Spiro

[Spiro @SpiroAnton]

@TansuYegen Qaasaaa

[Spiro @SpiroAnton]

Great to hear this news from our partners at @AlliumLabs !

[ethn @ethanyish]

I’m excited to announce our $40M Series B, led by @AmplifyPartners with @kleinerperkins, and @Theoryvc.

After knowing each other for 10 years and meeting in our freshman year in college, Cheng Han and I came together in 2021 to solve the massive problem with blockchains - the data was fragmented across hundreds of chains and unusable at scale.

Today, we manage 30+ petabytes of blockchain data that serves as the onchain system of record for institutions like Visa, BCG, and major banks and asset managers.

A lot has changed since our Series A two years ago:
→ Revenue grew 10x
→ 150+ enterprise customers
→ Visa and BCG built their stablecoin dashboards on Allium
→ Data cited by research institutions from the Fed to Stanford

Since we founded Allium 5 years ago, blockchain went from retail speculation to institutional infrastructure for 24/7 settlement, programmable payments, and tokenized assets that trade like equities. Allium went from 3 people in a room to the data layer leading institutions trust to operate onchain.

Thank you to our customers, investors, and especially the Allium team for helping us reach this milestone. It's been an incredible journey so far, and we're excited to continue building the system of record for onchain finance.

A special thank you to @dbeyer123 from Amplify who’s joining our board, @ttunguz @SpencerFarrar @LM_Braswell and everyone who believed in us from the beginning.

And thank you to @bdanweiss and @FortuneMagazine for covering the news! Read more about our announcement:

[Spiro @SpiroAnton]

@frank_liquid Specialty insurance

[Spiro @SpiroAnton]

@nic_carter @The_Big_Jugg @shaunmmaguire I’ve read Days of Rage. Quaint tbh given the abyss we’re entering now. But yes those were the days when the domestic left owned political violence. But that’s changed. You’re a numbers driven guy Nic and the numbers of the last few decades don’t remotely support your OP.

[Spiro @SpiroAnton]

Thanks to @austincampbell for deigning to respond to all this article’s inaccuracies

[Austin Campbell @austincampbell]

Wrong, Misleading, & Dangerous

This is an absolutely wild article to read, and there's so many misconceptions it's hard to pick a place to start. However, this sort of actively misleading argumentation does require some serious debunking, as the author is either deeply confused about where risk resides in the modern banking system, or actively attempting to mislead for some purpose. So let me attempt to clear some things up.

Incorrect Claim 1

[Payment Stablecoins] "...are volatile deposit-like instruments".

This one is relatively easy. The author states that stablecoins are volatile deposit-like instruments, and without the guarantee of the FDIC and other regulatory safeguards around banks, stablecoins are not safe.

This is just wrong.

First of all, the assets allowed within this bill for stablecoins are bank deposits, t-bills, overnight repo and reverse repo secured by treasuries. I will note that the author just asserted by fiat that the first one is safe, and the rest are the instruments contained inside the roughly $5 trillion dollars of gov't money market funds, not a single one of which even had peg stability problems in 2008, much less in much smaller more recent crises. In short, if the assets are the problem for the GENIUS act, boy do we have way, way, way, way bigger problems already in the financial system as these are the assets backing virtually all derivatives and futures, as well as many trillions of money market funds. There is also an explicit prohibition on using leverage, meaning stablecoins are reserved 1:1 with these assets.

Second, I'm not sure what happened with the author believing that stablecoins will not be subject to bank level regulation, because the bill explicitly spells out that no, actually, stablecoins will be subject to bank level regulation. This can come in the form of a literal bank charter, in which case a stablecoin is likely dealing with the FDIC and Federal Reserve, or it can come in the form of a trust charter, in which case the stablecoin is dealing with the OCC, a regulator that deals with small and non-complex financial institutions like, oh, I don't know, literally JP Morgan. In short, if you read the bill, you'd realize that stablecoins were literally handed to the bank regulators to regulate.

Third, the idea that bank deposits are safer than this structure flies in the face of very basic economics. Day one of business school you learn that leverage is more dangerous than no leverage and that credit risky instruments fail more often than non-credit risky instruments. So now let us compare:

Banks are levered, sometimes 10:1 or more, and engage in credit risky lending.

Stablecoins are unlevered, so always 1:1, and are prohibited from engaging in credit risky lending.

I think it should be obvious to see which of these is safer from a first principles basis.

Incorrect Claim 2

"...stablecoins have proven to be anything but stable. More than 20 stablecoins collapsed between 2016 and 2022. Every one of the world's leading stablecoins lost its "peg" to the U.S. dollar (or other designated reference asset) on multiple occasions between 2019 and 2023."

So there are a pair of huge problems with this statement.

The first is that the second part is literally false. I used to run BUSD, which I will remind everyone was the third largest stablecoin that has ever existed, topping out in the mid $20B range. Let me tell you how many times we failed to redeem at par: zero. Literally zero. BUSD never lost its peg.

Secondly, expanding the entire set to all stablecoins basically proves the point on why regulation is required. Let us instead shrink the set to stablecoins that have fit within regulation that looks similar to that of the GENIUS bill: the NYDFS and Bermuda. That would be, for reference, USDP, GUSD, BUSD, PYUSD, ZUSD, GYEN, and USDM. Riddle me this: how many of those have had redemption problems with the primary peg or reserve issues?

Zero, I hear you cry? Yes. That would be correct. Literally zero. What this claim proves is that unregulated stablecoins are fraught with risk and peril, but regulated stablecoins are actually the gold standard that have survived all of the waves.

Tether? It's had some bumps and bruises. Circle? I have so many questions about SVB. UST? Not even a stablecoin. But everything regulated like the Genius bill? None of the regional banking crisis, FTX, or TFL even put a dent in them.

Interesting thing to leave out of the article, isn't it?

Incorrect (or hilariously correct) Claim 3

The author also states:

"Those financial crises demonstrate that uninsured deposits and other uninsured short-term financial claims are highly vulnerable to systemic runs whenever there are serious doubts about the obligors' ability to repay those claims in a timely manner. The Hagerty bill ignores the painful lessons of those crises because it fails to establish a strong and effective regulatory regime for stablecoins, and it also fails to provide a credible federally supervised fund to ensure their timely repayment."

I will remind everyone here that the obligors in the Hagerty bill are limited to:

1. Regulated banks, which the author has said are the gold standard and safe (I would beg to differ, but I'm evaluating their intellectual consistency here, not mine)

2. The US government

So let's re-read this section again: "whenever there are serious doubts about the obligors' ability to repay those claims".

This simplifies to the author saying stablecoins are less safe than banks because either (a) banks are going to rug the stablecoin by failing themselves or (b) the US government is going to default.

That is quite the argument. Stablecoins are less safe than banks because they rely on banks, which fail all the time? That, or we are predicting the imminent demise of the US Treasury, which will somehow wipe out the stablecoins but the banks will be fine?

I laughed out loud reading this section. There is no way to create a coherent argument out of this, so this was the point where I both decided to write this thread and realized the author is either an amateur who should not be listened to or worse, actively misleading people for political purposes, because this argument is so bad I'd fail a student for giving it to me in my class.

Incorrect Claim 4

"In addition, the Hagerty bill would allow nonbank issuers of stablecoins to pay interest on their stablecoins and compete for short-term funding with FDIC-insured banks. The Hagerty bill's severely deficient regulatory regime would permit nonbank stablecoin issuers to offer short-term financial instruments that mimic deposits with substantially lower compliance costs, compared to FDIC-insured banks."

Okay, so one, this is not actually incorrect in the first half: this would allow stablecoin issuers to create products that compete with banks. Now, perhaps, you might also catch on to why I think the author actually wrote this article and who is angry about it.

After all, banks currently get to offer this deal to US consumers thanks to their regulatory monopoly: give us your money, we're going to lend it out, we're going to make big profits when that goes well, we're not going to pay you any interest, but if we do badly and the bank collapses, you lose your money and we get bailed out and keep our huge bonuses.

Yet they want you to think it's a problem to have safer competition for deposits that could pay you interest higher than the current national rate of something like .04% on checking accounts.

The current system is a massive subsidy to real-estate billionaires and bank executives at the expense of the average American, and @BankThink and a professor from @gwlaw is arguing that yes, that is 100% correct, and you should not even think about changing that.

Secondly, the lower compliance costs. Go back and read point one where they put the stablecoin issuers into a bank framework and they affirmatively give them all the obligations of money transmitters and financial firms. Now, by removing the FDIC from the equation for trust companies, they might be in a less techno-ignorant and regressive regime, but you've still got FinCEN, the OCC, and other heavyweights who actually know what they are doing. The idea that somehow stablecoins have lower compliance costs because they don't have regulation while having the exact same regulators is... confusing, at best.

The actual lower compliance costs will come from not constantly blowing up their balance sheets by lending billions to their real-estate billionaire buddies and/or not laundering $10s of billions in cash for the Mexican cartels, to point to two things that banks are actually literally doing right now.

"Siphoning deposits from FDIC-insured banks into nonbank stablecoin issuers would significantly impair the ability of those banks to provide loans to consumers and Main Street businesses that cannot obtain credit from the capital markets on reasonable terms."

That's the second part of this claim and again lays bare the problem. "Main street" businesses are not what most of the banks are lending to when you look under the hood, unless you consider exceptionally rich real estate developers, multi-national shipping companies, and the like to be "main street". Similarly, "on reasonable terms" again currently means that the depositor owns all the downside, gets none of the upside, but the bank executive is a billionaire. In short, get the fuck out of here with this nonsense. The only people who think this is "reasonable" are the corrupt ones profiting from this system.

Incorrect Claim 5

"Congress should instead pass legislation requiring all issuers and distributors of stablecoins to be FDIC-insured banks. That legislation would keep Big Tech firms out of banking and would maintain our nation's wise and longstanding policy of separating banking and commerce."

Once again, FDIC-insured banks are more prone to failure, not less prone to failure, than government money market funds. How many government money market funds have broken the buck from 2000-present? Zero. How many banks have failed from 2000-present? Over five hundred.

The idea that somehow the bank is the less risky thing here is contradicted by the existence of, you know, evidence and reality. It's just wild to me.

On the second part, keeping big tech out of banking is actually a totally separate issue. We don't need legislation that restricts stablecoins to banks for that (only a bank wanting to protect its unfair monopoly so they can continue to fuck the working class would want that), what we need is to properly enforce anti-trust law. I also agree that big tech should not be able to bootstrap tech monopolies into financial monopolies, but the answer to that is not to give massive financial monopolies to someone else, it's to actually enforce anti-trust laws!

In short, this is exactly the kind of piece that I would have paid someone to write from a policy perspective if I were a large bank looking to continue to fuck over my customers and continue to enrich myself at the expense of America.

I said before you can judge someone by their enemies, so I can't really think of a greater endorsement of the GENIUS act than the fact that it's causing banks to freak out over the fact that they might have to offer fair returns to consumers to keep their business.

[Spiro @SpiroAnton]

@HughKarp @hosseeb @NexusMutual @OpenCover 100%

[Spiro @SpiroAnton]

@kostascrypto Φοβερό

[Spiro @SpiroAnton]

@ArkhamIntel Whoa

[Spiro @SpiroAnton]

@TheStalwart In the original? I’d like another stab at that.

[Solidus Labs @Solidus_Labs]

🎤 Proud to Announce - RSVP Now! 🎤

Adrienne Harris, Superintendent of the @NYDFS, will be the keynote speaker at DACOM NEW YORK 2024! 🌟

Join the builders, movers, and shakers of a safe and regulated crypto & DeFi industry. Don’t miss out, RSVP now!

https://t.co/h2ccvPYMZS

[Spiro @SpiroAnton]

@austincampbell Didn’t know you were a COLI/BOLI guy

[Spiro @SpiroAnton]

@jp_koning A decentralized version of this is the way

[TokenSniffer.com @Token_Sniffer]

🚨 SCAM ALERT: We're tracking thousands of automated rugpull and honeypot scams on $BASE daily. Avoid tokens without locked/burned liquidity and verified sources!

[Spiro @SpiroAnton]

@alexalexakis @gakonst Can’t wait to listen

[Spiro @SpiroAnton]

@paulg Local VC discovers Gibbons discovering Gemestos Plethon

[Spiro @SpiroAnton]

Local DeFi founder discovers Aristotle

[Spiro @SpiroAnton]

@collins_belton @GaryGensler Yup

[Spiro @SpiroAnton]

@nic_carter @WSJ @JakeAuch please read