Category: Crypto regulation


Mark Cuban calls for stablecoin regulation in wake of Iron Finance ‘bank run’


After a bank run on the Iron Finance protocol cost him dearly, Mark Cuban is calling for regulation to define “what a stablecoin is and what collateralization is acceptable.”

Billionaire investor and DeFi proponent Mark Cuban has called for stablecoin regulation after losing money on what he dubbed as a “rug pull” on the Iron Finance protocol.

According to Iron Finance, the partially collateralized stablecoin project was the subject of a “historical bank run” that resulted in the price of the IRON stablecoin moving off peg. As a consequence, the price of Iron’s native token TITAN crashed by almost 100% over two days from its all-time high of $64.04.

Speaking with Bloomberg on June 17, Cuban blamed himself for “being lazy” and not doing enough research, but also raised questions surrounding the regulation of stablecoins:

“There should be regulation to define what a stablecoin is and what collateralization is acceptable. Should we require $1 in U.S. currency for every dollar, or define acceptable collateralization options, like U.S. treasuries.”

"Even though I got rugged on this, it's really on me for being lazy. The thing about DeFi plays like this is that it's all about revenue and math and I was too lazy to do the math to determine what the key metrics were," Cuban said.

Kraken CEO Jesse Powell has slammed Cuban on Twitter, highlighting that a lack of stablecoin regulation is not the problem:

“Not doing your own research and YOLOing into a terrible investment because your time was worth more than your money is your problem.”

Stablecoin regulation

The stablecoin sector is currently under the spotlight from U.S. lawmakers, as they consider how to regulate the rapidly evolving sector.

In December 2020, a bill dubbed the “STABLE Act” was introduced which would require stablecoin issuers to obtain a banking charting and comply with traditional banking regulations.

After the crypto downturn last month, Federal Reserve Chair Jerome Powell emphasized on May 20, that “as stablecoins’ use increases, so must our attention to the appropriate regulatory and oversight framework.”

Related: Stablecoins not that radical, says Bank of England official

Iron Finance highlights fractional reserve issues

In a blog post dubbed “Iron Finance Post-Mortem 17 June 2021,” the project noted that it is planning to hire a third party to conduct an in-depth analysis of the protocol so that it can “understand all circumstances which led to such an outcome.”

IRON is a partially collateralized stablecoin intended to be pegged at $1. The stablecoin is collateralized by a combination of its native token TITAN and the USDC stablecoin. The ratio of USDC to total IRON supply is dubbed the Collateral Ratio (CR).

After a mass sell-off from whales which caused the price of TITAN to drop down around $30, the IRON stablecoin also dropped below its $1 peg.

As the protocol relies on a Time Weighted Average Price (TWAP) to determine CR, the market activity overwhelmed the CR as it couldn’t keep up with the volatility.

Whales were able to buy IRON at $0.90 and redeem them for $0.25 TITAN and $0.75 USDC, which temporarily pushed the price of TITAN to around $50. They then proceeded to cash out their profits which sent the price crashing.

This sparked a “panicked event” or “bank run” from other investors who also started to cash out, sending the price of TITAN down to near zero as of today.

TITAN price chart: CoinGecko

“Remember that Iron.finance is a partially collateralized stablecoin, which is similar to the fractional reserve banking of the modern world. When people panic and run over to the bank to withdraw their money in a short period, the bank may and will collapse,” the blog post read.


Mark Cuban Hit by Iron Finance Token Crash, Calls for Defi Regulation


Mark Cuban Hit by Iron Finance Token Crash, Calls for Defi RegulationBillionaire investor and Shark Tank star Mark Cuban has called for cryptocurrency regulation focusing on decentralized finance (defi) and stablecoins after a token he invested in collapsed from $64 to near zero. Cuban Wants Defi and Stablecoin Regulation After Investing in Collapsed Token The billionaire owner of the NBA team Dallas Mavericks, Mark Cuban, invested […]


SEC Leaves Bitcoin and Cryptocurrency Off Regulatory Agenda 2021


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Bank of England Boss Pledges ‘Tough Love’ in Cryptocurrency Regulation


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Italy’s Financial Watchdog Raises Concerns Over Unregulated Cryptocurrency Market


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Experts: Regulatory Uncertainty and Slow Embrace Hampering Crypto Growth in Kenya


Regulatory uncertainty and the slow embrace of cryptocurrencies continue to be key impediments to the growth of Kenya’s digital currency market, experts say. They also assert that without speedy regulation, which they believe will hasten the adoption of digital currencies, Kenya’s sector will remain open to fraud. Kenya’s Embrace of Crypto Slow, Exchange Reps Point […]


Basel Committee Proposes Differentiating Regulation of Crypto Assets Based on Risks to Banks


Basel Committee Proposes Differentiating Regulation of Crypto Assets Based on Risks to BanksThe Basel Committee on Banking Supervision has proposed dividing crypto assets into two groups and regulating them based on their market, liquidity, credit, and operational risks to banks. Cryptocurrencies, such as bitcoin, will be subject to “a new conservative prudential treatment.” Crypto Regulation Proposed by Basel Committee on Banking Supervision The Basel Committee has proposed […]


Thailand Bans Meme Coins, Fan Tokens, NFTs From Trading on Crypto Exchanges


Thailand Bans Meme Coins, Fan Tokens, NFTs From Trading on Crypto ExchangesThe Thai Securities and Exchange Commission (SEC) has enacted new rules for cryptocurrency exchanges operating in the country. Certain types of cryptocurrencies, including meme coins, fan coins, and non-fungible tokens (NFTs), are prohibited to trade on crypto exchanges. Thailand Sets New Rules for Crypto Exchanges, Banning Certain Types of Cryptocurrencies The Thai Securities and Exchange […]




After googling it, CFTC boss says DeFi is a ‘bad idea’ and probably illegal


CFTC Commissioner Dan M. Berkovitz has called for a crackdown on unregulated DeFi derivatives platforms.

Commissioner Dan M. Berkovitz of the Commodity Futures Trading Commission (CFTC) believes DeFi derivatives platforms may contravene the Commodity Exchange Act (CEA).

Speaking as part of a June 8 keynote address dubbed “Climate Change and Decentralized Finance: New Challenges for the CFTC,” Berkovitz notes that:

“Not only do I think that unlicensed DeFi markets for derivative instruments are a bad idea, but I also do not see how they are legal under the CEA.”

Berkovitz noted that the “CEA requires futures contracts to be traded on a designated contract market (DCM) licensed and regulated by the CFTC,” however he asserts that no DeFi platforms are registered as DCMs or SEFs.

During the keynote, the commissioner emphasized the need for regulators to become familiar with DeFi derivatives and other applications amid the booming growth of the sector.

He referenced the huge amount of liquidity pumped into the market over the past twelve months, noting that now that “you’re talking real money” there needs be stringent regulation in place to protect DeFi consumers:

“Given the explosive growth of this sector, federal regulators should become familiar with this new technology and its potential uses and be prepared to protect the public against misuse.”

Interestingly, Berkovitz references a Wikipedia definition of DeFi, and notes that his research was based in part on a Google search. "If you type “DeFi” into Google search, a top link is to a CoinDesk article, 'What is DeFi?';" he said."[It's] an umbrella term for a variety of financial applications in cryptocurrency or blockchain geared toward disrupting financial intermediaries.”

The Co-founder of Coin Metrics Jacob Franek was quick to criticize the commissioner's research, noting that he “needs to do more than read a CoinDesk article”:

The commissioner warned that the emergence of the unregulated entities from the shadow banking system may result in competition with regulated entities, leading them to assume either “more risks in order to generate higher yields “ or to seek less regulation to “level the playing field.”

“In my view it is untenable to allow an unregulated, unlicensed derivatives market to compete, side-by-side, with a fully regulated and licensed derivatives market,” he said.

Berkovitz questioned the argument put forth by DeFi proponents that cutting out intermediaries can offer investors better returns and more “control over their investments.”

He argued that intermediaries such as “banks, exchanges, futures commission merchants, payment clearing facilities, and asset managers” have developed a banking and finance model over 200 to 300 years which reliably support “financial markets and the investing public.”

“One of the key reasons our financial system is so strong is the legal protections that investors enjoy when they invest their money in U.S. markets, most often through intermediaries,” he said.



US Senators Call for Increased Measures to Regulate and Trace Cryptocurrencies


US Senators Call for Increased Measures to Regulate and Trace Cryptocurrencies to Fight Ransomware AttacksTwo U.S. senators have urged lawmakers to increase measures to regulate cryptocurrencies, including how to trace cryptocurrency transactions, in order to combat ransomware attacks. “We haven’t figured out in the country or in the world how to trace cryptocurrency,” one senator said, adding that “We’ve got to do a better job here.” Senators Urge Lawmakers […]





Bitcoin Will Face Tougher Regulation as Popularity Grows, Says Sweden’s Central Banker


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SEC Urges Congress to Pass Cryptocurrency Legislation to Protect Investors


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Zimbabwean Fintech Lawyer and Proponent Pushes for Crypto Regulation via Private Legislative Bill


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Federal Reserve Bank President Says Most Cryptocurrencies Are Worthless


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SEC Chair Gensler Says Cryptocurrency Exchanges Need More Regulation, Asks Congress to Weigh in


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Top US Banking Regulator to Review Cryptocurrency Standards Under New Leadership


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Australian Senator Says Cryptocurrency Is Not a Fad — Government Won’t Stand in the Way


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