Tesla CEO Elon Musk announced on Friday that Tesla merchandise can now be purchased with the cryptocurrency Dogecoin — causing the price of the digital coin to soar.
Musk’s five-word tweet — “Tesla merch buyable with Dogecoin” — earned nearly 300,000 likes and drove the currency to surge by more than 20% before shedding some of its gains. At the time of this article’s publication, the price of Dogecoin rests at roughly $0.19.
Tesla merch buyable with Dogecoin
— Elon Musk (@elonmusk) January 14, 2022
Indeed, Tesla’s merchandise store features several items available for purchase via Dogecoin — including a 200-Doge Cybertruck trucker hat, a 205-Doge Cybertruck beanie, and an 835-Doge “Giga Texas Belt Buckle.”
Dogecoin — originally based on an internet meme — surged over 1,500% last February, attaining a total valuation exceeding $10 billion. Musk first tweeted about the satirical currency on February 4, proclaiming that “Dogecoin is the people’s crypto.” He was soon followed by celebrities such as rapper Snoop Dogg, who tweeted an image of “Snoop Doge.”
— Snoop Dogg (@SnoopDogg) February 6, 2021
Musk and his mother also spoke about Dogecoin during an appearance on “Saturday Night Live” in May. “I’m excited for my mother’s day gift. I just hope it’s not dogecoin,” Musk’s mother said. “It is,” Musk responded. “It sure is.”
A few months later, Sen. Elizabeth Warren (D-MA) asked Treasury Secretary Janet Yellen to consider new regulations on cryptocurrencies. Writing to Yellen, who is also chair of the Financial Stability Oversight Council, Warren said that the rising popularity of cryptocurrencies — which are not controlled by any central bank or other monetary authority — demands federal attention.
Warren’s letter read:
I have become increasingly concerned about the dangers cryptocurrencies pose to investors, consumers, and the environment in the absence of sufficient regulation in the United States. However, as the demand for cryptocurrencies continues to grow and these assets become more embedded in our financial system, the Council must determine whether these trends raise concerns beyond investor and consumer protection and extend to broader systemic vulnerabilities that could threaten financial stability.
Warren noted that 27% of hedge funds have cryptocurrency holdings, while banks’ holdings of digital assets create “liquidity, credit, market, and operational risks.” The letter continued:
These examples demonstrate the extent to which cryptocurrencies currently touch or can ripple through nearly every corner of the financial system. As such, it is essential that the policy response to the risks posed by these assets is coordinated and holistic, rather than fragmented amongst individual financial agencies…
FSOC should review this matter and determine whether it is appropriate to utilize its statutory authority to contain the systemic risks posed by the growing cryptocurrency market. The longer that the United States waits to adapt the proper regulatory regime for these assets, the more likely they will become so intertwined in our financial system that there could be potentially serious consequences if this market comes under stress.
More recently, El Salvador — which made Bitcoin one of its official currencies last year — announced plans to build the world’s first “Bitcoin City” featuring residential and commercial areas, restaurants, entertainment venues, and an airport, funded initially by Bitcoin-backed bonds.
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