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This Billionaire Thinks US Stock Market Could Tank 25 Percent if Warren Wins 2020 Election

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  • Alex Dovbnya
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    The US stock market could experience a massive crash if Elizabeth Warren wins the White House

This Billionaire Thinks US Stock Market Could Tank 25 Percent if Warren Wins 2020 Election
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Wall Street is getting nervous about Elizabeth Warren's surging poll numbers.

Billionaire Paul Tudor has joined the list of financial big-wigs who predict a stock market crash if the Massachusetts senator wins the presidency.

Tudor is certain that the S&P 500 index, which recently reached a new all-time high, could plunge by an eye-popping 25 percent if Warren gets past the much-coveted 270 electoral votes, Market Watch reports. 

Meanwhile, another billionaire hedge fund manager Steve Cohen believes that the fallout could start happening even if she wins the Democratic party's nomination, predicting double-digit losses for stock market investors.       

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Warren is known as a hard-liner when it comes to the super-rich. She's had spats with JPMorgan CEO Jamie Dimon and Facebook boss Mark Zuckerberg (to name a few).

Her proposed "wealth tax" would impose an annual two percent levy on households whose net worth exceeds $50 mln (those who are worth more than $1 bln have to shell out three percent). The lawmaker believes that this initiative would help the government fund different programs in the realm of education, medical care, and environmental protection. 

Warren's crackdown on the one percent is perceived as quite extreme even within her own party. During his recent appearance on CNBC's "Squawk Box," Democrat Ron Baron said that her wealth-tax was "pretty nuts." 

"Warren says if you're successful because this country has allowed you to be successful ... then you shouldn't be as successful as you are," said Baron. 

However, it might be too far-fetched to paint Warren as a Marxist insurgent. As a former Republican, she described herself as a capitalist "to her bones" unlike her Democratic rival Bernie Sanders who doesn't shy away from democratic socialism.

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About the author

Alex Dovbnya (aka AlexMorris) is a cryptocurrency expert, trader and journalist with an extensive experience of covering everything related to the burgeoning industry — from price analysis to Blockchain disruption. Alex authored more than 1,000 stories for U.Today, CryptoComes and other fintech media outlets. He’s particularly interested in regulatory trends around the globe that are shaping the future of digital assets.

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Federal Reserve System: Stablecoins Pose Potential Risks to Financial Stability

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  • Vladislav Sopov
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    According to its Financial Stability Report of November 2019, the Board of Governors has warned about the dangers of stablecoins.

Federal Reserve System: Stablecoins Pose Potential Risks to Financial Stability
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Contents

The Board of Governors of the U.S. Federal Reserve System have issued their monthly Financial Stability Report. This special report is dedicated to the profits and risks of "global stablecoins".

Stablecoins: Global System with So Many "Ifs"

First, the Federal Reserve admits to the numerous advantages that stablecoins present as a concept. It has been highlighed that stablecoins are "faster, cheaper, and more inclusive payments could complement existing payment systems". This is in comparison to cases where traditional financial institutions are sophisticated and poorly accessible. Stablecoins can also be managed to eliminate the volatility of cryptocurrencies, which is one of the borders for them to be utilized as the medium for exchange.

Therefore, the "global stablecoin initiatives" like Facebook's Libra can rapidly achieve cross-border adoption. However, the major threat for stablecoins is apparent - the "inability to convert in national currency". The loss of confidence in "pegging" the stablecoin to traditional assets can lead to a run, in which several holders will attempt to liquidate their stablecoins at the same time.

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This dramatic scenario may be caused by "poor design and governance", and can result in severe consequences for international economic activity, asset prices, and financial stability.

Transparency First

The Federal Reserve also outlined in its report that in many cases, stablecoins can be utilized for money laundering, terrorist financing, and other financial crimes. Therefore, the Federal Reserve would require operators of such systems to conduct their Due Diligence, as well as Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures to avoid any abuse. Moreover, the problems of disclosure policy and protecting investor data should be of paramount importance for stablecoin issuers:

Disclosures should clearly detail consumer and investor rights and protections, including whether the holder of the stablecoin has any rights to the underlying asset. Issuers should be transparent on how the stablecoin is tied to the underlying asset, has been said in the Report.

Last but not least, the report highlighted that the Federal Reserve, together with the Group of Seven, will closely monitor stablecoin developments as well as all the risks associated with it.

Have anyone ever invested in stablecoins? Do you prefer to use it, or to pay extra fees for fiat gateways? Tell us your story on Twitter!

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About the author

 Blockchain Analyst & Writer with scientific background. 5+ years in IT-analytics, 2+ years in blockhain. Worked in independent analysis (Crypto Briefing) as well as in start-ups (Swap.online, Monoreto, Attic Lab etc.)

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