA was never going to be an easy task, especially with lobbyists having so much influence within the existing regulatory bodies.
It is clear that Gensler is protecting his constituency, which is the big banks that are “too big to fail.”
With the FED pegging interest rates low, Banks could not compete with a Coinbase 4% APY on USDC savings accounts. Most importantly, properly incentivized (4%+) stablecoin savings accounts could cause a run on the banks…
Stablecoins are backed 1:1 by majority cash and the rest is held as cash equivalents by the stablecoin custodian/issuer.
If everyone with a stablecoin wanted their cash back at the same time, this could be done with no problem, no fractional reserve or rehypothecation takes place with crypto stablecoin custodians.
In other words, it is not possible for there to be a run on stablecoin custodians.
However, cash in banks is only backed 1:0.1 based on fractional reserves (after covid there is NO required reserve! 🤯 )
So, if everyone with a bank account wanted their cash back at the same time (bank run), this could literally not be done. The system would collapse because the real “casino chips” (as Gensler says) are actually the banking dollars created out of thin air and only recorded on a banks ledger that can not actually be distributed to depositors who want their cash in hand.
One system is over-leveraged and under-collateralized (tradfi) and one system is under-leveraged and over-collateralized (crypto).
It should not take a court ruling to understand which system is safer and which system is inherently more risky, but when it does come to that, common sense should prevail!
Ultimately, it is exciting to see how the negotiations play out. I think the deal is sealed for crypto. This process is ugly but at the end of it, with clear rules and regulations, the sky is the limit for the US crypto industry.
The $1.5 trillion asset manager is also seeking to hire engineers for a tokenized asset department.
“We are looking for talented developers and thinkers to join us in building an entirely new platform that will dramatically expand the concept of investing and asset management as it relates to the entire Digital Asset domain,” the job posting said.
It asked for candidates experienced in “public blockchain protocols,” including Algorand, Ethereum, Solana, Stellar and Tendermint.
What does this mean for Bitcoin and the internet economy?
When an asset manager with $1.5 Trillion of assets under management tells you they are going to “dramatically expand the concept of investing and asset management” then everyone should be paying attention.
The application of blockchain and smart contract technology to financial services is changing the world of finance.
This is just the beginning of a new age of digital financial services built within the internet economy!
El Salvador bond spreads to U.S. Treasuries hit a record high on Thursday on growing investor fears the Central American nation will not reach a potential $1 billion loan agreement with the International Monetary Fund and faces negative credit implications linked to its use of bitcoin.
S&P Global said risks associated with the country’s adoption of bitcoin as parallel legal tender to the U.S. dollar “seem to outweigh its potential benefits” and there are “immediate negative implications for credit.”
S&P also said the use of bitcoin threatens a potential deal between El Salvador and the IMF.
What does this mean for Bitcoin and the internet economy?
The traditional system is so manipulated and broken that there are no “free market” incentives remaining. The system is so rigged and controlled that the gatekeepers actually resort to bullying its participants rather than properly incentivizing them.
The IMF is bullying El Salvador with a threat to downgrade the country’s credit score simply because they have made Bitcoin legal tender.
Should we be surprised?
The global elites’ China technocracy model issues a credit score to all of its citizens and if your overlords catch you talking behind their backs or breaking their one-way social contract, then you guessed it, they doc your credit score and that means no more borrowing, or flying, or bus rides for you!
The President of El Salvador has definitely been orange pilled and as we all know once you see it, you can never go back! Here is how the President delivered his stance on twitter:
Nayib Bukele 🇸🇻
We just bought the dip.

150 new coins!

El Salvador now holds 700 coins.

So if you are still on the sidelines, what are you waiting for???
Nation States are entering the game and are now front running you.
By the way, El Salvador may be the only country buying right now (the first domino to fall) but other countries are close behind in making Bitcoin a legal tender and adding it to their Treasury’s balance sheet…
Gabriel Silva
*Traducido a inglés*

Today we proposed The Crypto Law. We want Panama to be compatible with blockchain, cryptoassets, and the internet.

This has the potential to creat jobs, attract investment and bring transparency

English version of the project:
Panama law makers have proposed legislation that would recognize multiple public blockchains and protocols (Bitcoin, Ethereum, Tether, and Elrond) as legitimate forms of payment and financial tools with the ability to increase Panama’s GDP and presence in the internet economy.
Now is the time to be paying attention, learning all you can, and establishing positions in the internet economy.
Evergrande faces an $83.5 million interest payment Sept. 23 on its March 2-22 bonds and a $42.5 million payment on Sept. 29 on its March 2024 notes, according to news reports.
Failure to settle those payments within 30 days of their due date would put Evergrande in default.
Fears of a bursting property bubble have long been a concern for investors when it comes to China. A heavily leveraged real-estate sector makes up more than 28% of China’s economy, according to the Financial Times. Questions surround how willing Chinese authorities will be to provide a backstop.
Meanwhile, holders of Evergrande’s approximately $19 billion in dollar-denominated bonds are left to wonder what will become of their investments, while other investors attempt to gauge the potential spillover effects a collapse could have on China’s property sector and global financial markets.
What does this mean for Bitcoin and the internet economy?
Traditional investors are still treating Bitcoin and crypto as a risk-on asset. That means they think in a systematic recession/depression that crypto assets would struggle.
There has been a high correlation between stocks and crypto, however there is no doubt these are two different financial systems.
In this case scenario, we are seeing in China the issues that come to light in an over-leveraged and under-collateralized system. The risk of a domino default could actually effect US markets (as we have seen this week) but imagine if the whole system were to freeze up.
This is the Chinese version of the USA real estate debacle in 2007-2008, ultimately the Chinese government will be forced to backstop these defaults by inflating their currency.
The Chinese government can not deal with a revolt so they will just steal from their people via inflation.
They learned from the best tyrants in USA who do the very same thing!
A systemic issue would effect the entire traditional system.
“Global Synchronized Growth” can not happen when a global manufacturing super power is on the brink of losing a large chunk of 28% of it GDP.
What other options or alternative financial systems exists if, God forbid, there was a systemic default/freeze?
The digital financial system of the internet economy!
Will that alternative system see more or less demand if the traditional system is no longer able to offer its financial services?
Bitcoin and crypto is now “risk-on” speculation on the future, until the tradfi bus goes off the cliff, then its the only solution in existence.
Be in crypto before everyone understands its the solution, not just speculation!
The House passed a bill Tuesday that would both prevent a government shutdown and suspend the debt limit in a step toward preventing possible economic calamity.
The chamber approved the plan in a 220-211 vote. All Democrats voted for it and all Republicans opposed it.
As the bill heads to the Senate, Republicans are threatening to block it, which could leave Democrats scrambling to find another way to avoid a federal funding lapse — or even a first-ever default on U.S. debt.
Congress has to pass a funding plan by Sept. 30 to prevent a shutdown. Separately, the U.S. will exhaust all of its options to keep paying its bills sometime in October, Treasury Secretary Janet Yellen has told congressional leaders.
The House-passed plan would keep the government running through Dec. 3. It would also suspend the debt ceiling into Dec. 2022.
What does this mean for Bitcoin and the internet economy?
The US has never defaulted on its debt, and as the politicians put on a partisan show, we believe they will ultimately pass this bill (what politician would vote to not pay themselves?), raise the debt ceiling, and continue to steal from the American people via inflation of the dollar.
After all, we need to set that great example for the Chinese!
For Bitcoin and internet economy this means there will be continued positive price pressure from the result of the devaluing of the Unites States Dollar.
Hard assets (Bitcoin, Real Estate, Commodities) can all be expected to continue to rise in value against the dollar as US politicians go full Venezuela with the dollar printing press.
If you think inflation is bad now, wait until everyone figures out that fixed supply constraints will not fix the dollar dilution problem…
Thats all for the BFV Newsletter - Issue #3
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