Professor Wang Yang, vice president for institutional advancement and chair professor at the Department of Mathematics at the Hong Kong University of Science and Technology (HKUST), criticized China’s cryptocurrency mining ban during a panel discussion in Hong Kong last week. He called the decision “very unwise” because it shifted businesses to the U.S., boosting American […]
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Associate Professor Rejects Alleged Link Between Nigerian Currency Depreciation and Crypto Trading
Nigeria’s decision to halt naira trading on cryptocurrency exchanges is likely to worsen matters for its volatile currency,” an associate professor at the University of East London has argued. The associate professor said Nigeria can effectively regulate the cryptocurrency industry through a framework introduced by its securities regulator in 2022. Crypto Trading Not Linked to […]
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Finance Professor Blasts SEC’s Potential Cash-Only Rule for Spot Bitcoin ETFs Citing Benefits of In-Kind Model
A finance professor at Georgetown University has urged the U.S. Securities and Exchange Commission (SEC) to avoid micromanaging the creation/redemption process for spot bitcoin exchange-traded funds (ETFs). While the SEC proposed the cash creation method, applicants like Blackrock and Fidelity have advocated for the in-kind creation method. “Now that the Commission has seemingly become comfortable with allowing spot bitcoin ETFs to trade in the U.S., it should not squander this positive development by forcing a suboptimal product (cash-only creation/redemption) to come to market,” said the professor.
Georgetown Professor Urges SEC to Let Spot Bitcoin ETFs Use In-Kind Creation Method
James Angel, an Associate Professor of Finance at Georgetown University, penned a letter to the U.S. Securities and Exchange Commission (SEC) on Tuesday regarding all proposals for spot bitcoin exchange-traded funds (ETFs) that the regulator has received. Professor Angel specializes in the market structure and regulation of global financial markets.
He told the securities watchdog:
Media reports indicate that the long overdue approval of a spot bitcoin ETF is imminent. Getting this done quickly and properly will free up SEC resources to do the other more important things in furtherance of the SEC’s important mission.
However, the professor raised concerns in his letter: “I’ve noticed some reports that the SEC is considering allowing only cash creation/redemption. If the media reports are accurate, that would be a big mistake. Issuers and APs [authorized participants] would not have the freedom to choose whether to create/redeem in-kind. This would impose costly frictions on the create/redeem process, resulting in wider bid-ask spreads and mispricing of an ETF relative to the spot price. This will result in higher costs and mispricing risk to investors.”
Angel explained:
In-kind creation/redemption eliminates trading costs and execution risks for the ETF. With cash creation/redemption, the ETF (and thus the shareholders) suffers the transaction costs of buying and selling bitcoin.
“These costs include the bid-ask spread along with the operational costs from the labor and overhead involved in calculating, executing, monitoring, and accounting for transactions in the various bitcoin markets,” he described. “Costs to ETF shareholders will be lower if the ETF does not have to pay to build a competent trading capacity in bitcoin. Furthermore, there are timing costs involved in the risk that the bitcoin price moves between the time when the NAV is established for a creation/redemption and the time when the bitcoin is traded. Given the high volatility of bitcoin, this is a real risk. There is no reason to force the shareholders to bear this execution risk when it is not necessary.”
Emphasizing that “The SEC should listen to the ETF sponsors that have decades of daily hands-on experience with creating and redeeming ETFs,” the professor stressed:
ETF sponsors should have the freedom to accept bitcoin directly. The SEC should resist the urge to micromanage how ETF sponsors do the creation/redemption process. It should be left to the professional judgment of the ETF sponsors.
Citing Blackrock, the world’s largest asset manager, and financial services giant Fidelity, the professor stated: “Blackrock has pointed out how an in-kind model offers lower transaction costs, superior resistance to market manipulation, reduction in risks of operating events, and simplicity. Fidelity has also pointed out the advantages of the in-kind model.” The world’s largest asset manager has proposed a revised in-kind model for its spot bitcoin ETF.
The professor concluded: “Now that the Commission has seemingly become comfortable with allowing spot bitcoin ETFs to trade in the U.S., it should not squander this positive development by forcing a suboptimal product (cash-only creation/redemption) to come to market.”
Do you agree with the professor? Let us know in the comments section below.
BRICS Expansion to Make West Recognize New World Order, De-Dollarization: UAE Professor
The accession of new members will allow BRICS to push the West to accept changes in international relations, an expert from UAE has been quoted as stating. That’s valid in particular for cross-border trade and de-dollarization, said Mohamed El Yattioui, professor at the American University in the Emirates.
BRICS Bloc to Benefit From Inducting New Members Like UAE and Saudi Arabia, Academic Says
“The role of BRICS has been increasing during the last years and in the last decade,” Mohamed Badine El Yattioui, doctor of political science and assistant professor of international affairs and strategy in the College of Security and Global Studies at the American University in UAE, told Russia’s Tass news agency.
The academic emphasized that “for the United Arab Emirates, it’s important to become part of the BRICS group,” which currently consists of Brazil, Russia, India, China, and South Africa. He believes that the expansion will allow the bloc to put pressure on the West to recognize changes in the system of international relations.
The admission of the UAE and other candidates will help BRICS to “push the Western countries towards accepting some modifications of the new world order, especially those regarding international trade, international political economy in general, currency and leaving the dollar,” El Yattioui elaborated.
The professor highlighted that Saudi Arabia and the UAE have strong economies and high gross domestic product (GDP) and are offering BRICS many opportunities, especially regarding energy. “It is in the interest of BRICS to have them inside the group,” he remarked.
Enlargement was one of the topics discussed by the foreign ministers of BRICS member states in Cape Town, South Africa, in June. The meeting was also attended by diplomats from 12 other nations that have expressed intentions to join the group of the largest developing economies.
This year’s BRICS summit is scheduled to take place on Aug. 22–24 in Johannesburg. The hosting country’s Minister of International Relations and Cooperation, Naledi Pandor, recently unveiled that the organization’s leaders will talk about its expansion. A total of 23 nations have so far submitted formal applications for membership, she said.
Earlier in August, the Press Secretary of Russian President Vladimir Putin, Dmitry Peskov, admitted that “certain nuances exist” among the five current BRICS members regarding the bloc’s expansion and these will be discussed at the summit. He was referring to a report by Bloomberg, according to which China’s push for a rapid enlargement is facing opposition from India and Brazil.
Do you think BRICS leaders will support the accession of new members at their upcoming meeting in Johannesburg? Share your expectations in the comments section below.
Harvard Economics Professor: US Default Could Spark Global Financial Crisis
Harvard economics professor Kenneth Rogoff, who previously served as the chief economist at the International Monetary Fund (IMF), has warned that the U.S. defaulting on its debt obligations could spark a global financial crisis. “It’s a very perilous situation and we are in unknown waters,” he warned.
Harvard Professor of Economics Kenneth Rogoff on U.S. Default and Global Financial Crisis
Harvard economics professor Kenneth Rogoff shared his view on the U.S. economy, a possible U.S. default, and a global financial crisis in an interview with ET editor Srijana Mitra Das, published Thursday. Rogoff is a professor of Economics and Maurits C. Boas Chair of International Economics at Harvard University. From 2001–2003, he served as Chief Economist and Director of Research at the International Monetary Fund (IMF).
He was asked whether the current U.S. debt crisis and its potential default could “bring back the risks of a global recession.” Rugoff replied:
Absolutely. The risks exist anyway but if this worsens, it could pose a global financial crisis. I hope it won’t come to that — but it’s a very perilous situation and we are in unknown waters.
“Generally, when you navigate government spending, you consider one bill at a time. You look over all its details and then negotiate how to work these out,” he explained. However, he stressed that the Republicans are trying to get everything all at once, emphasizing that “No country runs its fiscal policy that way.”
He cautioned: “Typically, these negotiations do get resolved at midnight but there is a two to three percent chance at the moment here that we will discover what a U.S. default looks like.”
How the U.S. ‘Defaulted’ in the Past
Rogoff further detailed that the U.S. has “defaulted” in the past but “in a different way.” One example was in the early 1930s when American debt used to be payable in gold. President Franklin Roosevelt changed the gold price from to . “We defaulted on the gold clause while we paid the debt in dollars, which was worth a lot less,” the Harvard professor noted.
Another example was “after the Revolutionary War when the U.S. was forming,” the economics professor described. “Alexander Hamilton, the first secretary of the U.S. Treasury, only paid some of the inherited colonial debt,” Rugoff explained, adding:
We’ve also had high inflation recently — so, if you’re a U.S. debt holder, the value of your holding has reduced markedly in the last two years. That is a kind of default since you weren’t expecting the loss of value but it is much less disruptive than this situation which is like facing a black hole.
U.S. Treasury Secretary Janet Yellen has said that the Treasury may not be able to pay all of the government’s bills as early as June 1 “if Congress does not raise or suspend the debt limit before that time.” However, some believe that raising the debt ceiling will make the problem worse, including economist Peter Schiff.
Like Yellen, the Congressional Budget Office similarly warned that the government could default on its debt in the first two weeks of June. The IMF cautioned last week that a U.S. default would have “very serious repercussions.” Meanwhile, former President and 2024 presidential candidate Donald Trump has urged Republican lawmakers to let the U.S. default on its debt if the Democrats do not agree to spending cuts.
Do you agree with Harvard economics professor Kenneth Rugoff? Let us know in the comments section below.
Saudi Arabia Joining BRICS Would Accelerate Chinese Yuan’s Use as Trading Currency, Says Professor
Professor Ashok Swain of Uppsala University’s Department of Peace and Conflict Research says Saudi Arabia joining the BRICS economic bloc “would accelerate the bilateral trading being conducted using the yuan as the trading currency. ”
How Saudi Arabia Joining BRICS Could Boost Use of Chinese Yuan
Ashok Swain, a professor of peace and conflict research at Uppsala University in Sweden, told Al-Monitor last week that Saudi Arabia joining the BRICS economic bloc would accelerate the use of the Chinese yuan as a trading currency. Professor Swain is head of Uppsala University’s Department of Peace and Conflict Research. He is also the UNESCO chair on International Water Cooperation.
Commenting on Saudi Arabia joining the Shanghai Cooperation Organization (SCO) and the BRICS, which comprises Brazil, Russia, India, China, and South Africa, he said:
There is no doubt that Saudi Arabia becoming a member of China-dominated SCO and BRICS would accelerate the bilateral trading being conducted using the yuan as the trading currency.
In March, Saudi Arabia became a dialogue partner of the SCO. The Shanghai Cooperation Organization was established in 2001 as a political, economic, and defense alliance; it is the world’s largest regional organization. Saudi Arabia is not yet a member of the BRICS group but the country has expressed interest in joining. Last month, Russian President Vladimir Putin and Saudi Crown Prince Mohammed bin Salman Al Saud discussed potential collaboration between Saudi Arabia and the BRICS.
Meanwhile, Saudi Arabia is actively negotiating with Beijing to price some of its oil sales to China in yuan, according to reports. While the discussions regarding yuan-priced oil contracts have been taking place on and off for six years between the two nations, they have intensified this year. The Uppsala professor noted that oil trade in yuan will be a “huge step” for China and “a significant setback to the dollar’s standing.”
A growing number of countries are shifting away from using U.S. dollars to settle trades. China’s yuan recently replaced the USD as the most traded currency in Russia as well as the most used currency to settle cross-border payments in China.
The BRICS group is also working to create a new currency that would reduce its member countries’ reliance on the U.S. dollar. A former White House economist believes that a BRICS currency will erode the U.S. dollar’s dominance. Another economist predicted that the yuan and euro will disrupt the U.S. dollar’s dominance and the three will form a tripolar reserve currency world.
Do you think Saudi Arabia joining the BRICS will undermine the dominance of the U.S. dollar? Let us know in the comments section below.
Iranian Professor: Saudi Arabia May Join De-Dollarization Shift as US Dollar Is Now ‘Unreliable and Dangerous’
A University of Tehran professor and member of Iran’s Presidential Delegation to China has stressed the importance of de-dollarization for the international community. “The dollar has been used as a weapon by the U.S. against different countries. It is unreliable and it is dangerous,” the professor warned.
Iranian Professor Stresses the Importance of De-Dollarization
Professor Mohammad Marandi discussed de-dollarization and Iran’s relations with Saudi Arabia and China in an interview with Chinese government-owned news outlet Global Times, published Wednesday. He is an Iranian American academic who is the University of Tehran’s Vice President for International Affairs and a member of Iran’s Presidential Delegation to China.
Commenting on the de-dollarization trend in several parts of the world, Marandi emphasized:
De-dollarization is very important for the international community, because the dollar has been used as a weapon by the U.S. against different countries. It is unreliable and it is dangerous.
“Therefore, countries like China, Iran, and Russia among many others, need to move away from the dollar so that the U.S. cannot use it as a weapon against them … The U.S. should not be allowed to use the dollar to put pressure on other countries,” the professor added.
The restoration of bilateral ties between Saudi Arabia and Iran, brokered by China in March, has been seen as a significant step towards peace in the long period of turbulence in the Middle East.
“Iran already sells a substantial amount of petroleum using currencies other than the U.S. dollar,” Marandi continued. “I think for Saudi Arabia, ultimately it will be in its best interests to move away from the dollar as well in order to make sure that it is not vulnerable or less vulnerable to the U.S.” The professor opined:
If the rapprochement continues, then I think the chances for Saudi Arabia to join the camp of de-dollarization increases substantially.
Moreover, he said: “Since China is a major energy importer from the Gulf region, it would be ideal for China to be able to use China’s yuan to import energy from the region.”
What do you think of Professor Mohammad Marandi’s view? Let us know in the comments section below.
South African Professor Accuses US Regulators of Attempting to ‘Assassinate Crypto’
The United States’ attempts to “assassinate crypto” are illegal and unlikely to succeed because “crypto is global,” Steven Boykey Sidley, a South African professor and author, has argued. According to Sidley, many formerly U.S.-based companies and innovators have fled the country and have set up bases in countries with more “comfortable” regulatory environments.
The United States’ Agenda Against Crypto
Steven Boykey Sidley, a South African professor of practice at JBS, University of Johannesburg, has accused U.S. regulators and departments of orchestrating what he described as coordinated and “possibly illegal” efforts to “assassinate crypto.” Sidley insisted that there are no moral or legal grounds justifying the attempts to take out BTC, particularly when the world is in the midst of a banking crisis sparked by banking failures in the U.S.
In his op-ed published by the Daily Maverick, Sidley points to the U.S. Federal Reserve’s “opaque and non-explanatory” reasons for refusing to grant a national banking license to Custodia Bank as one example of how U.S. authorities are attempting to kill crypto. According to the professor, the bank and its founder Caitlin Long were committed to reducing risks and boosting depositors’ confidence “that their deposits into crypto-exchanges were backed 1:1.”
Sidley asserts in the op-ed that the U.S. Federal Reserve’s abrupt and inexplicable withdrawal from its engagements with Custodia suggests that the United States has a sinister agenda against cryptos.
Coordinated Attacks
Meanwhile, Sidley also highlighted how U.S. regulators have seemingly coordinated their actions against crypto entities.
“Curiously coincidental in time, sometimes happening within hours of a seemingly unrelated announcement from some different corner of government. Keep in mind, some of the bodies are supposed to be entirely independent – they are designed not to collaborate for excellent reasons of conflict avoidance,” Sidley said in the op-ed.
Despite what he sees as illegal acts by U.S. regulators, Sidley, the co-author of the book Beyond Bitcoin: Decentralised Finance and the End of Banks, insisted powerful opponents like U.S. senator Elizabeth Warren are still unlikely to get their way, because “crypto is global.” He claimed that many formerly United States-based companies, developers, and innovators have already moved to places like Dubai, Hong Kong, Singapore, and Switzerland where the regulatory environment is more “comfortable.”
What are your thoughts on this story? Let us know what you think in the comments section below.
Why This Economics Professor Thinks Bitcoin Is Worthless
Steve Hanke, a professor of Applied Economics at Johns Hopkins University, is the latest scholar to trash Bitcoin.
Bitcoin Has No Fundamental Value, Says Professor
In a tweet on March 26, Hanke said Bitcoin is not a currency but a speculative asset whose fundamental value is zero. He appeared to back fiat, including the Japanese Yen and the USD, two of the world’s reserve currencies, as appropriate hedges in economic turmoil.
Bitcoin is not a currency. It's just a highly speculative asset with a fundamental value of zero. pic.twitter.com/leA4Fe9Ixz
— Steve Hanke (@steve_hanke) March 26, 2023
Considering the role of the USD in the world’s market, the currency minted by the Federal Reserve has been historically used to hedge against economic crises. The USD remains as a store value, explaining the currency’s spike in valuation whenever the equities market tank.
Hanke’s comments come when Bitcoin and cryptocurrencies have been outperforming traditional assets, expanding amid the banking crisis in the United States.
Following the bank run on Silicon Valley Bank (SVB) and the subsequent intervention by the United States government, where the Federal Reserve had to inject liquidity, averting a crisis, Bitcoin prices have been rallying. Last week, BTC peaked at around ,800, the highest in over nine months.
The expansion of Bitcoin prices while banking stocks were under pressure, observers note, was enough to justify the digital gold’s role as a store of value. Hanke is pessimistic about Bitcoin, dismissing its use as a hedge. Specifically, he mentions the coin’s speculative nature, a trait also linked to the asset’s volatility.
In another tweet, the economist lauded the United States Securities and Exchange Commission (SEC) for getting serious about going after Coinbase, a cryptocurrency exchange. The regulator says Coinbase has violated a range of investor protection rules.
1/ Today Coinbase received a Wells notice from the SEC focused on staking and asset listings. A Wells notice typically precedes an enforcement action.
— Brian Armstrong (@brian_armstrong) March 22, 2023
The Wells Notice would possibly be the beginning of a legal showdown between the SEC, that’s been, in recent months, clamping down hard on crypto businesses, and Coinbase, the largest crypto exchange in the country.
Dr. Doom Celebrated The Failure Of Crypto-Friendly Banks
Hanke joins the likes of Nouriel Roubini, often known as “Dr. Doom”, who has been very vocal about his disdain for crypto. Roubini is a New York University professor emeritus and a Bitcoin critic. The professor celebrated the collapse of Silicon Valley Bank (SVB) and Signature Bank of New York in mid-March, slamming them for getting involved in cryptocurrencies.
In a tweet, Roubini said all banks supporting cryptocurrencies would collapse and that it was good riddance. He added that there was no logic in protecting depositors of Signature Bank, an institution that “recklessly decided to jump into the crappy crypto cesspool and bet the house on shitcoins biz.”
Earlier, Roubini said crypto is risky, and the entire industry will go extinct.
NYU Professor Predicts CBDCs Are Imminent, Bitcoin Still Unviable
Central banks have been responding to the rise of Bitcoin with the introduction of central bank digital currencies, or CBDCs.
Thus far, movement on this front has been somewhat slow. Save for China, most central banks are still in the ideation phase, or are looking more into how a CBDC would affect their economy and their standing on a global scale. The U.S. Federal Reserve is moving especially slow, with Federal Reserve Chairman Jerome Powell seemingly signaling that the U.S. doesn’t need a CBDC at this time.
But Nouriel Roubini, an American economist that teaches at NYU Stern School of Business, says CBDCs are incoming. Bitcoin could benefit from, say some other analysts, though Roubini asserts that the leading cryptocurrency does not have much value at all.
Related Reading: Here’s Why Ethereum’s DeFi Market May Be Near A Bottom
Nouriel Roubini Discusses CBDCs
Speaking to Yahoo Finance about his thoughts on the economy, Bitcoin, cryptocurrencies, and central bank digital currencies, Roubini recently stated that he thinks that CBDCs will go mainstream in the next three years:
“So not only you don’t need crypto, you don’t even need Venmo [and] you don’t even need a bank account. You don’t even need cheques. And the big revolution we’re gonna see in the next three years is gonna be central bank digital currencies.”
His belief is that CBDCs are fundamentally better than Bitcoin due to them having a technological advantage.
Roubini believes that all cryptocurrencies are flawed, calling them not decentralized and having worst inflation rates than that of central bank currencies.
Related Reading: Tyler Winklevoss: A “Tsunami” of Capital Is Coming For Bitcoin
CBDCs Good For Bitcoin?
What’s ironic is that many think that the rise of CBDCs will actually benefit Bitcoin.
Raoul Pal, CEO of Real Vision and a retired hedge fund manager, recently said on Bitcoin’s currently outlook:
“It all looks like we are reaching this point. I have said this is where macro, crypto, politics, everything comes into the same big bucket. It is all concentrated and our pure focus right now. We know that Bitcoin plays a part in this.”
Core to his bullish sentiment is the rise of central bank digital currencies. He thinks that Bitcoin will act as a “life raft” that will allow investors to hedge their portfolios against the monetary inflation and the invasions of privacy caused by a CBDC.
Related Reading: 3 Bitcoin On-Chain Trends Show a Macro Bull Market Is Brewing
Featured Image from Shutterstock Price tags: xbtusd, btcusd, btcusdt Charts from TradingView.com NYU Professor Predicts CBDCs Are Imminent, Bitcoin Still Unviable