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Indian Exchange Launches Lending Program for 5 Cryptocurrencies

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An Indian crypto exchange has launched a program that allows its users to earn interest on their cryptocurrencies held at the exchange. Initially, users can lend BTC, USDT, BNB, XRP, and ETH. The CEO of the exchange has shared details about this new offering with news.Bitcoin.com.

Also read: Crypto Enthusiasts Unite in 4 Indian Cities to Voice Regulatory Suggestions

Lending Cryptocurrencies

Coindcx announced Thursday that its crypto lending program called Dcxlend has come out of the beta testing phase and is now fully launched. Five cryptocurrencies are supported: BTC, USDT, ETH, XRP, and BNB.

The exchange’s website currently displays monthly interest rates of 2 percent for BTC, 1 percent for USDT, 1 percent for BNB, 0.75 percent for XRP, and 0.75 percent for ETH. CEO Sumit Gupta told news.Bitcoin.com that BTC has the highest interest rate “because our traders mostly do margin trading in BTC markets (hence high demand for BTC lenders).”

Indian Exchange Launches Lending Program for 5 Cryptocurrencies

The exchange detailed that there are “three lending term lengths: 7 days, 15 days, and 30 days. The interest rate varies dynamically and goes up to a maximum of 2%, according to market dynamics — demand and supply.” Furthermore, its website states that “the cryptocurrencies lent through Dcxlend will be used to provide leverage to users on Dcxmargin,” another service the exchange offers.

Gupta shared with news.Bitcoin.com that during the beta testing period with just BTC and USDT, “we had roughly 120 lenders which led to a circulation of 170 BTC on a daily basis.” Claiming that the program has recently garnered more attention from lenders, he remarked, “Hence we’re scaling it up and will keep on adding more coins.”

The CEO explained that his exchange has an internal settlement and liquidation mechanism for margin trading which does not have “a dedicated funding wallet,” elaborating:

Funds are then lent to the users only when the margin trade is open, with no withdrawal access and hard liquidation with 7.5% maintenance margin.

Indian Exchange Launches Lending Program for 5 Cryptocurrencies

Similar Programs Worldwide

In the U.S., Blockfi recently introduced a savings account that enables customers to earn 6.2 percent annually on their BTC and ETH. Meanwhile, regulated bitcoin derivatives exchange and clearinghouse Ledgerx has a program called Ledgersavings which allows clients to earn an implied rate of around 16 percent annually.

In Japan, regulated exchange GMO Coin launched a lending program for BTC, BCH, ETH, LTC, and XRP last year. However, at the time of this writing, the exchange is only borrowing BTC but customers can lend between 10 and 500 BTC over 181 days and earn up to an annual rate of 5 percent.

Indian Exchange Launches Lending Program for 5 Cryptocurrencies

Recently-licensed Japanese exchange Coincheck, which was hacked in January last year, also has a lending program for BTC with a maximum annual rate of 5 percent. Prior to the hack, this service supported 12 cryptocurrencies.

Bitbank, another regulated Japanese exchange, also offers up to 5 percent interest annually for users lending between 1 and 25 BTC. Besides BTC, the exchange plans to extend the offer to BCH, ETH, LTC, XRP, and MONA.

Would you lend your cryptocurrencies to an exchange? Let us know in the comments section below.


Images courtesy of Shutterstock.


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While Tether Withdraws Claim of USD Backing, Rival Stablecoins Provide Monthly Attestations

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The controversy surrounding the backing of Tether’s USDT tokens has resurfaced following a recent alteration to the company’s terms of service that now state the reserves backing USDT comprise “traditional currency and cash equivalents and … other assets and receivables from loans made by Tether to third parties.” Despite tether’s dominance among stablecoins by market share and capitalization, Tether is facing increasing competition from newer stablecoin projects that have been able to provide regular attestations evidencing U.S. dollar backing since launch.

Also Read: Bitcoin Cash Developers Launch Privacy-Preserving Light Client Neutrino

New Tether Terms of Service State Stablecoins are not Exclusively Backed by USD

Tether has updated its terms of service regarding the backing of its USDT token, apparently reversing previous assertions that all USDT tokens are backed one-to-one with USD reserves.

Tether’s homepage now states that “Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

While Tether Withdraws Claim of USD Backing, Rival Stablecoins Provide Monthly Attestations

The company’s legal page also states that “the composition of the Reserves to back Tether Tokens is within the sole control and at the sole … discretion of Tether,” adding that “Tether reserves the right to delay the redemption or withdrawal of Tether Tokens if such delay is necessitated by the illiquidity or unavailability or loss of any Reserves held by Tether to back the Tether Tokens, and Tether reserves the right to redeem Tether Tokens by in-kind redemptions of securities and other assets held in the Reserves.”

Rival Stablecoins Evidence USD Backing Through Monthly Attestation Reports

While Tether appears to have backed down on its previous claim that all outstanding USDT are tokens are backed by USD, many of its rivals have provided regular attestation reports demonstrating fiat backing.

Trueusd has provided between one and three attestation reports per month since launching during March 2018, with top 40 accounting firm Cohen & Company producing the reports. As of Trueusd’s most recent report, which refers to accounts examined as of Feb. 28, 2019, the company’s 201,727,658 outstanding TUSD tokens were then backed by $202,621,765 dollars that were held in Trueusd’s bank accounts.

While Tether Withdraws Claim of USD Backing, Rival Stablecoins Provide Monthly Attestations

On Feb. 15, 2019, Circle published its fourth monthly attestation report pertaining to the USD reserve for its USDC token. The report states that as of January 31, 2019, the outstanding 307,7903,924 USDC tokens were backed by $307,848,312 held in custody accounts.

Since launching in Sep. 2018, Paxos has provided monthly attestation reports provided by Withum for its Paxos Standard Token Stablecoin. Paxos’ most recent report asserts that as of Feb. 28, 2019, the 109,543,189.7 PAX tokens were backed by USD reserve “at least equal to or greater than “$109,543,189.70.”

What is your response to the changes recently made to USDT’s terms of service? Share your thoughts in the comments section below!


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Stablecoins Are Threatened by These Two Major Issues

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On the heels of recent commentary from the published correspondence between Securities and Exchange Commission (SEC) chairman Jay Clayton and representative Ted Budd, SEC senior advisor Valerie Szczepanik explained at Austin’s SXSW conference that stablecoins may be violating current securities laws.

Also read: Payglobal Provides Cryptocurrency to Fiat Transfers With Existing Bank Cards

Stablecoins May Live in the Land of Securities

Over the last two years, stablecoins have become an extremely hot topic while becoming popular vehicles for hedging against the volatility tied to cryptocurrency markets. Tether (USDT) has been king of the stablecoins for a while, and recently made headlines for a revision to the company’s website. The change caused uproar within the cryptocurrency community because instead of confirming that each Tether is backed by one USD, the terms were substantially revised.

“Every tether is always 100 percent backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities,” the website now reads.

Stablecoins Are Threatened by These Two Major Issues

Following Tether’s recent website update, on March 15, SEC senior advisor Valerie Szczepanik explained that due to the inherent nature of stablecoins, the tokens could “raise issues under securities laws.” Szczepanik explained that stablecoins are broken down into categories which include tethering the tokens to “some real asset, like real estate or gold and oil — Coins tied to a fiat currency held in reserve, and a third category that could become problematic under the law.” The SEC advisor added while on stage at SXSW: “I’ve seen stablecoins that purport to control price through some kind of pricing mechanism, whether it’s tied to the issuance, creation or redemption of another type of digital asset tied to it, or whether it is controlled through supply and demand in some way to keep the price within a certain band.”

Szczepanik continued:

It’s these kinds of projects where there is one central party controlling the price fluctuation over time that might be getting into the land of securities.

The recent statements from the SEC senior advisor and chairman Jay Clayton’s statements last week could mean that stablecoins fall into the security category. Stablecoins, no matter whether they are backed by reserves held in a bank, or use the over-collateralization method favored by the Maker network, are essentially promises. Skeptics take issue with claimed tether (USDT) reserves because they believe the company has failed to prove its backing. Tether’s recent website change provoked popular finance author Frances Coppola to write: “Tether’s U.S. dollar peg is no longer credible,” in a seething critique.

Coppola’s assessment continued:

Perhaps crypto enthusiasts should read up on the fate of Reserve Primary Fund in 2008. Or perhaps Venezuela — After all, an exchange rate peg only holds until the reserves run out.

Stablecoins Are Threatened by These Two Major Issues

A Crypto Flash Crash Scenario Could Put a Heavy Strain on Stablecoins

Other stablecoins are based on promises as well and some have the stamp of U.S. regulators in order to make the pledge more robust. Trusttoken (TUSD) has tried to tackle transparency by allowing TUSD owners a “real-time view” of the company’s reserves. According to the Trusttoken team, accounting firm Armanino has developed a platform that allows users to verify the TUSD dollar collateral. Dai has over-collateralization, so there’s some safety net there, but critics believe that if the price of ethereum (ETH) plummeted in a flash, the stablecoin would have issues unless the team sold the collateral quickly.

A flash drop in overall fiat value within the cryptoconomy really puts a strain on stablecoins and when bitcoin and a few other digital assets dropped significantly in value last October this was quite noticeable. The belief that stablecoins can hold their stability would truly be put to the test if there was a flash crash throughout the crypto markets.

Stablecoins Are Threatened by These Two Major Issues

Just like their fiat cousins, all stablecoins are only as good as their promises and a flash crash and severe lack of liquidity could ultimately wreak havoc on digital promissory notes. On October 15, when the cryptoconomy shuddered with another price crash, tether (USDT) dipped below the $1 mark. However, despite concerns over coins like tether, Szczepanik asserted at SXSW that “algorithmic stablecoins” raise the most issues because there is a lack of any real collateral.

“You’re talking about folks who are buying into that ecosystem, or are buying this coin, with the expectation that somebody else is going to be holding a profit, or guaranteeing a profit or holding the price at a certain level. Again, that could raise issues under securities laws.”

Stablecoins Are Threatened by These Two Major Issues

Stablecoins Face a Future That Falls Under Securities Laws

At the moment, stablecoins face some significant hurdles and two major issues. One is the promise to hold to constant stability and liquidity especially during a big market crash. The other issue is whether stablecoins, whose legal status is currently being questioned, will pass the scrutiny of regulators. Stablecoin startup Basis knows these dangers only too well as the company was forced to close operations in December due to fears its product would be deemed a security.

“Folks like to put labels on things, but we’ll always look behind the label to see exactly what’s happening,” Szczepanik said. “So you can call it a utility coin, call it a stablecoin, call it a consumptive coin or some other coin — We’re [SEC] going to look at the characteristics.”

What do you think about the issues that stablecoins face in the future? Let us know what you think about this subject in the comments section below.

Disclaimer: This article is for informational purposes only. Bitcoin.com does not endorse or support any stablecoin and its affiliated companies. Readers should do their own due diligence before taking any actions related to the mentioned companies, creators, associates, or any of its affiliates or services. Bitcoin.com and the author are not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.


Image credits: Pixabay, Bitcoin.com, Shutterstock, and various stablecoin logos.


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