Latest news with #HannahLang
Yahoo
3 days ago
- Business
- Yahoo
Analysis-Stablecoins' step toward mainstream could shake up parts of US Treasury market
By Hannah Lang and Davide Barbuscia (Reuters) -As stablecoins take a step toward becoming mainstream, some segments of the U.S. Treasury market, notably securities with short-term maturities, could be vulnerable to volatility as they become more closely tied to the world of cryptocurrency. Congress is poised to pass legislation establishing a regulatory framework for stablecoins, expected to help legitimize the dollar-pegged cryptocurrencies which are commonly used by crypto traders to move funds between tokens. Proponents of the bill argue that clear rules will spur further stablecoin activity, and support a growing sector of buyers of short-term U.S. government debt, or T-bills, that are typically considered cash-equivalent securities. But others worry a larger footprint for a relatively new and more volatile industry could in turn spur volatility in the bills market. "In the event of a sudden loss of confidence, regulatory pressure, or market rumors, this could trigger large-scale liquidations, potentially depressing Treasury prices and disrupting fixed-income markets," said Cristiano Ventricelli, vice president and senior analyst of digital assets at Moody's Ratings. "A problem in the stablecoin sector could spill over into broader financial markets, affecting institutions holding similar assets or (that) rely on stablecoin liquidity," he added. If signed into law, the stablecoin bill would require tokens to be backed by liquid assets - like U.S. dollars and short-term Treasury bills - and monthly disclosures from issuers on the composition of their reserves. That means if stablecoins are expected to grow, issuers will have to purchase more T-bills to back their assets. The bill could be passed by the Senate as early as next week and could eventually increase the amount of U.S. Treasuries held by stablecoin issuers such as Tether and Circle, the latter of which debuted on the NYSE on Thursday. They together hold $166 billion in U.S. Treasuries, according to a report by Bain & Company's financial services practice. The stablecoin market, currently about $247 billion according to crypto data provider CoinGecko, could grow to $2 trillion by 2028 if legislation were to pass, Standard Chartered estimated. U.S. Treasury Secretary Scott Bessent encouraged lawmakers to pass legislation to codify federal rules for stablecoins, arguing that it could lead to a surge in demand for U.S. government debt. Currently, there are about $29 trillion in Treasury securities outstanding, of which $6 trillion are bills. RED FLAGS In an April research note, JP Morgan analysts estimated that stablecoin issuers could become the third-largest buyer of Treasury bills in the coming years. That raises red flags for some, who worry that would lead to closer ties between the crypto ecosystem and the traditional financial world. The Treasury Borrowing Advisory Committee, a group of banks and investors that advise the government on its funding, said in a study in April that growth of the stablecoin market at the expense of bank deposits could reduce banks' demand for U.S. Treasuries, as well as have an impact on credit growth. "If (stablecoin issuers) have to move those Treasuries quickly, or the market demands that, it could create some credit crunches there," said Mark Hays, associate director for cryptocurrency and financial technology at Americans for Financial Reform. Hays said this assumes that stablecoins become more widely used after legislation passes. Money market funds, which invest in short-term debt, could be impacted. Money market expert Pete Crane, president of Crane Data, said money funds are watching stablecoin closely but the size of the market would have to become significantly bigger to create concerns over financial stability. "Treasury bills are normally so short (in maturity) that people don't concern themselves with price movements, but of course in case of a rapid liquidation the price is going to go down," he said. Issues with stablecoins have not so far been large enough to cause systemic problems but the calculus could shift if federal legislation were to spur widespread adoption. In 2022, a meltdown in the crypto markets sent Tether's stablecoin below its dollar peg, which caused no impact on the Treasury market. At the time, then-U.S. Treasury Secretary Janet Yellen said stablecoins like Tether didn't pose a systemic risk to the financial system because they were too small in scale. In 2023, Circle's USD Coin also lost its dollar peg after the company revealed it held a portion of its reserves at failed Silicon Valley Bank. Circle and Tether declined comment. POTENTIAL UPLIFT TO MARKET Still, some argue that there could be benefits from increasing demand for government debt. "If we pass stablecoin legislation, dollars will be exported around the world, which will extend the strength of the dollar as the world's reserve currency," said Matt Hougan, chief investment officer at Bitwise Asset Management, a crypto asset manager. Roger Hallam, global head of rates at Vanguard, said higher demand for short-term government debt instruments could incentivize the Treasury Department to increase T-bill issuance, rather than long-dated debt, to cover its deficit funding need. Yields of long-dated U.S. debt have been rising recently, partly due to concerns over the country's fiscal health. "You could choose to issue more bills to meet that demand, which would relieve some of the tensions we currently see in the market ... around the scale of future issues and who's going to buy all these bonds," Hallam said.
Yahoo
3 days ago
- Business
- Yahoo
Analysis-Stablecoins' step toward mainstream could shake up parts of US Treasury market
By Hannah Lang and Davide Barbuscia (Reuters) -As stablecoins take a step toward becoming mainstream, some segments of the U.S. Treasury market, notably securities with short-term maturities, could be vulnerable to volatility as they become more closely tied to the world of cryptocurrency. Congress is poised to pass legislation establishing a regulatory framework for stablecoins, expected to help legitimize the dollar-pegged cryptocurrencies which are commonly used by crypto traders to move funds between tokens. Proponents of the bill argue that clear rules will spur further stablecoin activity, and support a growing sector of buyers of short-term U.S. government debt, or T-bills, that are typically considered cash-equivalent securities. But others worry a larger footprint for a relatively new and more volatile industry could in turn spur volatility in the bills market. "In the event of a sudden loss of confidence, regulatory pressure, or market rumors, this could trigger large-scale liquidations, potentially depressing Treasury prices and disrupting fixed-income markets," said Cristiano Ventricelli, vice president and senior analyst of digital assets at Moody's Ratings. "A problem in the stablecoin sector could spill over into broader financial markets, affecting institutions holding similar assets or (that) rely on stablecoin liquidity," he added. If signed into law, the stablecoin bill would require tokens to be backed by liquid assets - like U.S. dollars and short-term Treasury bills - and monthly disclosures from issuers on the composition of their reserves. That means if stablecoins are expected to grow, issuers will have to purchase more T-bills to back their assets. The bill could be passed by the Senate as early as next week and could eventually increase the amount of U.S. Treasuries held by stablecoin issuers such as Tether and Circle, the latter of which debuted on the NYSE on Thursday. They together hold $166 billion in U.S. Treasuries, according to a report by Bain & Company's financial services practice. The stablecoin market, currently about $247 billion according to crypto data provider CoinGecko, could grow to $2 trillion by 2028 if legislation were to pass, Standard Chartered estimated. U.S. Treasury Secretary Scott Bessent encouraged lawmakers to pass legislation to codify federal rules for stablecoins, arguing that it could lead to a surge in demand for U.S. government debt. Currently, there are about $29 trillion in Treasury securities outstanding, of which $6 trillion are bills. RED FLAGS In an April research note, JP Morgan analysts estimated that stablecoin issuers could become the third-largest buyer of Treasury bills in the coming years. That raises red flags for some, who worry that would lead to closer ties between the crypto ecosystem and the traditional financial world. The Treasury Borrowing Advisory Committee, a group of banks and investors that advise the government on its funding, said in a study in April that growth of the stablecoin market at the expense of bank deposits could reduce banks' demand for U.S. Treasuries, as well as have an impact on credit growth. "If (stablecoin issuers) have to move those Treasuries quickly, or the market demands that, it could create some credit crunches there," said Mark Hays, associate director for cryptocurrency and financial technology at Americans for Financial Reform. Hays said this assumes that stablecoins become more widely used after legislation passes. Money market funds, which invest in short-term debt, could be impacted. Money market expert Pete Crane, president of Crane Data, said money funds are watching stablecoin closely but the size of the market would have to become significantly bigger to create concerns over financial stability. "Treasury bills are normally so short (in maturity) that people don't concern themselves with price movements, but of course in case of a rapid liquidation the price is going to go down," he said. Issues with stablecoins have not so far been large enough to cause systemic problems but the calculus could shift if federal legislation were to spur widespread adoption. In 2022, a meltdown in the crypto markets sent Tether's stablecoin below its dollar peg, which caused no impact on the Treasury market. At the time, then-U.S. Treasury Secretary Janet Yellen said stablecoins like Tether didn't pose a systemic risk to the financial system because they were too small in scale. In 2023, Circle's USD Coin also lost its dollar peg after the company revealed it held a portion of its reserves at failed Silicon Valley Bank. Circle and Tether declined comment. POTENTIAL UPLIFT TO MARKET Still, some argue that there could be benefits from increasing demand for government debt. "If we pass stablecoin legislation, dollars will be exported around the world, which will extend the strength of the dollar as the world's reserve currency," said Matt Hougan, chief investment officer at Bitwise Asset Management, a crypto asset manager. Roger Hallam, global head of rates at Vanguard, said higher demand for short-term government debt instruments could incentivize the Treasury Department to increase T-bill issuance, rather than long-dated debt, to cover its deficit funding need. Yields of long-dated U.S. debt have been rising recently, partly due to concerns over the country's fiscal health. "You could choose to issue more bills to meet that demand, which would relieve some of the tensions we currently see in the market ... around the scale of future issues and who's going to buy all these bonds," Hallam said. Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
3 days ago
- Business
- Yahoo
Circle's blockbuster IPO paves way for other crypto public listings
By Hannah Lang and Suzanne McGee (Reuters) -Stablecoin issuer Circle's $1.05 billion initial public offering on Thursday could spur other large crypto players to follow suit as the industry benefits from U.S. President Donald Trump's embrace of the sector, according to experts and analysts. Circle priced its shares at $31 on Wednesday. In a sign of investor demand, they opened on the New York Stock Exchange on Thursday at $69 apiece and closed at $83.23. That trajectory is likely to encourage other crypto companies eyeing stock market debuts. Circle is the first major crypto company to go public since crypto exchange Coinbase listed on Nasdaq in 2021. Analysts have pointed to crypto exchanges Kraken and Gemini as other potential IPO candidates in the digital asset sector. Neither company immediately responded to a request for comment. 'It would not be surprising if other crypto companies follow suit," said Jacob Zuller, an analyst at Third Bridge. "Public markets have accepted that crypto is not going away." Circle issues stablecoin USDC, a cryptocurrency pegged to the U.S. dollar and designed to maintain a constant value. Crypto traders use stablecoins to move funds between tokens and proponents say they could be used to send and receive payments instantly. "We've had a deep conviction from the inception of the company that we could build a new infrastructure for money, built on the internet, that could radically reshape the utility of money," Circle CEO Jeremy Allaire said in an interview with Reuters. Circle's IPO success demonstrates that there is pent-up demand in the public markets for crypto and other financial technology companies, said Dan Dolev, senior analyst at Mizuho. "If IPOs go wild, it's a good bellwether," he said. NYSE Group President Lynn Martin went a step further, calling Circle's IPO a positive sign not just for crypto listings, but for IPOs in general. "I see the Circle IPO as a bellwether for the IPO markets this year, not just for crypto listings," she said. Fintech companies have been warmly received in recent months. Shares in retail brokerage eToro surged 34% in their Nasdaq debut in May. Digital banking startup Chime is seeking a more than $11 billion valuation when it launches next week. Investment interest in digital assets 'is coming from all corners,' said Sui Chung, CEO of crypto index provider CF Benchmarks. 'There's a plethora of high tech and blockchain-focused investment funds, and these vehicles have been starved of new issues for a long time," said Chung. After crypto exchange FTX collapsed in 2022, many institutional investors shunned the digital asset market. Crypto prices eventually recovered, and the industry got a major boost when Trump professed support on the campaign trail, pledging to be a "crypto president." In his first week in office, Trump created a cryptocurrency working group to propose digital asset regulations. In March, he hosted crypto executives at the White House. Congress is also widely expected to pass legislation this year creating a federal regulatory framework for stablecoins that experts say could pave the way for their widespread use. Sign in to access your portfolio
Yahoo
3 days ago
- Business
- Yahoo
Circle's blockbuster IPO paves way for other crypto public listings
By Hannah Lang and Suzanne McGee (Reuters) -Stablecoin issuer Circle's $1.05 billion initial public offering on Thursday could spur other large crypto players to follow suit as the industry benefits from U.S. President Donald Trump's embrace of the sector, according to experts and analysts. Circle priced its shares at $31 on Wednesday. In a sign of investor demand, they opened on the New York Stock Exchange on Thursday at $69 apiece and closed at $83.23. That trajectory is likely to encourage other crypto companies eyeing stock market debuts. Circle is the first major crypto company to go public since crypto exchange Coinbase listed on Nasdaq in 2021. Analysts have pointed to crypto exchanges Kraken and Gemini as other potential IPO candidates in the digital asset sector. Neither company immediately responded to a request for comment. 'It would not be surprising if other crypto companies follow suit," said Jacob Zuller, an analyst at Third Bridge. "Public markets have accepted that crypto is not going away." Circle issues stablecoin USDC, a cryptocurrency pegged to the U.S. dollar and designed to maintain a constant value. Crypto traders use stablecoins to move funds between tokens and proponents say they could be used to send and receive payments instantly. "We've had a deep conviction from the inception of the company that we could build a new infrastructure for money, built on the internet, that could radically reshape the utility of money," Circle CEO Jeremy Allaire said in an interview with Reuters. Circle's IPO success demonstrates that there is pent-up demand in the public markets for crypto and other financial technology companies, said Dan Dolev, senior analyst at Mizuho. "If IPOs go wild, it's a good bellwether," he said. NYSE Group President Lynn Martin went a step further, calling Circle's IPO a positive sign not just for crypto listings, but for IPOs in general. "I see the Circle IPO as a bellwether for the IPO markets this year, not just for crypto listings," she said. Fintech companies have been warmly received in recent months. Shares in retail brokerage eToro surged 34% in their Nasdaq debut in May. Digital banking startup Chime is seeking a more than $11 billion valuation when it launches next week. Investment interest in digital assets 'is coming from all corners,' said Sui Chung, CEO of crypto index provider CF Benchmarks. 'There's a plethora of high tech and blockchain-focused investment funds, and these vehicles have been starved of new issues for a long time," said Chung. After crypto exchange FTX collapsed in 2022, many institutional investors shunned the digital asset market. Crypto prices eventually recovered, and the industry got a major boost when Trump professed support on the campaign trail, pledging to be a "crypto president." In his first week in office, Trump created a cryptocurrency working group to propose digital asset regulations. In March, he hosted crypto executives at the White House. Congress is also widely expected to pass legislation this year creating a federal regulatory framework for stablecoins that experts say could pave the way for their widespread use.
Yahoo
16-05-2025
- Business
- Yahoo
Mike Novogratz's Galaxy Digital debuts on Nasdaq in bumper week for crypto
By Hannah Lang (Reuters) -Galaxy Digital, founded by Mike Novogratz, made its Nasdaq debut on Friday, capping off a momentous week for cryptocurrency in public markets, with Coinbase joining the S&P 500 and retail brokerage eToro also going public. Galaxy Digital, a crypto investment company that also specializes in artificial intelligence data center infrastructure, had been listed on the Toronto Stock Exchange, but began trading on the Nasdaq on Friday at $23.50 per share after a lengthy transition period. Shares in the company were last trading at $24.89. "I think we're at the beginning of the race, not the end of the race," said Novagratz, who is Galaxy's CEO and a prominent crypto investor, in an interview with Reuters. "Sometimes it feels like it's been such a struggle. You ring the bell and you're crossing the finish line, but it really is the starting bell." Digital assets have enjoyed a resurgence under President Donald Trump, who courted cash from the crypto industry on the campaign trail by pledging to be a "crypto president." In his first week in office, Trump ordered creation of a cryptocurrency working group to propose digital asset regulations. In March, he signed an executive order to create a federal stockpile of bitcoin. Those moves have buoyed cryptocurrency prices, including bitcoin, which is up more than 10% so far this year. Robinhood rival eToro -- which offers stocks and cryptocurrencies to retail investors -- also made its Nasdaq debut this week, securing a valuation of $5.64 billion after its shares surged 34% on Wednesday. Also this week, the S&P announced that Coinbase would be included in the S&P 500 index beginning May 19, becoming the first digital asset player to be included in the benchmark. "I think we're the beginning of what will be a trend of other (crypto) companies going public," Novogratz said.
