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HomeNewsBusiness WireVanEck CEO Says Stablecoins Are More Like Funds Than Banks

VanEck CEO Says Stablecoins Are More Like Funds Than Banks

Global asset manager and leading voice in crypto world points to specific steps regulators should take to keep pace with stablecoin innovation

NEW YORK–(BUSINESS WIRE)–Jan van Eck, CEO of leading global asset manager VanEck, today published an op-ed at Barrons.com titled “What the Government’s Recommendations for Stablecoins Got Wrong, and How to Do Better”.

“Stablecoins trade on exchanges. They invest to track a target asset, mainly the U.S. dollar. They can fluctuate in price, and they take in money and redeem like ETFs,” says van Eck. “They don’t lend money, so I don’t understand why there is a push to regulate them like banks. Bank regulation may in fact imply some sort of government guarantee.

“Because ETFs have to use qualified custodians, this should address the primary regulatory concern of stablecoins not having the assets they claim to,” he says.

In this piece, van Eck details the similarities between stablecoins and mutual funds, making a compelling case as to why policymakers should use the regulatory regimes around the mutual fund and ETF space in mapping out their recommendations for stablecoins. The stablecoin paper issued last November by the President’s Working Group (PWG) on Financial Markets “reflected… regulatory confusion,” he writes, “and made some odd recommendations.”

“First, the PWG had trouble defining a stablecoin,” he writes. “Despite the similarity that stablecoins have with money market funds, the PWG suggested that stablecoin issuers be ‘insured depository institutions’” regardless of the fact that stablecoins invest in securities and do not lend in the same way as banks. Lastly, he points to the PWG recommendation that stablecoin issuers comply with activities restrictions that limit affiliation with commercial entities, which he labels “an unnecessary additional burden with no obvious benefit.”

Then van Eck adds two specific recommendations for a more forward-thinking regulatory approach to stablecoins:

  • Allow a stablecoin to voluntarily subject itself to Securities and Exchange Commission oversight, similar to a fund operating under the Investment Company Act of 1940.
  • Do not force tax withholding on stablecoins.

Through these approaches, he adds, the market is allowed “to determine the value of this additional oversight… and it is better than creating regulatory requirements that treat (stablecoins) like banks when they aren’t.”

The full op-ed is available by clicking here.

VanEck has robust crypto-focused fund offerings available to investors around the world, particularly in Europe, where the firm has pioneered a number of crypto ETN exposures. In the U.S., VanEck offers a range of digital asset private funds for high net worth individuals and institutions, as well as several ETFs, including one that provides exposure to companies driving innovation and adoption in the digital assets economy, and another that provides a unique actively managed approach to investing in bitcoin futures.

About VanEck

VanEck has a history of looking beyond the financial markets to identify trends that are likely to create impactful investment opportunities. We were one of the first U.S. asset managers to offer investors access to international markets. This set the tone for the firm’s drive to identify asset classes and trends – including gold investing in 1968, emerging markets in 1993, and exchange traded funds in 2006 – that subsequently shaped the investment management industry.

Today, VanEck offers active and passive strategies with compelling exposures supported by well-designed investment processes. As of January 31, 2022, VanEck managed approximately $78.6 billion in assets, including mutual funds, ETFs and institutional accounts. The firm’s capabilities range from core investment opportunities to more specialized exposures to enhance portfolio diversification. Our actively managed strategies are fueled by in-depth, bottom-up research and security selection from portfolio managers with direct experience in the sectors and regions in which they invest. Investability, liquidity, diversity, and transparency are key to the experienced decision-making around market and index selection underlying VanEck’s passive strategies.

Since our founding in 1955, putting our clients’ interests first, in all market environments, has been at the heart of the firm’s mission.

Important Information Regarding Cryptocurrencies.

The securities/ financial instruments discussed in this material may not be appropriate for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives. This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security/financial instrument, or to participate in any trading strategy.

Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck. References to specific securities and their issuers or sectors are for illustrative purposes only.

Cryptocurrency is a digital representation of value that functions as a medium of exchange, a unit of account, or a store of value, but it does not have legal tender status. Cryptocurrencies are sometimes exchanged for U.S. dollars or other currencies around the world, but they are not generally backed or supported by any government or central bank. Their value is completely derived by market forces of supply and demand, and they are more volatile than traditional currencies. The value of cryptocurrency may be derived from the continued willingness of market participants to exchange fiat currency for cryptocurrency, which may result in the potential for permanent and total loss of value of a particular cryptocurrency should the market for that cryptocurrency disappear. Cryptocurrencies are not covered by either FDIC or SIPC insurance. Legislative and regulatory changes or actions at the state, federal, or international level may adversely affect the use, transfer, exchange, and value of cryptocurrency.

Investing in cryptocurrencies, such as Bitcoin, comes with a number of risks, including volatile market price swings or flash crashes, market manipulation, and cybersecurity risks. In addition, cryptocurrency markets and exchanges are not regulated with the same controls or customer protections available in equity, option, futures, or foreign exchange investing. There is no assurance that a person who accepts a cryptocurrency as payment today will continue to do so in the future.

Investors should conduct extensive research into the legitimacy of each individual cryptocurrency, including its platform, before investing. The features, functions, characteristics, operation, use and other properties of the specific cryptocurrency may be complex, technical, or difficult to understand or evaluate. The cryptocurrency may be vulnerable to attacks on the security, integrity or operation, including attacks using computing power sufficient to overwhelm the normal operation of the cryptocurrency’s blockchain or other underlying technology. Some cryptocurrency transactions will be deemed to be made when recorded on a public ledger, which is not necessarily the date or time that a transaction may have been initiated.

  • Investors must have the financial ability, sophistication and willingness to bear the risks of an investment and a potential total loss of their entire investment in cryptocurrency.
  • An investment in cryptocurrency is not suitable or desirable for all investors.
  • Cryptocurrency has limited operating history or performance.
  • Fees and expenses associated with a cryptocurrency investment may be substantial.

There may be risks posed by the lack of regulation for cryptocurrencies and any future regulatory developments could affect the viability and expansion of the use of cryptocurrencies. Investors should conduct extensive research before investing in cryptocurrencies.

Information provided by VanEck is not intended to be, nor should it be construed as financial, tax or legal advice. It is not a recommendation to buy or sell an interest in cryptocurrencies.

Van Eck Associates Corporation

666 Third Avenue

New York, NY 10017

Contacts

Media Contacts:
Chris Sullivan/Julia Stoll

MacMillan Communications

212.473.4442

[email protected]

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