Big Banks to Enter the Stablecoin Space?
Arthur Hayes, former CEO of Bitmex and current CIO of Malestrom, a crypto-focused early-stage investment fund, believes that big banks will eventually take over the stablecoin business. Currently, Tether dominates the stablecoin market with its USDT token. However, Hayes predicts that once traditional banks like JPMorgan are authorized to issue fiat-backed stablecoins, Tether's business model will be cannibalized.
Tether's Success and Business Model
Hayes acknowledges that Tether has become a prominent player in the crypto market. Its business model involves taking dollars, depositing them in a bank account, and investing in treasury bills to earn a spread. This allows Tether to generate significant cash flow, estimated at $4 to $5 billion annually. However, Hayes emphasizes that Tether's reliance on banks for clearing and custody services is a vulnerability.
The Role of Banks
Hayes criticizes banks for providing services to Tether and other stablecoin companies while failing to offer stablecoins themselves. He considers bank managers to be incompetent for not capitalizing on the stablecoin market. According to Hayes, this situation will change when the U.S. Treasury permits traditional banks to issue stablecoins. Once authorized, banks like JPMorgan are expected to replace Tether and other stablecoin companies, leveraging their existing infrastructure and offering similar interest-generating products.
Tether's Current Standing
As of 2023, Tether boasts a market capitalization of $91.5 billion and $4 billion in excess reserves. The company has also invested in various expansion initiatives. Paolo Ardoino, CEO of Tether, highlights the company's success and growth in recent years.
What are your thoughts on Arthur Hayes' perspective regarding the future of Tether and centralized stablecoins? Share your opinions in the comments section below.
Frequently Asked Questions
What are the pros and disadvantages of a gold IRA
An Individual Retirement Account (IRA), unlike regular savings accounts, doesn’t require you to pay tax on interest earned. An IRA is a great option for those who want to save money, but don’t want tax on any interest earned. This type of investment has its downsides.
If you withdraw too many funds from your IRA at once, you may lose all your accumulated assets. The IRS may prevent you from taking out your IRA funds until you reach 59 1/2. A penalty fee will be charged if you decide to withdraw funds.
You will also need to pay fees for managing your IRA. Many banks charge between 0.5%-2.0% per year. Others charge management fees that range from $10 to $50 per month.
Insurance will be required if you would like to keep your cash out of banks. Many insurers require that you own at least one ounce of gold before you can make a claim. Insurance that covers losses upto $500,000.
If you decide to open a gold IRA, it is important to know how much you can use. Some providers restrict the amount you can own in gold. Some providers allow you to choose your weight.
You will also have to decide whether to purchase futures or physical gold. The price of physical gold is higher than that of gold futures. However, futures contracts give you flexibility when buying gold. They enable you to establish a contract with an expiration date.
Also, you will need to decide on the type of insurance coverage you would like. The standard policy doesn’t include theft protection or loss due to fire, flood, or earthquake. However, it does cover damage caused by natural disasters. You may consider adding additional coverage if you live in an area at high risk.
Insurance is not enough. You also need to think about the cost of gold storage. Insurance won’t cover storage costs. Banks charge between $25 and $40 per month for safekeeping.
To open a IRA in gold, you will need to first speak with a qualified custodian. A custodian is responsible for keeping track of your investments. They also ensure that you adhere to federal regulations. Custodians aren’t allowed to sell your assets. They must instead keep them for as long as you ask.
After you’ve determined which type of IRA is best for you, fill out the paperwork indicating your goals. Your plan should include information about the investments you want to make, such as stocks, bonds, mutual funds, or real estate. Also, you should specify how much each month you plan to invest.
After completing the forms, send them along with a check or a small deposit to your chosen provider. The company will review your application and send you a confirmation letter.
Consider consulting a financial advisor when opening a golden IRA. A financial planner can help you decide the type of IRA that is right for your needs. They can help reduce your expenses by helping you find cheaper alternatives to buying insurance.
Is gold a good investment IRA?
Any person looking to save money is well-served by gold. It is also an excellent way to diversify you portfolio. But there is more to gold than meets the eye.
It has been used throughout the history of currency and remains a popular payment method. It is sometimes called the “oldest currency in the world”.
But unlike paper currencies, which governments create, gold is mined out of the earth. Because it is rare and difficult to make, it is extremely valuable.
The supply-demand relationship determines the gold price. If the economy is strong, people will spend more money which means less people can mine gold. The value of gold rises as a consequence.
On the flipside, people may save cash rather than spend it when the economy slows. This results in more gold being produced, which drives down its value.
This is why both individuals as well as businesses can benefit from investing in gold. If you invest in gold, you’ll benefit whenever the economy grows.
Also, your investments will earn you interest which can help increase your wealth. Plus, you won’t lose money if the value of gold drops.
How much should your IRA include precious metals
The most important thing you should know when investing in precious metals is that they are not just for wealthy people. You don’t need to have a lot of money to invest. You can actually make money without spending a lot on gold or silver investments.
You might consider purchasing physical coins, such as bullion bars and rounds. Stocks in companies that produce precious materials could be purchased. Another option is to make use of the IRA rollover programs offered by your retirement plan provider.
You will still reap the benefits of owning precious metals, regardless of which option you choose. They offer the potential for long-term, sustainable growth even though they aren’t stocks.
And unlike traditional investments, they tend to increase in value over time. You’ll probably make more money if your investment is sold down the line than traditional investments.
Which precious metals are best to invest in retirement?
The best precious metal investments are gold and silver. Both are easy to sell and can be bought easily. Consider adding them to the list if you’re looking to diversify and expand your portfolio.
Gold: Gold is one the oldest forms currency known to man. It is stable and very secure. Because of this, it is considered a great way of preserving wealth during times when there are uncertainties.
Silver: Silver has always been popular among investors. It’s an ideal choice for those who prefer to avoid volatility. Unlike gold, silver tends to go up instead of down.
Platinum: This precious metal is also becoming more popular. It’s like silver or gold in that it is durable and resistant to corrosion. It’s however much more costly than any of its counterparts.
Rhodium – Rhodium is used to make catalytic conversions. It is also used to make jewelry. It’s also relatively inexpensive compared to other precious metals.
Palladium (or Palladium): Palladium can be compared to platinum, but is much more common. It’s also less expensive. For these reasons, it’s become a favorite among investors looking to add precious metals to their portfolios.
Is it a good retirement strategy to buy gold?
Buying gold as an investment may not seem very appealing at first glance, but when you consider how much people spend on average on gold per year worldwide, it becomes worth considering.
Physical bullion is the most popular method of investing in gold. There are other ways to invest gold. It is best to research all options and make informed decisions based on your goals.
If you don’t want to keep your wealth safe, buying shares in companies that extract gold and mining equipment could be a better choice. Owning gold stocks should work well if you need cash flow from your investment.
You can also invest your money in exchange-traded fund (ETFs), which give you exposure to the gold price by holding securities related to gold. These ETFs usually include stocks of precious metals refiners or gold miners.
Statistics
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
- If you take distributions before hitting 59.5, you’ll owe a 10% penalty on the amount withdrawn. (lendedu.com)
- The price of gold jumped 131 percent from late 2007 to September 2011, when it hit a high of $1,921 an ounce, according to the World Gold Council. (aarp.org)
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- This is a 15% margin that has shown no stable direction of growth but fluctuates seemingly at random. (smartasset.com)
External Links
wsj.com
- Saddam Hussein’s Invasion Helped Uncage a Bear In 1990 – WSJ
- You want to keep gold in your IRA at home? It’s not legal – WSJ
cftc.gov
law.cornell.edu
- 7 U.S. Code SS7 – Designation Boards of Trade as Contract Markets
- 26 U.S. Code SS 408 – Individual retirement plans
bbb.org
How To
Investing gold vs. stocks
Gold investing as an investment vehicle can seem extremely risky these days. This is because many people believe gold is no longer financially profitable. This belief stems from the fact that most people see gold prices being driven down by the global economy. They think that they would lose money if they invested in gold. There are many benefits to investing in gold. Here are some examples.
One of the oldest currencies known to man is gold. There are records of its use going back thousands of years. People around the world have used it as a store of value. It is still used as a payment method by South Africa and other countries.
When deciding whether to invest in gold, the first thing you need to do is to decide what price per gram you are willing to pay. You must determine how much gold bullion you can afford per gram before you consider buying it. If you don’t know the current market rate for gold bullion, you can always consult a local jeweler to get their opinion.
It is important to remember that even though gold prices have dropped in recent times, the cost of making gold has risen. So while the price of gold has declined, production costs haven’t changed.
You should also consider the amount of your intended purchase when considering whether you should buy or not. For example, if you only intend to purchase enough to cover your wedding rings, it probably makes sense to hold off on buying any gold. But, if your goal is to make long-term investments in gold, this might be worth considering. Selling your gold at a higher value than what you bought can help you make money.
We hope you have gained a better understanding about gold as an investment tool. Before making any investment decisions, we strongly advise that you thoroughly research all options. Only after you have done this can you make an informed choice.
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By: Sergio Goschenko
Title: The Future of Tether and Centralized Stablecoins: Arthur Hayes’ Perspective
Sourced From: news.bitcoin.com/maelstrom-cio-arthur-hayes-alerts-big-banks-will-eventually-cannibalize-tethers-business-model/
Published Date: Sun, 31 Dec 2023 22:30:23 +0000
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