3 Stablecoin Headlines Investors Might Have Missed

Recently there has been no shortage of headlines and discourse around cryptoassets, generating both positive and negative price momentum for the sector. As both the Mt.Gox and German government liquidations proceed in a seemingly orderly manner these actions have both placed significant pressure on the price of bitcoin, which briefly dropped below $58,000. That said, as these liquidations have continued the price support at these levels has held, indicating that even after an initial bout of fear caused by this mass selling, investors remain confident in the medium to long term price forecasts. J.P. Morgan, for one, expects liquidation and price pressure to conclude by the end of July, followed by a market rebound in August. Crypto predictions are notoriously difficult to get right, but it serves as an example of market sentiment.

Additionally, crypto continues to play an increasingly important role in policy conversations, with the Biden Administration holding high level meeting with crypto industry leaders and advocates in an attempt to shore up support in what has emerged as an opportunity to sway swing voters. On the other side of the aisle, former President Trump has announced a 30-minute presentation at Bitcoin 2024, one of the largest and most significant crypto conferences in the United States. With all of this happening, it would be reasonable for investors and advocates to focus on these items, but that would overlook several important points.

Let’s take a look at a few headlines and stories crypto investors might have overlooked.

The SEC Continues To Falter

Even though Binance, and CZ individually, have pled guilty to criminal activity, paid fines in the billions, and are facing significant legal challenges moving forward, the SEC recently suffered a legal setback in further efforts connected to Binance. Recently the SEC concluded its investigation in Paxos – the issuer of Binance USD stablecoin – without recommending any enforcement action. The lack of enforcement action in and of itself should absolutely be seen as celebratory news by Paxos, but might also have wider implications for crypto regulation.

As the SEC continues to face increasing pushback and legal challenges to its ongoing efforts to classify the entire crypto sector as securities, stablecoins stand positioned to benefit. Especially since these cryptoassets – almost all of which are backed on a 1:1 basis by the USD – were purpose built and intended to be used as a medium of exchange versus as an investment vehicle, these setbacks might provide much needed breathing room for more objective conversations on the matter.

PayPal’s Stablecoin Continues To Grow

Following somewhat of a low profile launch, almost immediately hindered by an SEC investigation in the stablecoin itself, the stablecoin efforts at PayPal have continued. A recent integration with the Solana blockchain has led to a boost in the market capitalization of the token, which recently surpassed $500 million. Data from DeFillama shows the total supply across the existing Ethereum blockchain is approximately $399 million, or 77% of total supply with the remaining amount on Solana. Additionally supply has rapidly increased – by 58% during the first week of integration – on Solana while dropping 6% on Ethereum.

In addition the integration with Solana has also led to substantial growth on DeFi platforms and in the DeFi ecosystem at large, with availability on both the Jupiter and Orca DEX, as well as inclusion within the lending and liquidity protocol Kamino Finance. Given the household name recognition that PYUSD has, coupled with the growth resulting from Solana integration, it appears that PayPal and PYUSD appear situated for continued growth and utilization.

State-backed Stablecoins Are Coming Fast

While the federal government continues to lurch back and forth with regards to crypto regulation and standard-setting, individual states continue to lead the way. Building on previous efforts the state of Wyoming announced the intention to launch a state-backed stablecoin in 2022. After dealing with some pushback and legislative difficulties, in May 2024 an announcement was published that the minting of the state backed token was underway. The token, which is backed on a 1:1 basis by the U.S. dollar, is slated to begin circulation later in 2024 and will be issued under the ticker WYST.

The commission has been empowered by the passage of Senate Enrolled Act 85: Wyoming Stable Token Act, which granted the Stablecoin Commission to issue the first state-backed stablecoin in the U.S. WYST is set to debut and be hosted on the Ethereum blockchain, and will only be traded/available on centralized exchanges such as Coinbase. While it is too early to say how successful or widespread WYST will be, the fact that an individual state that has been able to come so far so quickly is indicative of the how strong the appeal of stablecoins remains.

Stablecoins are here to stay, play a critical role for TradFi, centralized exchanges, DEX, and investors of all sizes seeking to deploy capital into crypto. Even with multiple headlines in the media, investors and advocates should not lose track of this critically important cryptoasset class.

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