Gwyneth Paltrow linked cryptocurrency Miner TeraWulf crashes on debut
Shares of TeraWulf Inc., the cryptocurrency miner that recently touted the backing of celebrity investors including Gwyneth Paltrow, slumped as much as 40% during the company’s public trading debut on the Nasdaq stock market.
The firm, which strives to provide more environmentally-friendly processing of crypto transactions, went public after completing a merger with imaging-technology company Ikonics. The stock dropped as low as $20.02 after being listed at $25.
The slump comes amid a broader drop in the shares of other cryptocurrency miners, which use massive amounts of computing power while competing to win freshly minted tokens for processing transactions. The quantity of electricity used is equal to the amounts by some nations.
Crypto mining stocks have been “hard hit” following the sharp selloff in Bitcoin prices and concern of falling profitability, said Chris Brendler, an analyst covering the industry at DA Davidson & Co., with the so-called hash rate or the speed of mining back to highs unseen since China took their rigs offline.
“Profitability has fallen dramatically. The price of Bitcoin going down and global hash rate going up means bad news for miners,” Brendler said.
Stablecoin Issuers Should Choose Rule Model, Key Lawmaker Says
(Bloomberg) Pat Toomey, the top Republican on the Senate Banking Committee, said cryptocurrency stablecoin issuers should be able to choose from three different regulatory models including operating under a bank charter.
The Pennsylvania Republican outlined a blueprint for future legislation in remarks at a hearing Tuesday, where he also said stablecoin issuers may be able to register as a money transmitter, which would subject them to state rules. Congress and federal agencies have been grappling with how best to regulate the crypto industry, including stablecoins, where the value of tokens is pegged to another asset, such as the dollar, as a way to reduce volatility.
Stablecoin Risk Spurs U.S. Agencies to Seek Power for Crackdown
It’s unlikely any legislation proposed by Republicans will gain much traction anytime soon with the Senate evenly divided. While some Democrats have highlighted risks crypto poses, Republicans often tout the benefits of the new technologies.
In his “guiding principles,” Toomey said stablecoin issuers would choose to either operate under a conventional bank charter, acquire a special-purpose banking charter designed in the future stablecoin legislation, or register as a money transmitter at the state level and a money services business at the federal level. He also said non-interest bearing stablecoins shouldn’t necessarily be regulated like securities.
“The legislation should address consumer protection and financial system risks, but it should also be designed to promote innovation in the rapidly evolving global digital economy,” Toomey said in a statement.
Last month, the President’s Working Group on Financial Markets published a report raising concern about risks tokens pose to the U.S. economy. The report urges Congress to pass legislation that requires stablecoin issuers to become banks with insured deposits, capital and liquidity requirements and Federal Reserve supervision. In fact, companies should be prohibited from offering payment stablecoins unless they are insured depository institutions, the report recommended.