Caution: US Law, A Danger Signal for These Altcoins!

A new bill passed by the US Senate has risks for some altcoins... Here are all the details...
 Caution: US Law, A Danger Signal for These Altcoins!
READING NOW Caution: US Law, A Danger Signal for These Altcoins!

A new bill passing the US Senate poses risks for some altcoins. In particular, Circle’s USD Coin (USDC) and other stablecoins could potentially face a compliance nightmare if a new national defense bill passes the United States Senate. Here are the details…

Critical law passed in USA for some altcoins

In an investment note dated July 31, Berenberg analyst Mark Palmer explained that a recent amendment to the 2024 National Defense Authorization Act (NDAA) could potentially introduce new Know Your Customer and Anti-Money Laundering measures that stablecoin companies cannot comply with. “The amendment will require the U.S. Secretary of the Treasury to ‘establish review standards for crypto assets’ to help regulators ensure compliance with money laundering and sanctions laws,” Palmer wrote. He also added:

We believe this change could be problematic if it remains in the final version of the NDAA.

Which altcoins are affected?

Apart from USDC, there are many altcoins that are at risk of being affected by this bill. Chief among these is Tether, the largest stablecoin. Next come the following stablecoins, the largest by market cap:

What problem awaits Circle-Coinbase?

Palmer explained that the identities of altcoins holders can only be determined when the asset is issued and redeemed. “Such a result would likely cause further deterioration in USDC’s market value,” he warned. The market value of USDC has been on the decline in recent months. It has dropped $17.5 billion — about 39 percent — since March 5. Saying that this situation is a significant setback for Circle, it may also cause problems for Coinbase, Palmer stated that the exchange “earned 27 percent of its net income from USDC interest income” in the first quarter of this year.

Since the start of the year, Coinbase shares have vastly outperformed the traditional stock market. As we reported as Kriptokoin.com, it increased its price by 170 percent from $ 33 on January 1st. Raised it to the current $98.61. According to Berenberg, there were two main reasons for this superior performance. The first was the positive decision given to Ripple Labs, and the second was the flurry of applications for spot Bitcoin ETFs by large institutions such as BlackRock and Fidelity. Analysts noted that these two drivers of bullish activity for Coinbase are standing on shaky ground, as recent comments from SEC Chairman Gary Gensler “spill cold water on the rally’s primary sources.”

What did the gens say?

In an interview with Bloomberg on July 28, Gensler said crypto investors should not assume that cryptocurrencies do not fall under the jurisdiction of the SEC. Also, analysts believe that Gensler’s moderate response to a question about Bitcoin ETF applications implies that he may oppose their approval. Overall, Berenberg has maintained a “hold” rating for Coinbase stock. He noted that while there is still “significant uncertainty” for Coinbase in the future, its large cash and equivalent balance provides “flexibility” in ensuring the company’s financial longevity.

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