The Big Stablecoin Short

Good morning. Today we're witnessing the makings of the next AUTHOR book turned movie with a hedge fund shorting Tether. We've also got coverage on the EU's MiCA bill, digital identities in the UK and more!

Market Update (as of 7:48am ET):

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Top 5:

1. Proposal limiting proof-of-work is rejected in EU Parliament Committee vote. This time the boring headline comes with good news. The section of the MiCA (Markets in Crypto-assets) bill that potentially could have banned proof-of-work (PoW) blockchains from operating in the EU has been excluded from the draft by a vote of 32-24. The proposal received heavy backlash from the crypto industry over the past few days.

2. Hedge fund makes short wager against stablecoin Tether.  Fir Tree Capital Management has taken out a large short position on Tether, the largest stablecoin by market capitalization. Tether currently only backs around half of its circulating supply with cash and government bonds, while the other half is backed by riskier assets like commercial paper (short-term corporate loans). While this presents an opportunity for higher yield generation for Tether, it also presents greater risk for its users. Fir Tree believes much of Tether's commercial paper is connected to Chinese real estate developers and expects the value of those assets to decline to such an extent that their short position will pay off for the firm in the next 12 months.

3. Standard Chartered’s crypto custodian to help clients earn yield on token holdings. Zodia, a crypto custodian created by major TradFi players, Standard Charter and Northern Trust, is preparing to launch several new products that "help institutional investors earn yield on token holdings." Maxime de Guillebon, Zodia’s CEO, says that clients are asking for "efficient access to liquidity, leverage and yield," in addition to custody services. The company is also exploring options to provide clients with exposure to staking rewards and other DeFi opportunities. Zodia's connection to Standard Charter and Northern Trust put the firm in a strong position to scale with existing customers of the legacy firms. All product offerings will be subject to regulatory approval.

4. Former Walt Disney CEO Bob Iger backs metaverse startup. The longtime Disney CEO announced on Monday that he has joined the board at Genies, a digital avatar platform built on the Flow blockchain that specifically focuses on NFTs and large-scale crypto gaming. Genies raised $65 million last year and signed partnerships with Universal Music Group and Warner Music Group to serve as the official avatar and NFT provider for artists on their labels. According to co-founder and CEO, Akash Nigam, "Genies avatars as a combination of
different NFTs worn by a digital avatar that users can buy, sell and trade with other collectors." The firm believes that avatars are the next form of communication and they plan to deliver Genie avatars for the masses.

5. UK announces initial steps for national digital identities. The UK's Department for Digital, Culture, Media, and Sport (DCMS) has plans to "to make digital identities as secure as official documents such as passports and driving licences." Digital IDs will be available via a mobile app and website and will be able to be used in-person or online. DCMS says that digital identities will be voluntary and citizens will be allowed to maintain physical documents if they so choose. Privacy and security concerns are already being raised in response to the announcement. Remember, Big Brother is watching.

Updates and other stories:
- Tennessee Bitcoin miner faces lawsuit over noise complaints...Read More
- Binance granted a crypto asset service provider license from Bahrain...Read More
- Visa to hire college students to develop in-house crypto talent...Read More

Top Sharers of the Crypto Top 5:
1. Donna Y. - Nashville, TN
2. Jake Y. - Greenville, SC
3. Forrest H. - Evansville, IN

External Resources:
1. Cryptopedia from Gemini - if you see a word, acronym, or phrase in this newsletter that you don't understand, there's a good chance you can find an explanation here
2. Crypto Explainer+ - intro level courses on Bitcoin, Ethereum, decentralized finance, NFTs, and more
3. Crypto Jobs! - looking for a new job? Check out this page from Anthony Pompliano with hundreds, if not thousands of listings

Disclaimer: The information contained in this newsletter shall not be understood or construed as financial advice. I am not an attorney, accountant, or financial advisor, nor am I holding myself out to be, and the information provided is not a substitute for financial advice from a professional who is aware of the facts and circumstances of your individual situation.