Welcome to the crypto investor.
last month, Do Kwonthe disgraced co-founder of Terraform Labs, resurfaced in the news with claims he was not a fugitive on the run. Without revealing his present location of him (which is of great interest to law enforcement authorities), the poster boy for the perils of algorithmic stablecoins took to Twitter to casually announce that he was, unsurprisingly, a law-abiding citizen fully cooperating with authorities – just with an Interpol red notice targeting him worldwide and South Korea initiating a request to cancel his passport.
Earlier this year, Kwon oversaw the spectacular collapse of the TerraUSD stablecoin, which wiped out $60 billion from investors’ bank accounts. Since then, the developer has stunned Twitter audiences with his risible explanations of how he spends his time: “I go on walks and [to] malls,” Kwon claims. He’s also making light of the Interpol red noticetweeting: “For something that has notice in the name, it sure gives no notice.”
The elusive founder might be able to joke on Twitter, but with South Korean prosecutors eager to use every tool at their disposal to bring about accountability and justice, Kwon is probably not going to be able to shake off legal action much longer.
In this newsletter, stay tuned for a round-up of this week’s crypto developments, including a look at what’s happening with central bank digital currencies (CBDCs) around the world and the metaverse. We also have an interview on crypto investing and how the war in Ukraine impacts crypto holdings with the Carlyle Group’s co-founder David Rubinsteinthe billionaire author of the new book How to Invest: Masters on the Craft.
Let’s rewind this week in crypto news:
- alex mahinskythe CEO and founder of the bankrupt crypto lender Celsius, has stepped down amid legal action against the embattled crypto company (which still owes thousands of creditors). Other crypto firms, too, have seen their top people head for the successes, including the CEOs of crypto exchange Kraken, the crypto brokerage Genesis, and the president of digital assets exchange FTX US.
- But despite a string of high-profile departures across the crypto industry, there’s one bright spot this crypto winter: the metaverse is still growing, and Chief Metaverse Officers are all the rage.
Although everyone’s hiring one to avoid missing out on the next big tech trend, some critics are asking: Is it all hype, just like the metaverse itself?
- Disney doesn’t think so. It’s on the hunt for a new lawyer to address transactions related to the metaverse, NFTs, and blockchain tech. With a quarter of people predicted to spend at least an hour a day in the metaverse in the future, according to Gartner research, and McKinsey forecasting that metaverse-related spending might add up to $5 trillion a year in less than a decade, it’s not surprise why there is so much investment in the space.
- further field, Australia is on track to finish its first central bank digital currency (CBDC) pilot by mid-2023, which will reveal whether or not the country will pursue a digital currency known as an “eAUD.” Although nearly a quarter of Australians have adopted crypto, it’s not clear if the country’s government is equally enthusiastic about stablecoins and all things blockchain. Right now, the study’s goal is modest: to “explore innovative use cases and business models” for CBDCs.
- Elsewhere, China first began allowing foreigners to use their own CBDC, the digital yuan, during the Olympic Games in February. They were able to buy everything from ice cream and popcorn to chewing gum at the self-service counter of Family Mart with the popular new currency.
The government says the digital yuan already has 260 million users, with 4.5 million merchants across China accepting it as a payment method. and the average transaction? About $40. If that sounds paltry, Beijing says there have been roughly $12 billion worth of transactions since the digital yuan program was first unveiled in May 2020. No doubt popularity has been helped by integration with the popular messaging app WeChat, along with Alipay and JD.com .
US observers are more hawkish about the e-CNY’s adoption, however, with the conservative think tank the Hoover Institution going so far to say that the digital yuan might even be used to “circumvent US sanctions” and create “an alternative channel for cross-border transactions.”
In fact, many point to China’s dominance – and apparent success – in the CBDC space as reason enough for the US to accelerate its own CBDC push, citing fears that the rival Chinese economy might displace the US in global competitiveness. To that end, several people on the US House Committee on Financial Services this month voted to move forward with an American digital dollar during a hearing, partly to counter China’s digital yuan.
The Ask: David Rubenstein, Co-Founder, the Carlyle Group
crypto investor recently talked to David Rubinstein, billionaire investor and co-founder of one of the world’s largest private equity firms, the Carlyle Group. Rubenstein is the author of the new book How to Invest: Masters on the Craft (Simon & Schuster), which came out this month and imparts time-tested advice for how to invest long-term in crypto and other assets.
Although the book has an entire section devoted to investing in crypto, Rubenstein warns readers to exercise caution when placing a bet on who might win in the nascent industry, as the task might be a fool’s errand: “Trying to pick the ultimate winner, or winners, is an extremely difficult task,” Rubenstein says.
The businessman once saw crypto as a risky bet, and subscribed to a belief that it lacked any underlying value. But today, Rubenstein believes that even the current bear market and war in Ukraine cannot stop the growth of crypto as an emerging industry. “Today, I believe crypto is more likely to be around longer than I initially believed,” he tells crypto investor. Take a read:
Sabrina Toppa, crypto investor: You’ve mentioned the war in Ukraine as one reason to stay optimistic about crypto. Tell me why that is.
Rubinstein: My view is that many Russian oligarchs put their assets in very visible forms of wealth (homes, boats, art) which are easily confiscated by governments.. [But] crypto is less easily confiscated, as governments may not know what is owned or how to access it. Therefore, those who want to hedge their bets may put increasingly larger amounts of their net worth in crypto assets which, theoretically, cannot be as easily confiscated by governments.
We are currently in a period of economic turmoil for crypto. How do you diagnose the current moment, and what do you see as the next step for investors holding on to — or worrying about — their crypto assets?
Rubinstein: The biggest mistake investors make is selling when asset prices are down and buying when asset prices are up. Right now, prices for cryptocurrencies are down compared to their heights, and it’s likely many investors are shedding those assets. History shows investors are better off buying more when asset prices are lower, or not selling when they think a market is near a bottom. It is better to hold on and benefit from a rebound that may be inevitable.
What do you think is important for investors to understand about the promise — and threat — of regulation?
Rubinstein: Members of Congress are putting modest pressure on regulators right now. Supporters of the crypto industry are lobbying members of Congress to ease up on excessive regulation. Therefore, I do not expect a large number of new regulations, as there is not much pressure to regulate. Until there are large scandals, or massive multi-billion-dollar lawsuits brought by average investors, I do not believe Congress is likely to do anything that will upend the current regulatory apparatus.
This conversation has been condensed for length and clarity.
This Crypto Investor newsletter was originally published on.
Welcome to the crypto investor.
last month, Do Kwonthe disgraced co-founder of Terraform Labs, resurfaced in the news with claims he was not a fugitive on the run. Without revealing his present location of him (which is of great interest to law enforcement authorities), the poster boy for the perils of algorithmic stablecoins took to Twitter to casually announce that he was, unsurprisingly, a law-abiding citizen fully cooperating with authorities – just with an Interpol red notice targeting him worldwide and South Korea initiating a request to cancel his passport.
Earlier this year, Kwon oversaw the spectacular collapse of the TerraUSD stablecoin, which wiped out $60 billion from investors’ bank accounts. Since then, the developer has stunned Twitter audiences with his risible explanations of how he spends his time: “I go on walks and [to] malls,” Kwon claims. He’s also making light of the Interpol red noticetweeting: “For something that has notice in the name, it sure gives no notice.”
The elusive founder might be able to joke on Twitter, but with South Korean prosecutors eager to use every tool at their disposal to bring about accountability and justice, Kwon is probably not going to be able to shake off legal action much longer.
In this newsletter, stay tuned for a round-up of this week’s crypto developments, including a look at what’s happening with central bank digital currencies (CBDCs) around the world and the metaverse. We also have an interview on crypto investing and how the war in Ukraine impacts crypto holdings with the Carlyle Group’s co-founder David Rubinsteinthe billionaire author of the new book How to Invest: Masters on the Craft. Subscribe for full article
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