The Dominance of Tether and the Rise of Big Banks
Arthur Hayes, the former CEO of Bitmex and current CIO of Malestrom, a crypto-focused investment fund, recently shared his thoughts on the future of Tether and other centralized stablecoin companies. According to Hayes, he expects big banks, such as JPMorgan, to eventually take over the stablecoin business that is currently dominated by Tether.
Tether's Success and the Banking System
During an episode of Laura Shin's Unchained podcast, Hayes explained that Tether has become a popular product in the crypto market primarily because the U.S. banking system has not offered a similar product. Tether's business model involves taking dollars, investing them in treasuries, and earning the spread.
Hayes pointed out that the people who own Tether make billions of dollars in free cash flow each year through this interest rate model. However, he also emphasized that stablecoin companies like Tether rely on banks to clear and custody their money. Hayes criticized bank managers, referring to them as "f***ing morons" for failing to achieve the same level of success by offering stablecoins themselves.
The Role of Big Banks in the Future
Hayes believes that the current situation will change when the U.S. Treasury allows traditional banks to issue their own stablecoins. Once this happens, big banks like JPMorgan will take over the stablecoin market and offer the same interest rate model that Tether and other stablecoin companies currently rely on. Hayes concluded that centralized stablecoin companies will not have a defensible business model because they depend on banks to custody their funds and facilitate trading.
Tether's Current Status
As of 2023, Tether has a market cap of $91.5 billion and $4 billion in excess reserves. The company has invested in various expansion initiatives, according to its CEO Paolo Ardoino.
What's Next for Tether and Centralized Stablecoins?
Arthur Hayes' perspective on the future of Tether and centralized stablecoins raises important questions about the sustainability of their business models. As big banks enter the stablecoin market, the landscape may undergo significant changes. It remains to be seen how Tether and other stablecoin companies will adapt and whether they can maintain their dominance in the face of increased competition.
What are your thoughts on Arthur Hayes' opinion? Share your views in the comments section below.
Frequently Asked Questions
How much of your portfolio should you hold in precious metals
To protect yourself from inflation, investing in physical metals is the best option. You can invest in precious metals to buy into their future value, and not just the current price. Your investment will increase in value as the prices rise.
Any gains you make from investments that you hold onto for at least five year will be tax-free. After that time, capital gains taxes will be due. Learn more about how you can buy gold coins on our website.
Should You Open a Precious Metal IRA?
This will depend on whether or not you have an investment objective and what level of risk you are willing to accept.
If you plan to use the money for retirement, you should open an account now.
Because precious metals are highly likely to appreciate over time, They can also be used to diversify.
Additionally, silver and gold prices tend to move in tandem. This makes them better choices when you want to invest in both assets.
Do not invest in precious metals IRAs if your goal is to save money or take on any risk.
Can I have physical possession of gold within my IRA?
Many people want to know if gold can be physically owned in an IRA. This is a fair question because there isn't any legal way to do it.
But if you carefully examine the law, there's nothing stopping you from owning gold in your IRA.
Most people don’t realize just how much they could save by putting your gold in an IRA, rather than keeping it at home.
It's easy to throw away gold coins but not so easy to put them in an IRA. You'll have to pay twice taxes if you keep your gold in your home. The IRS will collect once and the state where your residence is located will collect the other.
It is possible to lose your gold and pay twice as much tax. Why would you want to keep your gold in your house?
It might seem that you want the security of knowing your gold is safe inside your home. It is important to store your gold somewhere safer in order to prevent theft.
If you plan on visiting often, you shouldn't leave your precious gold at home. If you leave your gold unattended, thieves can easily steal it while you're out of town.
You can store your gold in an insurance vault. Your gold will be safe from fire, flood and earthquake as well as robbery.
Another benefit to keeping your gold in vaults is that you won’t have to pay any property taxes. Instead, any gains that you make by selling your gold will be subject to income tax.
You may be interested in an IRA if you don't want to pay taxes on your gold. An IRA allows you to keep your gold free from income taxes, even though it earns interest.
Capital gains tax is not a requirement for gold investments. You can cash out your entire investment anytime you wish.
Federally regulated IRAs mean that you won't face any difficulties in transferring your gold to another bank if it moves.
The bottom line? You can own your gold in an IRA. Fear of losing it is the only thing that will hold you back.
How do you withdraw from an IRA that holds precious metals?
If you have a precious metal IRA account such as Goldco International Inc., it may be worth considering withdrawing your funds. When you sell your metals, the value of those funds will be higher than if it was kept in the account.
Here are the steps to help you withdraw money from your precious-metal IRA.
First, determine whether the precious metal IRA provider allows withdrawals. Some companies allow this option, while others don't.
Second, determine whether you can take advantage of tax-deferred gains by selling your metals. Most IRA providers offer this benefit. Some do not, however.
To find out if fees apply, thirdly check with your precious-metal IRA provider. You may have to pay an additional fee for the withdrawal.
Fourth, you should keep track of precious metal IRA investments for at minimum three years after they are sold. In other words, wait until January 1st each year to calculate capital gains on your investment portfolio. Follow the instructions on Form 8949 to calculate the gain.
You must file Form 8949 and also report any sale of precious metals to IRS. This ensures you pay tax on any profits from your sales.
A trusted attorney or accountant should be consulted before you sell your precious metals. They can help ensure you follow all necessary procedures and avoid costly mistakes.
How to Open a Precious Metal IRA?
A self-directed Roth Individual Retirement Account is the best way to open a IRA for precious metals.
This account is better compared to other types because you don’t need to pay any taxes until you withdraw the investments.
This makes it very attractive to people who want to save money but also need a tax break.
You are not limited to investing in gold or silver. You can invest in anything you want if it fits the IRS guidelines.
While most people associate precious metals with silver and gold, there are many types of precious metals.
There are many examples: palladium; platinum; rhodium; osmium; iridium; ruthenium.
There are several ways you can invest in precious metals. Two of the most popular ways to invest in precious metals are buying bullion coin and bar coins, and also purchasing shares in mining corporations.
Bullion Coins or Bars
Buying bullion coins and bars is one of the easiest ways to invest in precious metals. Bullion refers to physical ounces (or grams) of gold and/or silver.
Bullion bars and coins can be purchased to receive actual pieces.
While you might not see any change in your pocket after you purchase bullion coins and bars at a store, you will notice some benefits over time.
For example, you'll get a piece of history in a tangible form. Each coin and each bar have a story.
The face value of a coin will often be lower than its nominal worth. The American Eagle Silver Coin cost $1.00 an ounce in 1986 when it was first introduced. Today, however, the American eagle's price is closer to $40.00 per an ounce.
Since the value of bullion has increased dramatically since its introduction, many investors prefer buying bullion coins and bullion bars rather than futures contracts.
Mining Companies
For those who want to purchase precious metals, another option is investing in shares of mining companies. When you invest in mining companies, you are investing in the company's ability to produce gold and silver.
You will then receive dividends, which are calculated based upon the company's profit. These dividends are then used to pay shareholders.
You will also benefit from the company's growth potential. The share prices of the company should rise as more people buy the product.
Because these stocks fluctuate in price, it's important to diversify your portfolio. This means spreading your risk across multiple companies.
However, mining companies are not immune to financial loss just like any stock-market investment.
Your share of ownership may be worthless if gold prices fall significantly.
The Bottom Line
Precious metals like gold and silver can provide safety during economic uncertainty.
However, both gold and silver are subject to wild swings in price. If you are interested in long-term investing in precious metals, open a precious Metals IRA account at a reputable firm.
By doing this, you can reap the tax benefits and still have physical assets.
Statistics
- The maximum yearly contribution to an individual's IRAs is currently $6,000 ($7,000 for those 50 years or older), or 100% of earned income, whichever is less. (monex.com)
- The IRS also allows American Eagle coins, even though they do not meet gold's 99.5% purity standard. (forbes.com)
- To qualify as IRA allowable precious metals and be accepted by STRATA, the following minimum fineness requirements must be met: Gold must be 99.5% pure, silver must be 99.9% pure, and platinum and palladium must both be 99.95% pure. (stratatrust.com)
- SEP-IRA”Simplified employee pension” For self-employed people like independent contractors, freelancers, and small-business ownersSame tax rules as traditional IRASEP IRA contributions in 2022 are limited to 25% of compensation or $66,000, whichever is less4. (sltrib.com)
External Links
wsj.com
takemetothesite.com
investopedia.com
regalassets.com
How To
How to open a Precious Metal IRA
Precious metals are one of the most sought-after investment vehicles today. They offer investors higher returns than traditional investments, such as bonds and stocks. This is why they are so popular. However, you need to be careful when investing in precious materials. These are the first things you need to know if you're looking to open a precious metal IRA.
There are two types of precious metal accounts. They are paper gold and silver certificates (GSCs) and physical precious metals accounts. Each type of account has its own advantages and disadvantages. GSCs, on the other hand, are more accessible and can be traded. Continue reading to learn more about each of these options.
Physical precious Metals accounts consist of bullion, bullion, and bars. Although diversification benefits are great, this option has drawbacks. You will need to pay a lot of money for precious metals, whether you are buying, selling, or storing them. Their large size makes it difficult to transport them between locations.
On the other hand, paper gold and silver certificates are relatively inexpensive. They can also be traded online and are easily accessible. This makes them ideal for people who don't want to invest in precious physical metals. But, they're not as well-diversified as physical counterparts. These assets are also supported by government agencies, such as the U.S. Mint. Inflation rates could cause their value to drop.
If you open a precious metal IRA, choose the right account for your financial situation. Before you make that decision, here are some things to consider:
- Your risk tolerance level
- Your preferred asset-allocation strategy
- How much time are you willing to put in?
- No matter if you intend to use the funds in short-term trading.
- Which tax treatment would you prefer?
- Which precious metals would you prefer to invest in
- How liquid do your portfolio need to be
- Your retirement age
- Where to store precious metals
- Your income level
- Current savings rate
- Your future goals
- Your net worth
- Consider any special circumstances that could affect your decision
- Your overall financial position
- Preference between paper and physical assets
- You are willing to take chances
- Your ability and willingness to accept losses
- Your budget constraints
- You desire to be financially independent
- Your investment experience
- Precious metals are familiar to you
- Your knowledge of precious Metals
- Your confidence with the economy
- Your personal preferences
After you've decided on the best type of precious metal IRA for you, you can start to open an accounts with a reputable broker. These companies can also be found online, through word-of mouth or referrals.
After you have opened your precious metal IRA account, you will need to decide how much money to put in it. You should note that every precious metal IRA account has a different minimum deposit amount. Some accounts require $100 while others allow you to invest up $50,000.
As stated above, the amount of money invested in your precious metal IRA is completely up to you. You should choose a higher initial deposit if you want to build wealth over time. On the other hand, if you're planning on investing smaller sums of money every month, a lower initial deposit might work better for you.
As far as the actual precious metals used in your IRA go, you can purchase any number of different types of investments. These are the most commonly used:
- Gold – Bullion bars, rounds, and coins
- Silver – Rounds, and coins
- Platinum – Coins
- Palladium – Round and bar forms
- Mercury – Round or bar forms
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By: Sergio Goschenko
Title: The Future of Tether and Centralized Stablecoins: Arthur Hayes' Perspective
Sourced From: news.bitcoin.com/maelstrom-cio-arthur-hayes-alerts-big-banks-will-eventually-cannibalize-tethers-business-model/
Published Date: Sun, 31 Dec 2023 22:30:23 +0000
