US defense bill may be problematic for USDC and stablecoins: Analysts

Circles USD Coin (USDC) and other stablecoins could possibly deal with a compliance nightmare if a new national defense bill that passed in the United States Senate makes it all the way.In a July 31 investment note seen by Cointelegraph, Berenberg expert Mark Palmer described that a recent modification to the 2024 National Defense Authorization Act (NDAA) might possibly present new Know Your Customerand Anti-Money Laundering measures that stablecoin issuers will be not able to abide by.” The change would require the U.S. Treasury Secretary to establish assessment standards for crypto properties that would help regulators to make sure compliance with cash laundering and sanctions laws,” composed Palmer, adding:” We believe this change, if it remains in the last version of the NDAA, might be bothersome.” Palmer described that the identities of stablecoin holders can only be figured out when the possession is issued and redeemed. ” Such an outcome would likely cause more deterioration in USDCs market cap,” he warned.In recent months, USDCs market cap has actually been on the decline, falling $17.5 billion– roughly 39%– since March 5. Knock on results for CoinbaseWhile this might be a significant setback for Circle, it could also prove troublesome for Coinbase, said Palmer, keeping in mind the exchange “obtained 27% of its net profits from interest income on USDC” in the very first quarter of this year. Given that the beginning of the year, Coinbase shares have dramatically surpassed the standard equities market, surging 170% from a cost of $33 on Jan. 1 to $98.61 at the time of publication. Coinbase stock year-to-date rate chart. Source: TradingViewAccording to Berenberg, there were two primary reasons for this outperformance. The very first was the beneficial judgment bied far to Ripple Labs and the second was the flurry of filings for spot Bitcoin ETFs from major organizations such as BlackRock and Fidelity. Related: Coinbase rejects SEC told it to delist everything but BitcoinThe analysts noted that these two drivers of bullish activity for Coinbase stand on unsteady ground, as recent comments from SEC Chair Gary Gensler have “put cold water on the main sources of the rally.” In a July 28 interview with Bloomberg, Gensler said crypto investors should not assume that cryptocurrencies do not fall under the purview of the SEC. Additionally, the analysts think that Genslers lukewarm action to a concern worrying Bitcoin ETF applications suggested that he might oppose their approvals. Overall, Berenberg kept its “hold” score for Coinbase stock, keeping in mind that while there is still “significant unpredictability” for Coinbase in the future, its big balance of money and equivalents provides “cushion and versatility” in ensuring the monetary longevity of the company. Hall of Flame: Wolf Of All Streets stresses over a world where Bitcoin hits $1M.