TeraWulf Inc., a cryptocurrency miner that recently had celebrity investors such as Gwyneth Paltrow as backers, saw its stock plummet by as much as 40% during its Nasdaq stock market debut.
After concluding a merger with imaging-technology startup Ikonics, the company went public, with the goal of providing more environmentally friendly crypto transaction processing. After being listed at $25, the shares sank as low as $20.02.
The dip coincides with a broader drop in the stock of other cryptocurrency miners, who compete for newly minted tokens for processing transactions by utilising massive amounts of computing power. Electricity consumption is comparable to that of certain countries.
According to Chris Brendler, an analyst covering the industry at DA Davidson & Co., crypto mining stocks have been “hard hit” as a result of the sharp drop in Bitcoin prices and concerns about falling profitability, with the so-called hash rate, or the speed of mining, returning to highs not seen since China took its rigs offline.
“Profitability is at an all-time low. The fact that the price of Bitcoin is falling while the worldwide hash rate is rising is bad news for miners, according to Brendler.
Issuers of stablecoins should pick a rule model, according to a key legislator.
(Bloomberg) — Pat Toomey, the top Republican on the Senate Banking Committee, said cryptocurrency stablecoin issuers should have the option of operate under three distinct regulatory frameworks, including a bank charter.
In remarks at a hearing Tuesday, the Pennsylvania Republican sketched a framework for future legislation, including the possibility that stablecoin issuers may register as money transmitters, subjecting them to state regulations. Congress and government agencies have been debating how to effectively regulate the crypto business, including stablecoins, which are tokens whose value is tied to another asset, such as the dollar, to prevent volatility.
The threat of a stablecoin crisis has prompted US agencies to seek power to enforce a crackdown.
With the Senate evenly divided, it’s unlikely that any Republican proposal would get much movement very soon. While some Democrats have emphasised the dangers of crypto, Republicans frequently laud the advantages of the new technologies.
Toomey stated in his “guiding principles” that stablecoin issuers might operate under a traditional bank charter, a special-purpose banking charter defined under future stablecoin legislation, or register as a money transmitter at the state level and a money services business at the federal level. He also stated that non-interest bearing stablecoins should not be regulated in the same way as securities are.
In a statement, Toomey said, “The law should address consumer protection and financial system vulnerabilities, but it should also be structured to stimulate innovation in the quickly developing global digital economy.”
The President’s Working Group on Financial Markets released a study last month that expressed worry about the risks tokens represent to the US economy. According to the research, Congress should approve legislation requiring stablecoin issuers to become banks with guaranteed deposits, capital and liquidity requirements, and Federal Reserve oversight. Companies should not be allowed to offer payment stablecoins unless they are insured depository institutions, according to the paper.