Regulators should treat stablecoins like banks • Hacker News Board

Re: Regulators should treat stablecoins like banks

#101

Post by njade » Wed, Aug 11, 2021, 4:13 PM UTC

Marazan wrote: post #77

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

Isn't DAI backed by USDC and Tether in part?

You are correct. Last time I checked, more than 50% backed by USDC. Makes no sense as the whole point of censorship resistance is defeated.

Re: Regulators should treat stablecoins like banks

#102

Post by hanniabu » Wed, Aug 11, 2021, 4:13 PM UTC

Marazan wrote: post #77

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

Isn't DAI backed by USDC and Tether in part?

In part yes, along with many other assets. They've stated they'd like to lesson the use of stables as collateral and are still brainstorming solutions. The ability to add real estate as collateral should be interesting.

Re: Regulators should treat stablecoins like banks

#103

Post by wutbrodo » Wed, Aug 11, 2021, 4:19 PM UTC

lalaland1125 wrote: post #76

gunshai wrote: post #71

>Tether, has issued $62bn-worth of tokens which it says are redeemable for a dollar apiece. But of the assets backing the tokens in March only about 5% were cash or Treasury bills Cash & Cash Equivalents & Other Short-Term Deposits & Commercial Paper: Commercial Paper and Certificates of Deposit2 $30,807,654,349 Cash & Bank Deposits3 $6,282,756,692 Reverse Repo Notes4 $1,000,662,458 Treasury Bills5 $15,279,528,705 Su…

Note the terminology there: Cash or treasury bills. That $31 billion in commercial paper might not be actually liquid. The only thing that counts are the $6 billion in cash and $15 billion in treasury bills. There are a number of other issues as well. Which bank is holding that cash? Is it actually a real bank?

> The only thing that counts are the $6 million in cash and $15 million in treasury bills.

Those figures are all in billions. 21B/62B is still much much higher than the claimed 5%

Re: Regulators should treat stablecoins like banks

#104

Post by mdorazio » Wed, Aug 11, 2021, 4:21 PM UTC

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

Devil's advocate: 2008 was bad because of regulatory failures (specifically deregulation). Lack of transparency was only part of the problem. So if you want to avoid 2008 in cryptocurrency, the answer would be more regulation, not less.

Re: Regulators should treat stablecoins like banks

#105

Post by capableweb » Wed, Aug 11, 2021, 4:24 PM UTC

njade wrote: post #101

Marazan wrote: post #77

Earlier quoted context omitted.

Isn't DAI backed by USDC and Tether in part?

You are correct. Last time I checked, more than 50% backed by USDC. Makes no sense as the whole point of censorship resistance is defeated.

Where/how did you check this? >50% of USDC sounds unreasonably high.

Re: Regulators should treat stablecoins like banks

#106

Post by saryant » Wed, Aug 11, 2021, 4:29 PM UTC

csomar wrote: post #89

arcticbull wrote: post #75

Earlier quoted context omitted.

It simply is not. Retail banking customers are able to withdraw 100% of their balances and have been for almost 100 years thanks for the existence of the FDIC. Nobody has lost a single dollar to a bank run since the FDIC was instituted after the Great Depression. Even in 2008 when WaMu went under. Not one dollar. All retail banks in the United States are backstopped by the FDIC and the FDIC is backstopped by the fede…

FDIC guarantees up to $250k and also kicks in after the bank goes under. I'm guessing it should take some time (a few years?) until the FDIC reimburses the people who lost money.

The FDIC moves the accounts to a solvent bank. Usually it takes a day or so and then all customer funds are available.

Re: Regulators should treat stablecoins like banks

#107

Post by colordrops » Wed, Aug 11, 2021, 4:30 PM UTC

emn13 wrote: post #66

colordrops wrote: post #46

Earlier quoted context omitted.

It's pretty clear that the argument is that the government is hypocritical and unequal in treatment of establishment players vs cryptocurrency.

But that argument (not yours, I know) is really weak: If we have problems with banks behaving in ways that are harmful to others in society, and problems with emergent phenomena that banks don't care to avoid because most of the losses from any collapses won't be on their balance sheets... why would we exactly want to have a bank-equivalent organization that isn't under at least as stringent regulations as the banks?…

Because without proper regulation of establishment players, the alternative, which is competition from upstarts, is the only way to keep them in check, so stunting them only serves the establishment.

Re: Regulators should treat stablecoins like banks

#108

Post by grenoire » Wed, Aug 11, 2021, 4:35 PM UTC

mdorazio wrote: post #104

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

Devil's advocate: 2008 was bad because of regulatory failures (specifically deregulation). Lack of transparency was only part of the problem. So if you want to avoid 2008 in cryptocurrency, the answer would be more regulation, not less.

Right, OP, CDOs were also very innovative when they first got rolled out!

Re: Regulators should treat stablecoins like banks

#109

Post by cwkoss » Wed, Aug 11, 2021, 4:36 PM UTC

mdorazio wrote: post #104

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

Devil's advocate: 2008 was bad because of regulatory failures (specifically deregulation). Lack of transparency was only part of the problem. So if you want to avoid 2008 in cryptocurrency, the answer would be more regulation, not less.

Was 2008 an issue of lack of regulation or lack of enforcement?

I thought it was more about "too big to fail" attitudes preventing enforcement from being fairly applied to the largest participants.

Re: Regulators should treat stablecoins like banks

#110

Post by beiller » Wed, Aug 11, 2021, 4:36 PM UTC

mdorazio wrote: post #104

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

Devil's advocate: 2008 was bad because of regulatory failures (specifically deregulation). Lack of transparency was only part of the problem. So if you want to avoid 2008 in cryptocurrency, the answer would be more regulation, not less.

Hot take: 2008 was caused by over regulation, resulting in broken incentives for rating agencies and preventing any real bad outcomes from them just rating everything as great.