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Tether and Bitcoin: Lugano's first monthly report on cryptocurrency usage

After the store in Lugano started using the Tether and Bitcoin cryptocurrencies for the first month, merchants said they have not seen anyone using the tokens for purchases.

As expected, people have been able to use Bitcoin and Tether in Lugano for over a month now. However, the question is how many citizens took advantage of this opportunity, a question answered by some businesses in the center of Lugano.

Despite the efforts and ambitions of the city of Lugano, it is clear that few citizens still use cryptocurrencies such as Tether and Bitcoin to buy goods.

Not so long ago, the citywide Plan ₿ was launched to introduce blockchain and cryptocurrency culture among businesses in the city. The project involves shops, businesses and institutions and aims to make the city on the banks of the Ceresio river the cryptocurrency capital of the world.

Specifically, merchants have been accepting Bitcoin and Tether for payments since October. Today, nearly a hundred companies in Lugano have joined this initiative, and more companies are ready to participate.

However, cryptocurrency payments do not seem to be going well in Lugano's establishments and shops. In fact, some local businesses say the move has yet to receive significant feedback from consumers.

Paolo Zappa, owner of Intersport Zappa sportswear store in the center of Lugano, commented on his first month in the program:

“Satisfied? I would love to receive tokens including LVGA. However, so far we have not received any bitcoin payments and I think this will continue for a while after what has happened in the past two weeks time."

Apparently, the merchant was referring to the failure of FTX, one of the most popular crypto exchanges that crashed in recent weeks and brought the entire market to its knees.

Obviously, whether it's the apparel industry, the tech industry or the gourmet food industry, negativity is prevalent. In fact, even Damiano, the owner of Hi-Fi and home theater store Musicdoor, said he hasn’t received any cryptocurrency purchases yet.

For others, like the owner of the Dolce Vita Shop, a gourmet shop selling Sicilian produce, it's only a matter of time. In fact, optimistic store owners say:

"Received some tokens recently, but not Bitcoin."

However, some businesses have different expectations for the results. Ottica Götte is one of them, according to the merchant:

“We were expecting mixed feedback. As one of the first merchants in the city to accept these payments, at least in my observations, we have yet to receive unsolicited offers from customers to pay in Bitcoin or Tether. The vast majority still use traditional method of payment."

Additionally, the optician on Pessina Street said it had received several cryptocurrency transactions in the past, but used a system unrelated to the city’s current move.

Good news for LVGA token launched in Lugano

Fortunately, things look quite different for the LVGA token, the city's virtual currency launched by MyLugano. In fact, about a year ago, the LVGA token program already laid the groundwork for Plan ₿.

Specifically, thanks to this initiative, tokens were introduced that can be accumulated through the “cashback” formula and then used to make payments with entities that join the program.

Musicdoor's Damiano says the system is far more popular with customers:

"Through MyLugano, we've done a couple of deals, also because we've been in the scheme for a while."

Dolce Vita Shop also confirms this:

“We’ve had several deals with the LVGA, especially around Christmas time, and we’ve noticed more and more people paying and accumulating these tokens.”

It turns out that payments using LVGA are not only more popular than payments via Bitcoin and Tether, but also make merchants happier, such as Paolo Zappa. MyLugano's tokens seem to be more successful given how people use them.

However, even a token system won’t satisfy everyone, with an optician for example admitting it does a little more transactions with LVGA than with regular cryptocurrencies, but again not discussing it as a regular practice.

Tether and Bitcoin Payments: No Extra Fees or Risks

Merchants and traders have responded well to the introduction of Tether and Bitcoin in the payment system, although the city of Lugano has encountered difficulties for citizens to comply with these new payment methods.

This is because they accept these new payment methods without any additional fees or risks. In fact, merchants have a POS that accepts cryptocurrency transactions, and they can choose to hold them in the form of Bitcoin or Tether and convert them to Swiss Francs instantly.

However, the common view among merchants is that they currently prefer to convert cryptocurrency payments into Swiss francs. This is because many of them do not yet have a cryptocurrency wallet.

Time is likely to be an important factor, perhaps just getting used to the new program. All that remains is to wait and see how and whether cryptocurrencies can become the money of the future, and whether this transformation can actually start in Lugano.

https://en.cryptonomist.ch/2022/12/01/first-month-bitcoin-tether-lugano/

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WSJ: The Hypocrisy of the Mainstream Media, Sleeping Under the Wheel of Information

The crypto industry has long been a popular target for skeptics due to many high-profile crises, frauds, and scams. Unfortunately, the history of bad actors in cryptocurrencies is much longer than we would like.

Despite the heightened focus of skeptics and critics on the industry, it’s surprising how many actual bad actors, frauds, and unsustainable investment schemes are entirely on their radar. Over the years, Tether has been a popular target for many skeptics, journalists, and even the mainstream media.

Given this, a reasonable question is: How many entrenched detractors of Tether have warned against FTX, Alameda, BlockFi, Genesis, Celsius, 3 AC or Terra, to name a few? Surely the same individuals and entities focused on rooting out bad actors and protecting investors would investigate these entities with at least the same energy they spend teasing out every detail of Tether's operations?

Disappointingly, the answer is "no".

Critics and media outlets have been criticizing, investigating, and warning of Tether’s so-called “perpetually looming” failure for years, yet they’re completely in a state of sleep over irresponsible leverage, blatant fraud, and regulatory arbitrage. Does this add to their credibility? Does this demonstrate their knowledge of the crypto market?

How could they call Tether's imminent collapse every time the price of the crypto asset fell more than 15%, and completely miss the structural failure that nearly destroyed every lender and destroyed billions of dollars in wealth?

Unfortunately, instead of introspecting, apologizing, and self-correcting, most of the media seems to be doubling down on spreading falsehoods.

"Run crisis"

A recurring narrative is that FTX is simply a victim of a run crisis. A run risk occurs when a large number of customers of a bank or other financial institution withdraw their deposits at the same time due to concerns about the bank's solvency.

Every organization is responsible for properly managing its own assets and liabilities to meet its own payment schedule, and this is no different than any household.

Calling FTX a run risk is either highly ignorant or a political cover for media outlets who have been writing a Sam Bankman-Fried biography for the past two years and would put a ton of blood on their faces if they admitted this reality shame.

Let's be clear: there are two main reasons why you cannot describe FTX as a "run":

Instead of lending customer assets to related parties (eg, companies with common shareholders) and speculating with customer money, cryptocurrency exchanges should protect customer deposits while allowing them to invest.

FTX not only lends out customer deposits, but also fails to recover loans in a timely manner. It used them to make a series of increasingly risky bets and suffered losses. Money may be lost, but time will tell. This is what causes customers to worry.

The reason given by some people and the media is that we don't have all the information. This is of course true. More information is required to understand the details.

However, these two basic points were more or less stated in SBF's interview with Vox, so it is difficult to understand why we "need more information".

Say the right thing, look the right way

How did all this happen? How did FTX get so much flattering coverage while operating such a large structural failure?

A large part of this is because SBF knows how to play the game. He crafted a character who "speaks the right thing." He also "saw the right way."

More importantly, this specific case clearly illustrates how parts of the mainstream media, for political reasons or huge checks (or donations, as they prefer to call them), are ready to look the other way. For them, it's not sending a message, it's sending a message about money.

It turns out that even after SBF made it clear that he was crafting his image for the media, the same media continued to support him without shame. It is hoped that information about these donations will be made public as part of the disclosures in the bankruptcy proceedings.

Arthur Hayes discusses this dynamic in more detail in his article.

Interestingly, a similar pattern can also be seen in Silbert's DCG. While DCG, their core product GBTC, and one of their companies, Genesis, are subject to similar concerns expressed by multiple parties in the crypto community (which are nicely summarized here), including reportedly having to raise billions of dollars quickly to cover the substantial amount of money in their balances Sexual vulnerability table, it seems that the mainstream media has been extremely reluctant to report this matter, or chose to ignore it.

Moreover, while CoinDesk has focused on Tether for years, including trying to access Tether’s private reports to the New York Attorney General in the name of transparency, it has failed to demand the same transparency from its owners.

Yes, CoinDesk is owned by DCG.

Yes, DCG is also an investor in Circle, a direct competitor of Tether.

coincide? who knows...

DCG's main product trades at a close to 50% discount, while they take a 2% fee from the full value of the asset (unattainable to investors). Investors are trapped in a product that has become toxic, and DCG can fix that by disbanding the product.

GBTC is a key pillar of the failure of Blockfi and 3 AC. DCG provided these investors with a backdoor to issue GBTC shares at a discount and extract value from retail investors. When the deal fell through, both parties fell.

Not only were Genesis the enablers of the whole FTX fiasco, they lent FTX cash against worthless collateral, which ultimately caused disaster for the entire industry and FTX customers, they also facilitated transactions and borrowed against worthless UST , thereby causing Terra to explode the collateral.

We wonder if the disruption and widespread fraud of the past few months would have occurred without DCG.

Where is DCG's Op Ed? Where are the calls for censorship? Tether has been the target of all the financial stability concerns in the cryptocurrency industry, but at the end of the day, Tether seems to be one of the only adults in the room with actual risk management and functional business practices.

It's not surprising that the media is being used against rivals for political or monetary reasons, but it would be surreal and dirty if media control started being used to cover up potential compromises.

about making up your mind

It is impossible to know why so many of these organizations receive zero scrutiny from the media and skeptics, and why Tether continues to receive so much scrutiny. This is despite nearly two years of comprehensive reserve reports and independent assurance certificates published on Tether's website.

However, this may be at least partly due to the dangers of making up your mind early. This means that these parties have established what they believe to be true.

In this worldview, it is a foregone conclusion that Tether is a "real risk", so, like SBF's moral justification of its actions, despite the facts, the ends justify the means

There's no point in being open to new information or questioning one's assumptions when you arrogantly think you already "know" the answer.

Like a blindfolded horse, you can only see what is placed in front of you, everything else (FTX, etc.) is outside your field of vision or field of vision.

After all, “everyone knows” Tether is “sketchy,” and at the same time, “everyone knows” that FTX is a highly profitable business that supports the most important political causes.

It seems that "everyone" is wrong!

Volatility and Stability

In times of high volatility, investors often worry that things will break, which is understandable considering how many companies that were previously considered stable have collapsed this year.

Since investments are primarily short-term, Tether's reserves remain well-positioned to weather this turbulent period in traditional financial markets. Tether's reserves overwhelmingly maintain their value and liquidity, independent of declines in financial markets or crypto/digital asset prices.

A recent Wall Street Journal article questioned Tether’s secured loans and suggested they could pose a risk to Tether’s callability.

The article contains many misconceptions about Tether and USD₮, most notably claiming that because Tether's USD₮ secured loans are denominated in USD₮, Tether is at risk of declining USD₮ value.

This completely misses the mark and mistakes USD₮ itself for the collateral backing it. Tether’s secured loans are extremely over-collateralized and even backed by additional Tether equity when needed.

Stocks are growing fast right now, so 82.45% of Tether's total reserves are in US Treasuries and other cash equivalents, with yields at multi-year highs. Between the high level of liquidity overcollateralization, and the growing equity buffer for a rising interest rate environment that was publicly demonstrated in the event of Celsius' failure, and Tether's precise and thorough risk management, it's hard to imagine a secured loan scenario Tether's ability to redeem USD₮ tokens is at risk.

While many companies, including some public companies, have joined the lending program based on the pinky spell, Tether has been educating the market, and even Wall Street's risk management guards.

Furthermore, the WSJ misses the point that in secured loans, USD₮ token price drops are not important, since these drops only reflect the exchange value, not the redemption value of the underlying collateral. As with almost everything, collateral is the asset that really matters. Not the trading price of USD₮ on a given day.

How does Tether's secure lending program work?

It's kind of like what private banks do to their clients. We use this analogy to make this simple concept easier to understand, and instead of publishing an article or a tweet, everyone can just call their banker and ask a question.

When a private banking client needs some short-term liquidity and he has a significant portfolio that he does not want to sell, the client requests that his portfolio be collateralized for short-term liquidity. Banks determine the value attributable to pledged collateral (the so-called loan value) based on the liquidity of the instrument, currency, type of instrument, issuer and other factors. If the price of pledged collateral falls, the bank contacts its customer and asks the customer to repay the short-term loan or provide additional eligible (liquid) collateral. This is known as a margin call.

If the customer does not meet the bank's requirements, the bank immediately enforces the collateral by selling it in the market and collects the cash owed by the customer to the bank to repay the loan. The bank did not sell customer loans to another financial institution or a cryptocurrency company, as the Journal has led to believe.

Tether's loan program works in a similar fashion, but since Tether has done its homework professionally as usual, it benchmarks against other financial institutions with a more conservative loan-to-value (see definition above) and Strict requirements on margin calls. What's more, Tether will always require extremely liquid assets for extensive overcollateralization.

While banks are usually allowed to wind up with fractional reserves, this is not the case with Tether. The size and quality of Tether collateral ensures that Tether backing remains above 100% at all times

Tether lending policies are very conservative and margin calls are very effective, as the Celsius case demonstrates. If not, Celsius won't be able to restore anything, as mentioned in the article. Instead of acknowledging it and applauding it, the article presents it in a discriminatory way, again referring to the need to disclose collateral in the Tether report. Tether was unaware that the regulated bank disclosed it. We also want to emphasize that, as already mentioned to reporters, Tether will not buy any bad loans from financially distressed companies, but will instead provide over-collateralized loans to eligible customers while controlling collateral/pledging.

Tether's customers take advantage of the unique utility offered by the Tether token, which is by far the most accepted and reputable stablecoin in the world.

Tether is professionally managing its reserves as it is committed to guaranteeing any customer redemption with the same liquid reserves as reported in the transparency page, in the CRR report, an independent attestation issued by a top 5 auditing firm that also Available for reading on the website.

Tether is profitable and will remain solvent even in critical situations. Rather than betting customers' money, Tether has always managed its reserves accurately and does not employ fractional reserves.

https://tether.to/en/wsj-and-co-the-hypocrisy-of-mainstream-media-asleep-at-the-wheel-of-information/