Tag Archives: gamble

MiCA’s Stablecoin Gamble: How Europe’s Bank Mandate Could Backfire

MiCA’s Stablecoin Gamble: How Europe’s Bank Mandate Could Backfire

The European Union’s Markets in Crypto-Assets (MiCA) regulation marks a pivotal moment in the global regulation of digital assets, particularly concerning stablecoins. This comprehensive framework aims to bring clarity and stability to the burgeoning crypto market within the EU. However, a closer examination of its specific provisions, especially those pertaining to stablecoin reserves, reveals a potentially problematic approach.

As a financial journalist with a keen interest in the intersection of finance and technology and having observed the evolution of digital assets and their regulatory landscapes, I contend that the MiCA stipulation requiring 60% of stablecoin reserves to be held within EU banks could inadvertently introduce instability and hinder the very innovation it seeks to foster. While seemingly aimed at enhancing security, this mandate may instead create new vulnerabilities and fragment the global stablecoin market.

The Stablecoin Landscape

Before dissecting the intricacies of MiCA’s impact, it’s essential to grasp the current dynamics of the stablecoin market. As of early 2024, this sector boasts a market capitalization exceeding $130 billion, a testament to the growing demand for digital assets that offer price stability. Tether remains the dominant player, commanding approximately 70% of this market share. This dominance isn’t accidental; it largely reflects market confidence in Tether’s reserve composition and its consistent ability to maintain its peg to the U.S. dollar.

The success of Tether can be directly attributed to its reserve strategy, which predominantly involves holding U.S. Treasuries and other highly liquid dollar-denominated assets. Tether’s transparency, albeit sometimes scrutinized, through its regular attestation reports provides insights into this strategy.

According to their latest reports, a significant portion, around 85% of their reserves, are held in cash and cash equivalents, with U.S Treasuries forming the lion’s share. This preference for U.S. Treasuries is not arbitrary. These instruments are backed by the full faith and credit of the United States government and offer unparalleled liquidity. The daily trading volumes in the secondary market for U.S. Treasuries routinely average over $910 billion, making them exceptionally easy to buy and sell without significantly impacting their price. This deep liquidity is a crucial factor in maintaining the stability of a stablecoin.

Other significant stablecoins, such as USD Coin, prioritize holding reserves in highly liquid and low-risk assets, including U.S. Treasuries and cash held in regulated financial institutions. This industry-wide preference for U.S. Treasuries underscores their perceived safety and liquidity within the global financial system. The ability to quickly convert reserves into fiat currency during periods of high redemption pressure is paramount for a stablecoin to maintain its peg.

Protectionism Masquerading as Security?

MiCA’s requirement that 60% of stablecoin reserves be held in EU banks appears to be more of a protectionist measure aimed at bolstering the European financial sector than a genuine enhancement of stablecoin security. This assertion becomes particularly compelling when comparing the liquidity of the European bond market to that of U.S. Treasuries. While the EUR government bond market is substantial, it pales compared to the U.S. Treasury market in terms of trading volume and depth. The lower liquidity and often wider bid-ask spreads in European government bonds raise concerns about the ease and cost of liquidating these assets during periods of market stress.

Tradeweb reported in September 2024 that the average daily volume for European government bonds was $49.5 billion. As I do not have the exact average daily trading data from the European Central Bank, I put fair estimated daily trading volumes of around €100 billion for this comparison. This figure is less than one-ninth of the daily trading volume observed in U.S. Treasuries, which is over $910 billion.

This significant liquidity disparity is not merely an academic point; it has real-world implications for stablecoin issuers who need to access their reserves quickly to meet redemption requests. During market turbulence, the ability to quickly and efficiently convert reserve assets into fiat currency is critical for maintaining the stablecoin’s peg. Lower liquidity in the European bond market could translate to higher transaction costs and potential delays in accessing funds, potentially undermining the stability MiCA aims to achieve.

Furthermore, the concentration of reserves within EU banks raises questions about the potential for systemic risk within the European financial system. While diversification is generally considered a prudent risk management strategy, forcing stablecoin issuers to concentrate a significant portion of their reserves within a specific regional banking system could amplify the impact of any localized financial instability.

The Silicon Valley Bank Lesson

The collapse of Silicon Valley Bank (SVB) in March 2023 is a stark and relevant case study highlighting the inherent risks associated with relying solely on the traditional banking system for stablecoin reserves. When SVB experienced a rapid bank run, Circle’s USD Coin, despite being considered a highly reputable stablecoin, temporarily lost its peg, plummeting to around $0.87. This dramatic event occurred even though only approximately 10% of USD Coin’s reserves were directly affected by the SVB failure. This incident underscored two critical vulnerabilities: firstly, bank deposits, even within seemingly well-regulated institutions, are not entirely risk-free, and secondly, the operational limitations of the traditional banking system, such as weekend closures and processing delays, are fundamentally incompatible with the 24/7 nature of cryptocurrency markets.

Imagine the amplified impact if, under MiCA’s regulations, 60% of a stablecoin’s reserves were caught in a similar situation. The inability to access a significant portion of their reserves during a critical period could have catastrophic consequences, potentially triggering a systemic crisis within the European crypto ecosystem and eroding trust in stablecoins more broadly. The SVB episode demonstrated the speed at which confidence can evaporate in the financial system and the potential for contagion to spread rapidly. MiCA’s banking-centric approach, while intended to provide security, could inadvertently create a single point of failure, making the system more vulnerable to such shocks.

The Liquidity Premium of U.S. Treasuries

U.S. Treasuries have earned their reputation as the world’s premier safe-haven asset for compelling reasons, primarily their unparalleled market depth and liquidity. This deep liquidity ensures minimal price slippage even during periods of large-scale liquidations. During the height of the COVID-19 market panic in March 2020, the U.S. Treasury market remained remarkably robust despite unprecedented volatility across global markets. While bid-ask spreads widened temporarily, the market continued functioning efficiently, allowing investors to buy and sell Treasuries relatively quickly. This resilience during extreme stress underscores the inherent strength and liquidity of the U.S. Treasury market.

Conversely, European government bonds, particularly those issued by smaller EU nations, have experienced significant liquidity challenges during various crises. During the Eurozone crisis of 2011-2012, some sovereign bonds became practically untradeable, highlighting the potential for liquidity to dry up during times of stress. For a stablecoin issuer needing to process large redemption requests quickly, such a scenario could prove disastrous, making it difficult, if not impossible, to access the necessary funds to maintain the peg. The historical data demonstrates U.S. Treasuries’ superior liquidity and stability compared to their European counterparts, making them a more reliable asset for backing stablecoins.

The Banking System’s Inherent Vulnerabilities

MiCA’s reliance on the traditional banking system introduces additional layers of risk beyond just liquidity concerns. The banking turmoil of 2023, which witnessed the failures of both SVB and Signature Bank and First Republic Bank in the United States, serves as a potent reminder that even seemingly well-regulated banks can collapse under stress. European banks are not immune to such vulnerabilities. The forced merger of Credit Suisse with UBS in 2023, orchestrated to prevent a broader financial crisis, stands as a recent and prominent example.

Furthermore, unlike U.S. Treasuries held directly, bank deposits are subject to counterparty risk. If the bank holding the stablecoin reserves faces financial difficulties or even fails, accessing those reserves could become problematic.

Additionally, under EU banking regulations, bank deposits are potentially subject to bail-in provisions. In a crisis, depositors (including stablecoin issuers) could see their funds used to recapitalize the failing bank. This introduces a level of risk that stablecoin issuers cannot directly control, which is not present when holding highly liquid government securities. Banks also typically reinvest deposits in various assets, creating additional layers of risk and complexity that are opaque to the stablecoin issuer.

Market Fragmentation and Innovation Barriers

MiCA’s stringent requirements could lead to fragmentation in the global stablecoin market. Major issuers like Tether, who have established their reserve management strategies based on global liquidity and the reliability of U.S. Treasuries, might find the cost and complexity of complying with MiCA’s requirements prohibitive. They might opt to limit their operations within the EU rather than fundamentally restructure their reserve management strategies. This could create a bifurcated market: globally accessible stablecoins operating largely outside the EU and smaller, potentially less liquid stablecoins operating within the regulatory framework of MiCA.

This fragmentation could hinder the seamless flow of capital and innovation within the European digital asset space. New stablecoin projects seeking to launch in the EU would face significant barriers to entry, needing to establish relationships with EU banks and navigate complex reserve requirements before even launching their product. This could concentrate power in the hands of established financial institutions, potentially stifling the decentralized ethos that underpins much of the cryptocurrency movement. The increased regulatory burden and operational complexity could also make it less attractive for innovative stablecoin projects to establish themselves within the EU, potentially pushing innovation to other jurisdictions with more accommodating regulatory environments.

Alternative Approaches to Foster Stability

Rather than imposing potentially risky banking arrangements, regulators could explore alternative approaches focusing on transparency, risk-based assessments, and a broader acceptance of high-quality collateral. One such approach would be enhancing transparency and mandating stablecoin reserves’ auditing regardless of geographical location. Independent audits conducted by reputable firms could provide greater assurance to users.

Another avenue would be to develop clear and objective standards for assessing the quality of reserve assets, focusing on criteria such as liquidity, credit risk, and market depth. This would allow for a more nuanced approach to reserve management, recognizing assets like U.S. Treasuries’ proven stability and liquidity. Regulators could establish a framework that allows for a more diverse range of high-quality collateral, including U.S. Treasuries and other highly liquid government securities from reputable jurisdictions, provided they meet stringent risk criteria. This approach would acknowledge the stablecoin market’s global nature and certain assets’ established role in maintaining stability.

The data and historical precedent are clear: U.S. Treasuries have consistently demonstrated their value as stable and liquid collateral through multiple periods of financial stress. MiCA’s attempt to artificially promote European alternatives through regulatory mandate does not alter this fundamental market reality. A more pragmatic approach would be to acknowledge the global nature of stablecoins and focus on establishing robust standards for reserve quality and transparency rather than imposing geographically restrictive requirements.

Balancing Innovation and Stability

While MiCA’s underlying intentions to protect consumers and ensure the stability of the stablecoin market are undoubtedly laudable, its current implementation risks achieving the opposite of its intended effect. By compelling issuers to hold a significant portion of their reserves in potentially less liquid and potentially riskier assets within the European banking system, the regulation may inadvertently increase, rather than decrease, systemic risk within the European crypto ecosystem.

The stablecoin market undeniably requires thoughtful and effective regulation. However, such regulation should be grounded in market realities, informed by historical data, and designed to foster innovation while mitigating genuine risks.

As the digital asset industry evolves rapidly, regulatory frameworks must strike a delicate balance between promoting stability and encouraging innovation without erecting artificial barriers that could ultimately harm the very users they are designed to protect. A more globally collaborative and less geographically prescriptive approach to stablecoin regulation would likely be more effective in fostering a stable and innovative digital asset ecosystem.

 

Source: https://intpolicydigest.org/mica-s-stablecoin-gamble-how-europe-s-bank-mandate-could-backfire/

 

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Hong Kong’s Plan to Greenlight Spot Crypto ETFs: Smart Move or Foolish Gamble?

Hong Kong’s Plan to Greenlight Spot Crypto ETFs: Smart Move or Foolish Gamble?

Crypto ETFs are exchange-traded funds that track the performance of one or more cryptocurrencies, such as Bitcoin and Ether. Crypto ETFs allow investors to gain exposure to the crypto market without having to buy, store, or manage the underlying assets themselves. Crypto ETFs can also offer more liquidity, transparency, and diversification than direct crypto investments.

There is a lot of hype about crypto ETFs in the West, especially in the US, where many fund managers have been applying for the approval of the Securities and Exchange Commission (SEC) to launch spot crypto ETFs, which would hold the actual cryptocurrencies in custody. However, the SEC has been reluctant to approve these ETFs, citing concerns over market manipulation, investor protection, and regulatory compliance. So far, the SEC has only approved crypto ETFs that invest in Bitcoin futures contracts, which are derivatives that track the price of Bitcoin but do not involve the physical delivery of the asset.

The approval of spot crypto ETFs in the US would be a major milestone for the crypto industry, as it would open the door for more mainstream adoption and institutional participation. It would also create more competition and innovation in the crypto space, as well as more regulatory clarity and oversight. Many crypto enthusiasts and investors are eagerly awaiting the SEC’s decision, which could have a significant impact on the crypto market sentiment and price movements.

Hong Kong, one of the world’s top financial hubs, is thinking about allowing spot crypto ETFs, which would make it the first major place in Asia to do so, and possibly make it a regional center for digital asset activities. According to a recent report by Bloomberg, the Hong Kong Securities and Futures Commission (SFC) is in talks with potential issuers of crypto ETFs and is considering whether to grant them licenses under its existing framework.

What are spot crypto ETFs and why do they matter?

An ETF is a kind of fund that follows the performance of an asset or a group of assets, and can be traded on a stock exchange like a normal stock. A spot crypto ETF is an ETF that directly invests in cryptocurrencies, such as Bitcoin or Ether, and shows their spot prices, which are the current market prices of the tokens. A spot crypto ETF would let investors get exposure to the crypto market without having to buy, store, or manage the tokens themselves, which can be hard, expensive, and risky. A spot crypto ETF would also give more liquidity, transparency, and diversification than buying individual tokens, and would be under the regulatory control and investor protection of the stock exchange and the securities regulator.

Spot crypto ETFs are seen as a way of making cryptocurrencies more popular and accessible to a bigger range of investors, especially institutional and retail investors who may be hesitant or unable to invest in the crypto market directly. Spot crypto ETFs could also increase the demand and adoption of cryptocurrencies, and improve their legitimacy and credibility as an alternative asset class. Moreover, spot crypto ETFs could improve the innovation and competitiveness of the financial sector, and attract more talent and capital to the crypto ecosystem.

Challenges and risks of spot crypto ETFs

However, spot crypto ETFs also have challenges and risks, as the crypto market is still mostly unregulated, unpredictable, and vulnerable to various threats. Some of the main challenges and risks are:

Regulatory uncertainty: The crypto market is subject to different and often conflicting regulations across different places, and some countries have banned or limited the use of cryptocurrencies altogether. This creates legal and compliance challenges for spot crypto ETFs, as they may have to deal with multiple and changing regulatory regimes, and face possible sanctions or restrictions from some authorities. Moreover, the crypto market is constantly changing and innovating, and new kinds of tokens and platforms emerge often, which may pose new regulatory issues and challenges that are not yet covered or solved by the existing frameworks.

Market volatility: The crypto market is very volatile, as the prices of cryptocurrencies can change a lot and unexpectedly due to various factors, such as supply and demand, market mood, news and events, technical issues, and speculation. This makes the crypto market very risky and speculative, and exposes spot crypto ETFs to big price changes and potential losses. For example, Bitcoin, the biggest and most famous cryptocurrency, reached a record high of over $67,567 in November 2021, but recently it went below $20,000 in early 2023, losing more than half of its value. Such extreme volatility can hurt the confidence and trust of investors, and stop them from investing in spot crypto ETFs.

Security and operational risks: The crypto market is also exposed to various security and operational risks, such as hacking, fraud, theft, cyberattacks, human mistakes, technical problems, and system failures. These risks can affect the integrity and functionality of the crypto platforms, wallets, and transactions, and result in the loss or theft of cryptocurrencies or user data. For instance, in 2023, the JPEX crypto exchange in Hong Kong was allegedly involved in a HK$1.6 billion ($204 million) fraud that affected more than 2,600 investors, who lost their money and personal information. Such incidents can harm the reputation and credibility of the crypto market, and expose spot crypto ETFs to legal and financial responsibilities.

Hong Kong’s position on spot crypto ETFs

Hong Kong is currently one of the few places in the world that allows futures-based crypto ETFs, which are ETFs that invest in contracts that bet on the future prices of cryptocurrencies, rather than the tokens themselves. However, the demand and performance of these ETFs have been low, as they are more complex and costly than spot crypto ETFs, and may not show the actual prices of the tokens. As of November 2023, there are only three futures-based crypto ETFs listed on the Hong Kong Stock Exchange (HKEX), with a combined market value of about $65 million.

In contrast, Hong Kong does not allow spot crypto ETFs, as the Securities and Futures Commission (SFC), the city’s securities regulator, has not authorized any such products for public offering. However, this may change soon, as the SFC’s new chief executive officer, Julia Leung, said in an interview with Bloomberg on November 5, 2023, that the SFC is considering allowing spot crypto ETFs, as long as they meet the regulatory requirements and address the new risks. Leung said that the SFC is open to proposals that use innovative technology to boost efficiency and customer experience, and that the SFC is happy to give it a try as long as the risks are managed.

Leung’s statement shows that Hong Kong is taking a more active and progressive approach to the crypto market, and is trying to create an ecosystem for digital assets that can attract more investors and businesses. This is consistent with Hong Kong’s recent efforts to establish a complete and strong regulatory framework for virtual assets, which covers crypto exchanges, stablecoins, and tokenization. The SFC launched the framework in June 2023, with the goal of improving the transparency, accountability, and security of the crypto market, while promoting its innovation and development.

Two sides of the coin

As a practitioner who has been following the crypto market for several years, I have a mixed and complex view on Hong Kong’s plans to greenlight spot crypto ETFs. On one hand, I think that this is a smart and forward-looking move that could make Hong Kong a leading and competitive digital asset center in Asia, and maybe the world. Spot crypto ETFs bring benefits and opportunities for the financial sector, the crypto ecosystem, and the investors, as they could provide more access, convenience, diversity, and innovation to the crypto market, and enhance its growth and adoption. I also think that Hong Kong has the potential and the ability to become a successful and reputable spot crypto ETF market, as it has a strong and mature financial infrastructure, a sophisticated and experienced regulatory system, and a lively and dynamic crypto community.

On the other hand, this is a risky and difficult move that could expose Hong Kong to a lot of uncertainties and threats, as the crypto market is still mostly unregulated, unstable, and insecure. Spot crypto ETFs present challenges and risks for regulators, issuers, and investors, as they could face legal and compliance difficulties, market volatility and losses, and security and operational breaches. Hong Kong has to be careful and sensible in its authorization and supervision of spot crypto ETFs, as it has to balance the interests and expectations of different stakeholders, and ensure the protection and education of the investors, especially the retail investors who may not be fully aware or informed of the risks and complexities of the crypto market.

Many of my friends think that Hong Kong’s plans to greenlight spot crypto ETFs are a double-edged sword that could bring both rewards and risks, and that Hong Kong has to consider the advantages and disadvantages carefully and responsibly, and adopt a balanced and adaptive approach that can foster the innovation and development of the crypto market, while reducing its challenges and risks.

But in my personal opinion, Hong Kong’s potential approval of spot crypto ETFs is a good decision, as it would benefit both the investors and the industry in the long run. The advantages outweigh the disadvantages, as the risks and challenges can be mitigated by proper regulation, education, and innovation.

The next steps in policy and industry practice should focus on creating a robust and adaptive regulatory framework for spot crypto ETFs in Hong Kong. It’s essential to strike a balance between fostering innovation and safeguarding investors, particularly the retail sector. This regulatory framework should address challenges related to regulatory uncertainty, market volatility, and security risks, promoting transparency and accountability. It should provide comprehensive investor education to ensure a better-informed market. In light of the Western enthusiasm for crypto ETFs, Hong Kong’s success in this endeavor could set a benchmark for other Asian countries, facilitating broader adoption and promoting responsible growth in the crypto space.

Hong Kong has the potential to become a leader and a model in the crypto space, as it has a strong and mature financial system, a supportive and proactive government, and a vibrant and diverse crypto community. Hong Kong’s move could also influence and inspire other Asian countries and regions to follow suit and embrace the crypto revolution.

 

 

Source: https://www.blockhead.co/2023/11/14/hong-kongs-plan-to-greenlight-spot-crypto-etfs-smart-move-or-foolish-gamble-gs-plans-to-greenlight-spot-crypto-etfs-a-smart-move-or-a-foolish-gamble/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j

Meme Coins: The Next Jackpot or Just a Gamble?

Meme Coins: The Next Jackpot or Just a Gamble?

There has been a lot of buzz on social media about traders who seemingly struck gold by investing in the PEPE meme coin. These stories of overnight success have sparked an important debate: Can meme coins be a reliable way to build wealth, or are they more like playing the lottery and relying on luck?

To answer this question, we need to explore the different approaches taken by various socio-economic classes when it comes to playing the lottery. Comparing meme coins and lotteries can shed light on how people view wealth accumulation.

For those who are unfamiliar, meme coins are digital currencies inspired by internet memes. Unlike traditional cryptocurrencies, meme coins usually don’t have practical applications beyond being traded and shared among users. Their value is heavily influenced by social media sentiment and other factors, leading to significant price fluctuations and the potential for market manipulation. While meme coins come with considerable risks, they have gained a substantial following of individuals who see them as a way to challenge established financial systems and connect with like-minded communities online.

One specific example is the PEPE meme coin, which experienced an astounding 9,071% surge in value before its listing on Binance, reaching a market capitalization of $1.8 billion. However, traders are now sharing cautionary advice due to the recent breach of crucial trend and support levels by the coin. Meme coins, especially those developed by anonymous teams, are vulnerable to “rug pulls,” where developers abandon the project, leading to a collapse in value. Moreover, price volatility tends to be most pronounced during Asian trading hours.

Let’s consider the different strategies people employ to accumulate wealth. Renowned billionaire investor Warren Buffet, for instance, prioritizes investing in stable, blue-chip stocks that align closely with the growth of the US economy. By consistently maintaining a funding rate 2-3% below his peers, Buffet has amassed a personal fortune of $112.8 billion. His success teaches us two crucial lessons: investing in well-established blue-chip companies without unnecessary risks is sufficient, and remaining invested over an extended period allows for substantial wealth accumulation. Therefore, emphasizing safety and longevity are key factors in achieving financial prosperity.

On the other hand, the allure of the lottery lies in the promise of instant wealth with minimal effort and investment, which proves irresistible to many. Despite the astronomical odds of winning a jackpot (1 in 300 million for Powerball), the average player spends around $200 per year, resulting in a significant cumulative amount over time. Surprisingly, research suggests that individuals in lower socio-economic classes tend to play the lottery regardless of the odds, while wealthier individuals participate only when the jackpot offers substantial returns. A $10 million win may not make a significant impact for the wealthy, but a jackpot exceeding $100 million captures their interest.

In essence, the PEPE meme coin and the lottery represent two sides of the same coin. Both offer the allure of quick wealth with minimal investment, but both also carry significant risks. While Buffet’s investment strategy prioritizes safety and is grounded in long-term plans, playing the lottery or investing in meme coins resembles a game of chance, where success depends on luck and hoping for the best outcome.

Now, let’s take a look at some other meme coins that have gained traction in the market. The surge in popularity of meme coins can be attributed to various factors, including the growing fascination with cryptocurrencies and the relative ease of creating new digital currencies. Many meme coins have gained attention through clever branding and incorporating popular culture references, resulting in a frenzy of buying and selling as investors try to capitalize on the hype and volatility of these highly speculative assets.

Here are a few meme coins that have made waves recently:

AiDoge: This meme coin positions itself as a new web3 platform for AI-driven meme creation and sharing. Its presale reportedly raised over $5.5 million, showcasing significant attention from investors.

Ordi: Ordi is a meme coin that pays homage to the Ordinals protocol, which currently holds the largest value among meme coins, reaching $400 million.

BOB: BOB is an AI bot that provides tweet summaries to Twitter users who reply with “@ExplainThisBob.” It has gained a large following, with Elon Musk himself praising BOB’s automatic responses to his tweets.

MONG: MONG is a recently launched meme cryptocurrency project associated with an established NFT collection called MONGS NFT. Each NFT in the collection features a distinct mungo (mongoose) artwork, adding uniqueness to the project.

TURBO: TURBO is an innovative cryptocurrency aiming to become the meme coin of the future. It stands out by relying heavily on ChatGPT development.

LADYS: LADYS is the native token of Milady Meme Coin and can be used for online transactions. The token gained attention after Elon Musk tweeted about the Milady NFT meme, and its market capitalization has exceeded $100 million.

WOJAK: WOJAK is a new ERC-20 token inspired by the famous Wojak meme. Since its inception, the token has experienced significant momentum, with a surge of over 1000% at its peak.

Floki: Floki started as a meme coin inspired by Elon Musk’s dog but has evolved into a complete Web3 ecosystem. It now includes NFTs, DeFi, a metaverse, and even prepaid gift cards for Visa and Mastercard. The project gained attention after being listed on Binance.

XRdoge: XRdoge is a meme coin on the XRP ledger, aiming to bring fun to the Ripple ecosystem. It adds a playful element to the XRP community.

While these newer meme coins try to ride the PEPE wave, others like BIBI, BOBO, PEPO, and PIPI are striving to find their own unique niche. Additionally, Chinese-themed coins such as Pogai and LowB are attempting to gather Mandarin-speaking communities to join in the fun. For coins like Cate, SquidGrow, TSUKA, and Renewable, which are not part of the frog or dog craze, they must patiently await their turn to shine.

It’s important to note that while newer meme coins have gained significant popularity recently, older meme coins such as Doge, Shiba Inu, Pitbull, RichQuack, Saitama, Baby Doge, and Safemoon continue to thrive by actively engaging with their communities and progressing their projects. This commitment to longevity and a steadfast presence in the ever-changing world of cryptocurrencies suggests that some of these coins may have staying power beyond mere hype cycles. The continued relevance and demand for these older meme coins highlight their ability to maintain a loyal following and leave a lasting impact, even amidst emerging trends and market fluctuations.

In conclusion, it’s crucial to recognize that meme coins primarily thrive due to their robust online communities driven by hype and speculation, often lacking significant real-world use cases or underlying technology. As I’ve expressed on Twitter, popular meme coins can explore utility, payment systems, games, and more, while less popular ones must focus on providing entertainment value. Community engagement and having fun together remain pivotal for a meme coin’s survival. If a meme coin can navigate the early stages successfully and gain support from its community, its games, NFTs, metaverse, and other revenue streams have a higher chance of success, enabling survival even in bear markets and beyond.

While the allure of quick wealth may be tempting, it’s crucial to carefully consider the risks and rewards of any investment opportunity.

 

Source: https://www.securities.io/meme-coins-the-next-jackpot-or-just-a-gamble/

Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author- “NFT: From Zero to Hero” and “Blockchain Revolution 2030”.

Currently, he is appointed as the Chief Digital Advisor at Mongolia Productivity Organization, championing national digitization. Prior to his current appointments, he was the Chairman of BigONE Exchange, a global top 30 ranked crypto spot exchange and was also the Advisory Board Member for Hyundai DAC, the blockchain arm of South Korea’s largest car manufacturer Hyundai Motor Group. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region.

An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.

www.anndy.com
j j j