Confidence in the cryptocurrency industry has been undermined more than ever during the current cryptocurrency crash, in which investors lost about $ 800 billion in less than two months. The industry is trying to restore its reputation along with the glue of “transparency,” a popular word that is currently everywhere.
The executive director of the crypto company Ripple from San Francisco is calling for transparency in Davos, Switzerland, where the World Economic Forum is discussing the future of digital assets. The Stellar Development Foundation, a non-profit organization from San Francisco with a long history of solving challenging problems in cryptography, also calls for transparency. So is a company with a new cryptocurrency and old ties to the Bay Area.
What are they trying to clear up?
Lawmakers and consumer advocates have warned for years that the industry is not warning consumers of the risks of rapidly losing large investments or encountering endless fraud schemes, even as Super Bowl commercials and other high-profile promotions, some in the Gulf Region.
In January, Golden State Warriors star Klay Thompson tweeted that he was “excited to take a share of my bitcoin salary thanks to the Cash app! I’m with bitcoin because I believe it’s the future of money. ” The tweet was a promotion for the banking app Cash App in which Thompson and his other Warriors star Andre Iguodala gave a million dollars in bitcoins.
But giving bitcoin on Twitter may be over, experts say.
In the current crash, a key part of the industry has collapsed, causing huge losses. Stable coins were assumed to be a safe bet for cryptocurrencies because their value should be aligned with the real-world currency. They do not provide the explosive potential of investing in other cryptocurrencies, but they do provide a solid medium of exchange for many virtual needs, such as long-distance money transfers to people without bank accountants, routine financial transactions or online trading of goods and services. They were to be inviolable.
But Do Kwon, a “crypto brother” with a severe case of arrogance, oversaw the decline of stable terra and moon coins, which were not backed by real assets but connected to each other through algorithms that were supposed to deal with market fluctuations.
Kwon, a Stanford student, once fired economist Frances Coppola on Twitter, saying, “I’m not discussing the poor on Twitter and I’m sorry I don’t have anything for her at the moment.”
He should have listened.
Luna’s price has dropped from $ 97 on April 25 to $ 0.00016 now. That disaster accounts for only $ 40 billion in recent losses – 5%. But the impact was seismic. The industry has told the world that this can never happen with stable coins.
“An event as significant as terra and luna is a really big challenge. We know it takes us backwards, ”says Denelle Dixon, CEO of the Stellar Development Foundation. A Yahoo lawyer in 2007 when the company faced congressional scrutiny for mishandling data, Dixon is no stranger to Silicon Valley’s struggle to protect new innovations.
“We felt there was a huge boost in terms of working with governments and traditional companies and bringing them into crypto. But those things take you back, “says Dixon,” when it comes to a brand that is generally tied to crypto. ”
Dixon and others believe that asset transparency that supports stable coins is an important first step in rebuilding cryptocurrencies.
Transparency for stable coins is key to “ensuring that the people involved feel, buy and have access to all the financial information they need to feel comfortable being actually secured by dollars,” Ripple’s chief executive, Brad Garlinghouse, told Fox Business May 24 Ripple is a San Francisco-based company that helps financial institutions with cryptocurrency transactions.
Garlinghouse, whose company had its own struggles with the Securities and Exchange Commission, spoke from the World Economic Forum, where cryptocurrency was a key topic. The head of the International Monetary Fund begged investors not to abandon cryptocurrencies, while noting that stable coins that are not fully backed up run the risk of “filling your face”. Christine Lagarde, President of the European Central Bank, reiterated this idea, saying: “Coin issuers should back up their coins with as many dollars as they have coins. That needs to be checked, monitored and regulated, ”said Fortune.
Regulation is coming, including laws specifically dealing with stable coins. The Biden administration cited stable coins as a key concern in a November treasury report. In early May, California Gov. Gavin Newsom also issued an executive order calling for cryptocurrency regulation.
Federal government veterans who have ties to Bay Are are lining up behind a new cryptocurrency they say provides that transparency. Among them is former U.S. Treasurer Rosie Rios, a former Oakland economic development official and consultant in San Francisco. Rios says Silicon Valley must help restore confidence in the industry.
“For anyone who invests in cryptocurrencies, it’s important to consider their usefulness and the role your investment plays in Silicon Valley and beyond,” Rios says. “If California wants to continue to be a leader in technology and innovation, we should find ways to boost the functionality and role of cryptocurrencies in the global economy.”
Rios believes this must happen with stable coins that are actually backed by real assets, not coins that are “just traded as floating assets”.
Rios is the director of Unicorn Hunters, a company that is building unicoin, a cryptocurrency that will be supported by an investment fund so that coin owners can receive dividends from the investment.
Moe Vela, another director of the company, was the director of President Obama’s administration, where he worked closely with Biden. Vela also worked with Vice President Al Gore at the Clinton White House.
“The lack of transparency has caused incomparable and incomparable volatility in the investment process,” says Vela. “I cannot stress how important it is that there is a difference between uncorrupted cryptocurrencies, the traditional cryptocurrency that is now collapsing, and cryptocurrencies protected by assets.”
Regulating stable coins and other assets can change cryptocurrencies in the Bay Area and around the world. Promotions inviting the public to dive may be over. Maybe the time has come for transparency and stabilcoin. Just a few months ago, celebrities urged consumers to dive. Some of these promotions have not aged well.
Had Thompson, the star of the Warriors, taken his entire salary for the bitcoin season during his Twitter promotion earlier this year, he would have lost $ 19 million, or about half his salary.
Asked for comment, the Warriors declined, noting “As you know, markets can rise and fall.”