• Tether expects its Q1 earnings at roughly $700 million.
• The SEC launches an assault on stablecoins and USDT might be caught in the crosshairs.

Tether has expressed optimism about its profits in Q1, especially now that March is approaching its conclusion. The demand for USDT surged in during the quarterly period for numerous reasons but the road ahead might have some bumps.

According to the latest reports, Tether expects more than $1 billion in total revenue from USDT in Q1. It also anticipates a $700 million profit for the quarter.

The first three months of March have so far been quite eventful for USDT and the rest of the stablecoin segment following USDC’s depegging.

Tether estimates it will make $700 million profit in the March quarter, taking its total excess reserves to over $1 billion. The value of all the USDT in circulation has grown substantially this month from $70.98 billion on March 1 to $78.14 billion on Thursday. CNBC…

— Wu Blockchain (@WuBlockchain) March 24, 2023

USDT saw a large influx of volumes especially as many people migrated from USDC. This new volume added to Tether’s transaction revenue generated from USDT transactions.

Tether also increased USDT supply in Q1 and continues to increase it further, according to recent data. There was roughly $77.6.14 billion worth of the stablecoin in circulation on Thursday according to the latest Glassnode data.

Source: Glassnode

But can this surge in circulating supply match the prevailing stablecoin demand? A comparison between active addresses and transfer volumes may provide some interesting insights.

Active addresses peaked in mid-February, during which there was a surge in daily transfer volume. This is likely because of the outflows as the market saw ample demand.

Source: Glassnode

Interestingly, the USDT transfer volume had its highest peak on 11 March. This was mainly because of the aforementioned inflows due to USDC migration.

However, transfer volume dropped since then due to outflows as demand for cryptocurrencies surged.

U.S. regulator finds inroad to criticize stablecoins

USDT’s growing circulation might be in preparation for more demand but it has not been without concerns.

Many crypto proponents have expressed concerns regarding Tether’s ability to provide a proper guarantee of reserves. The SEC recently took advantage of those concerns to launch criticism against Tether and USDT.

🚨Ω🚨#SEC just warned all anons that “proof of reserves” is meaningless, anons may suffer losses from “enforcement of laws”, & that “the market for a crypto asset may disappear”.

anon they’re trying to tell you #Tether is a fraud.

run for you life.https://t.co/21ua7iI353 pic.twitter.com/hNEDkOnsp5

— ⚯ M Cryptadamus ⚯ | @cryptadamist@universeodon.com (@Cryptadamist) March 23, 2023

In fact, the SEC described proof of reserves as meaningless in a recent statement to investors. The latter constitutes the latest of the market’s concerns.

Regulators have been increasingly pushing back against cryptocurrencies and stablecoins. However, some view this as a good sign that regulators are concerned about the crypto market appearing as a threat to the traditional finance system.

Regardless of the current market views, there are still concerns about potential bank runs that may trigger the loss of stablecoin pegs in the future.

The United States Securities and Exchange Commission has often talked about the purported “dangers” of crypto-assets while highlighting the need to strongly regulate the industry. It wasn’t until the FTX blow-up that the regulator stepped up its aggression.

In yet another instance stigmatizing the asset class, the securities watchdog has released a bulletin urging investors to exercise caution when dealing with cryptocurrencies.

SEC’s “Investor Alert”

The SEC’s Office of Investor Education and Advocacy cautioned investors against considering an investment involving crypto asset securities citing its “exceptionally volatile and speculative” nature. The post also pointed out that the crypto exchanges “may lack important protections for investors.”

The SEC explained that the law requires parties, including securities broker-dealers, investment advisers, alternative trading systems (ATS), and exchanges, to register with the regulatory agency, a state regulator, and/or a self-regulatory organization (SRO), such as FINRA. It added that platforms offering lending or staking services in crypto assets may be subject to federal securities laws.

It stated that unregistered platforms offering crypto asset securities may not provide relevant details required by investors to make informed decisions. The SEC also attempted to touch on the concept of proof-of-reserves – an auditing procedure allowing users to verify that a crypto exchange has sufficient reserves backing all user balances.

Proof-of-reserve reports have gained significant traction after the FTX collapse to address the transparency concerns surrounding centralized crypto exchanges.

But the SEC maintained these types of services may not provide any meaningful assurance and verify that these entities hold adequate assets to back their users’ balances.

“Crypto asset entities might use these in lieu of audited financial statements in order to obscure and confuse customers about the safety of their assets. In addition, a proof of reserves is not as rigorous, or as comprehensive, as a financial statement audit and may not provide any level of assurance.”

The SEC further stated that so far, no crypto asset entity is registered with it as a national securities exchange, nor any existing national securities exchange currently trades crypto asset securities. In doing so, it indicated that investors engaging with crypto asset securities may not benefit from rules that protect against fraud, manipulation, front-running, wash sales, and other misconduct.

The actions of the SEC represent a key inflection point for crypto, and the heart of this battle is the debate over whether crypto-assets should be considered securities or commodities.

Eyes on Coinbase

The SEC is currently at loggerheads with one of the most prominent crypto exchanges – Coinbase. The San Francisco-based platform was issued Wells Notice this week, setting the ball rolling on a potential lawsuit, following a slew of investigations by the Gary Gensler-led regulatory agency.

In response, Coinbase co-founder and CEO Brian Armstrong said the SEC reviewed its business in detail and approved the platform to go public two years ago while maintaining that they were “right on the law” and “confident in the facts.”

The White House released its annual economic report on March 20, and it dedicated an entire section to digital assets. 

The authors should be commended for doing so. I largely agree with the report’s assessment that certain aspects of the digital asset ecosystem are causing problems for consumers, financial systems and the environment.

However, as a builder in the digital asset space, I cannot disagree more with its conclusion that “crypto assets currently do not offer widespread economic benefits.”

To understand how the White House plans to regulate digital assets, it’s important to examine what was left out of the White House report. A particularly out-of-touch piece of data that made the report was a list titled, “Top Ten Crypto Derivative Platforms by Open Interest.” It included offshore exchanges including BingX, Deepcoin and BTCC Futures.

While most digital asset proponents would agree with the report that these exchanges are not reputable by any means, and open interest is a metric that is trivially easy to manipulate, it’s neither here nor there. The real issue is why the White House report chose to focus on offshore exchanges that have no checks and balances and aren’t even open to United States-based users.

What’s more revealing is the fact that they choose to completely ignore the largest derivatives product that is available to U.S.-based users, one that has been vetted and received approval from the Commodities Futures Trading Commission to launch in a safe and regulated manner: the Bitcoin (BTC) and Ether (ETH) futures offered by the Chicago Mercantile Exchange (CME).

Related: What Paul Krugman gets wrong about crypto

The CME is an entity that is fully compliant with all U.S. laws and regulations and, with the recent launch of the Micro Bitcoin and Micro Ether futures, has made it possible for retail investors to access a safe, regulated and U.S.-based futures derivative product.

Why would they choose to omit the mention of the CME?

Could it be because the CME can only list commodities, putting into question the Securities and Exchange Commission’s position that ETH is a security?

Furthermore, none of the platforms mentioned by the White House have any name recognition among crypto-native investors. While this could be attributed to the fact that there are relatively few derivative exchanges on the market and that none of these exchanges seem to have filled the void left by FTX, another omission is very telling.

The White House report also fails to mention Deribit, the largest options exchange by volume and open interest. Based in the Netherlands but unavailable to U.S. users, the company is focused on education and outreach and is far more transparent than most on the market. So, why was it not included?

The White House is purposefully excluding any legitimate businesses from the list of derivative platforms, a position that is likely taken in order to paint digital assets as shadowy, unsafe assets.

Derivatives, such as futures and options, are a core component of any financial system. The U.S. — and White House — would benefit from a thriving digital asset economy that includes derivatives and options markets. And I do agree that the exchanges listed in the White House report are indeed quite risky.

But what the White House is missing is that there is a better alternative, one that cannot be swept under the rug anymore and one that is transparent, noncustodial, cryptographically secure and fully open-source: decentralized finance (DeFi).

DeFi is fully noncustodial and has no intermediaries, so there are no “entities” to regulate because users are always in control of their funds. In addition, most DeFi uses collateral requirements and limits access to leverage: All lending protocols are overcollateralized, and the balance is instantly auditable, as opposed to fractional reserve banking.

Related: Did regulators intentionally cause a run on banks?

The lack of regulatory clarity from the U.S. SEC and CFTC stifles innovation in the derivatives space.

Most DeFi protocols can and should plan to follow the guidelines of self-regulatory organizations such as the Financial Industry Regulatory Authority to protect all users. Clearly stated regulations have a place in any industry, but regulation by enforcement stifles innovation. I’m seeing this firsthand as a builder in the digital asset space, and the lack of clarity is making it impossible for any U.S.-based entity to even tap into the U.S. market.

Digital asset proponents know about previous financial crises. Most of us lived through the hellscape that unfolded post-2008 due to bank deregulation. Our goal is to rebuild the financial infrastructure from the ground up, in the most transparent and securest way possible. DeFi is backed by mathematically unbreakable encryption, and centralized exchanges based offshore are the shadow banks of this generation.

Builders in the DeFi space want to create the most secure financial system in history. We want to empower citizens of the world, not private banks or runaway financiers.

And despite what U.S. regulators may think, we are willing to work with governments, central banks and regulators. We just need to know you’re arguing in good faith.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

The Crypto-friendly Custodia bank, founded by Caitlin Long, a well-known figure in the crypto industry, has been denied its application to come under the supervision of the U.S. Federal Reserve (Fed), according to an official announcement. 

The Board had previously announced the denial of the application. Still, the announcement confirmed that the order outlining the decision was not immediately available due to the need to review it for confidential information. 

Fed’s Decision Based On Custodia’s Ties With Crypto?

The order of the Federal Reserve Board notes “concerns” about Custodia Bank’s proposed business plans, which focus entirely on the crypto sector. The Board believes that banks with business plans focused on a narrow sector of the economy may pose heightened risks, as they may be more “susceptible” to economic or regulatory challenges.

Furthermore, the recently released denial by the Fed notes that the Board’s concerns are further elevated concerning Custodia Bank. The financial institution believes that the crypto-friendly bank is an “uninsured depository institution,” not backed by the Federal Deposit Insurance Corporation (FDIC), and may pose greater risks to depositors and the overall financial system. 

In addition, according to the released Fed’s denial of the crypto-friendly bank, the Custodia Bank proposed the issuance of Avits, which are dollar-denominated tokens designed to function as a programmable “electronic negotiable instrument” and as deposits for purposes of federal banking law. 

According to the press release by the Fed, they note that Custodia Bank does not refer to Avits as “stablecoins” but that they would likely function similarly to stablecoins like Tether USDT and USDC. 

This proposed issuance of Avits by Custodia Bank may have been seen as a potential risk by the Fed, given the concerns around stablecoins and their potential use for “illicit purposes.” 

Custodia Bank’s Response To The Fed

After the reiterated conclusion by the Fed, Custodia Bank emitted its response. The financial institution and its founder Caitlin Long made several claims about the need for fully solvent banks and the Federal Reserve’s handling of bank-run risks and the crypto industry. 

Custodia Bank proposed a model that would hold $1.08 in cash to back every dollar customers deposit, which may be seen as a more conservative and risk-averse approach to banking. 

Custodia Bank’s statement also highlights that there is a dire need for fully solvent banks that are equipped to serve “fast-changing” industries in an era of rapidly improving technology, referring to the need for banks that can adapt to the demand and changes of customers in industries like fintech and the crypto-asset. 

The statement by Custodia Bank also suggests that Custodia has not been intimidated by what it perceives as coordinated “attacks” and press leaks of confidential information by the Fed. 

The notice also suggests that the recently released order denying Custodia Bank’s application for membership in the Federal Reserve System resulted from numerous procedural “abnormalities, factual inaccuracies, and a general bias against the crypto industry.”

Additionally, the claims by the Custodia Bank suggest that the bank may need to turn to the courts to vindicate its rights and compel the Fed to “comply with the law” in response to the denial of its application for membership in the Federal Reserve System. 

Featured image from Unsplash, chart from TradingView.com

As the world of cryptocurrencies continues to evolve, more and more people are looking for the next big thing. DigiToads (TOADS) could be that next big thing, with TikTok users tipping it as the Web3 answer to Binance’s BNB.

What Is DigiToads?

DigiToads is a high-growth token that allows holders to earn residual income through NFT staking, P2E gaming, and holding TOADS tokens. The project has been gaining significant traction recently, with many, including Bitcoin whales, backing it to soar in 2023.

One of the critical reasons for DigiToads’ success is its focus on community. The project is built to continuously reward the community of TOADS holders, with 10% of funds raised being airdropped to token holders monthly. This encourages people to infuse in the token and helps create a solid and engaged community around the project.

Another reason for DigiToads’ popularity is its innovative approach to P2E gaming. The project features a new web3 game that lets players collect, nurture, and battle unique DigiToads. As a player, you can acquire one-of-a-kind DigiToads by buying, trading, or even winning them.

Players will want to make their DigiToads the strongest in the swamp arena. This can be achieved using TOADS tokens to purchase food, potions, and training equipment for their DigiToads. These items will aid in increasing the size and strength to provide a competitive edge in battles against other players.

The Chance To Earn Playing DigiToads

At the end of every DigiToads season, which lasts for a month, the top 25% of players on the leaderboard will receive TOADS tokens as a reward. To ensure that the community is always rewarded, 50% of the funds raised from the sale of items in the game will be allocated to the prize fund and distributed among the top 25% of players.

With all of these features, it’s no wonder that DigiToads is becoming increasingly popular among investors and crypto enthusiasts alike. Its unique approach to P2E gaming and its commitment to community and charity make it stand out in a crowded market.

But the most exciting thing about DigiToads is its growth potential. With Bitcoin whales backing the project and TikTok users tipping it to be the Web3 answer to Binance-owned BNB, there is a lot of buzzes around DigiToads right now. If it continues on its current trajectory, it could be one of the top cryptocurrencies of 2023 and beyond.

TOADS Presale Live Now

So, if you’re looking for the next big thing in crypto, check out the DigiToads presale. With its innovative approach to P2E gaming, commitment to community and charity, and growth potential, it could be the opportunity you’ve been waiting for.

For More Information on DigiToads visit the website, join the presale or join the community.

Disclaimer: This is a sponsored article, and views in it do not represent those of, nor should they be attributed to, ZyCrypto. Readers should conduct independent research before taking any actions related to the company, product, or crypto projects mentioned in this piece; nor can this article be regarded as investment advice.

Deutsche WertpapierService Bank (Dwpbank), which offers securities processing to around 1,200 banks in Germany, is creating a new platform, wpNex, that will offer Bitcoin (BTC) to all of its affiliates’ retail customers in the second half of this year. 

The new service will feature crypto accounts alongside bank customers’ other accounts and will not require additional Know Your Customer procedures, according to local media reports.

Wallet-as-a-service provider Tangany and Bankhaus Scheich’s Tradias digital asset trading service will also participate in the new offering. Retail customers will not hold private keys. Dwpbank CEO Heiko Beck said the bank planned to add other cryptocurrencies, digital assets and tokenized securities to the service in the future.

MLB Banking was the first Dwpbank affiliate to sign on to the platform and has already performed a transaction on it. MLP Banking’s account and securities processing head, Paul Utzat, said in a statement:

“In our MLP customer portal, it is a logical addition to the existing wealth management offering.”

Crypto accounts are linked to euro cash accounts, so transactions can take place without going through a separate payments account.

Related: Almost half of Germans to invest in crypto: Report

Germany has been named one of the world’s most favorable countries for crypto. DZ Bank announced in February that it was adding crypto to its asset management service. DZ Bank is Germany’s second-largest bank by assets and a central institution for a network of bank coops with 8,500 branch offices.

Great news for #BTC adoption and access in

Through its new wpNex platform, the dwpbank will allow up to 1200 German banks to offer #Bitcoin trading – and soon more crypto-assets.

The crypto holdings will be integrated into the customers’s online banking securities account.

— Patrick Hansen (@paddi_hansen) March 24, 2023

German crypto bank Nuri, however, shut down in November under stress of the crypto bear market. It had half a million customers. On the traditional finance side, Deutsche Bank shares plummeted on March 24 as instability spread among European banks. Deutsche Bank asset management division DWS was reportedly in talks with tradias on investment in the service.

Magazine: Best and worst countries for crypto taxes — plus crypto tax tips