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Report on Stablecoins [pdf]

home.treasury.gov

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Re: Report on Stablecoins [pdf]

#21

Post by ayngg »

frisco wrote: post #6

> To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level. How does this interact with the concept of algorithmic stablecoins? Not every stablecoin is simply backed by deposits.

This is what I wonder, since I thought what most consider stablecoins now (like Tether) are basically steppingstones towards things like Maker/ Dai, which I am unsure how they would fit into this kind of regulation.

Re: Report on Stablecoins [pdf]

#22

Post by cinquemb »

frisco wrote: post #6

> To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level. How does this interact with the concept of algorithmic stablecoins? Not every stablecoin is simply backed by deposits.

> How does this interact with the concept of algorithmic stablecoins? Not every stablecoin is simply backed by deposits.

Relegated to a footnote (just like Jeffery Snider at Alhambra Partners talks a lot of the typical chatter by frbny et al wrt the (euro)dollar system gets relegated to footnotes and nick named the phenomena "footnote dollars") on page 4:

"Stablecoins that are purportedly convertible for an underlying fiat currency are distinct from a smaller subset of stablecoin arrangements that use other means to attempt to stabilize the price of the instrument (sometimes referred to as “synthetic” or “algorithmic” stablecoins) or are convertible for other assets. Because of their more widespread adoption, this discussion focuses on stablecoins that are convertible for fiat currency."

i.e we'll pretend that people cant swap dollar denominated non centralized corporate issued stablecoins for any kind of fiat at the floating rate of the denomination of the stablecoins underlying to the fiat in typical fx markets (also ignoring that higher amount of those other stable coins are being used in defi protocols relative to their supply than the centralized ones).

So of course, those like FEI, FRAX and others will get ignored.

Re: Report on Stablecoins [pdf]

#23

Post by sputknick »

svachalek wrote: post #17
frisco wrote: post #6

> To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level. How does this interact with the concept of algorithmic stablecoins? Not every stablecoin is simply backed by deposits.

I think it would make them illegal. As it probably should, I'm not aware of any that are not an elaborate scam.

Do you have any thoughts on how you would do that? Isn't that as practical as outlawing Bitcoin?

Re: Report on Stablecoins [pdf]

#24

Post by nostrademons »

toomuchtodo wrote: post #16
nostrademons wrote: post #14

Interesting to read this with an eye on the authors' mindset. Their understanding of stablecoins seems largely centered on Tether (and to a lesser extent, BUSD/USDC). A lot of their understanding is incorrect when applied to algorithmic stablecoins like Dai, eg. there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies; the effect of a run on Dai i…

That computer code runs somewhere and every IP address leads to a person eventually.

Except it doesn't. On Ethereum and other blockchains, that computer code runs everywhere, and every IP address is a gossip protocol that may have originated an undetermined number of hops backwards.

Re: Report on Stablecoins [pdf]

#25

Post by [deleted] »

toomuchtodo wrote: post #16
nostrademons wrote: post #14

Interesting to read this with an eye on the authors' mindset. Their understanding of stablecoins seems largely centered on Tether (and to a lesser extent, BUSD/USDC). A lot of their understanding is incorrect when applied to algorithmic stablecoins like Dai, eg. there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies; the effect of a run on Dai i…

That computer code runs somewhere and every IP address leads to a person eventually.

[deleted]

Re: Report on Stablecoins [pdf]

#26

Post by williamtrask »

nostrademons wrote: post #14

Interesting to read this with an eye on the authors' mindset. Their understanding of stablecoins seems largely centered on Tether (and to a lesser extent, BUSD/USDC). A lot of their understanding is incorrect when applied to algorithmic stablecoins like Dai, eg. there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies; the effect of a run on Dai i…

Perhaps I'm oversimplifying your comment, but it seems like a very good thing that the government continues to be people/organization centric and doesn't embrace a future where "reality is determined by computer code and people are a bit players". We should hope our democratic institutions continue to operate this way.

Re: Report on Stablecoins [pdf]

#27

Post by yokem55 »

frisco wrote: post #6

> To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level. How does this interact with the concept of algorithmic stablecoins? Not every stablecoin is simply backed by deposits.

The primary targets here are going to be folks issuing stables backed by real world assets and fiat. Under-collateralized algo-stables will probably be targeted as securities by the SEC, while overcollaterized debt based ones will probably just be ignored for now because of how capital inefficient they are.

Re: Report on Stablecoins [pdf]

#28

Post by MonkeyClub »

nostrademons wrote: post #14

Interesting to read this with an eye on the authors' mindset. Their understanding of stablecoins seems largely centered on Tether (and to a lesser extent, BUSD/USDC). A lot of their understanding is incorrect when applied to algorithmic stablecoins like Dai, eg. there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies; the effect of a run on Dai i…

> a future where reality is determined by computer code and people are bit players in the script.

When you put it like that, it does sound a bit creepy.

Re: Report on Stablecoins [pdf]

#29

Post by colonelxc »

nostrademons wrote: post #14

Interesting to read this with an eye on the authors' mindset. Their understanding of stablecoins seems largely centered on Tether (and to a lesser extent, BUSD/USDC). A lot of their understanding is incorrect when applied to algorithmic stablecoins like Dai, eg. there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies; the effect of a run on Dai i…

From the footnotes:

"""Stablecoins that are purportedly convertible for an underlying fiat currency are distinct from a smaller subset of stablecoin arrangements that use other means to attempt to stabilize the price of the instrument (sometimes referred to as “synthetic” or “algorithmic” stablecoins) or are convertible for other assets. Because of their more widespread adoption, this discussion focuses on stablecoins that are convertible for fiat currency."""

Re: Report on Stablecoins [pdf]

#30

Post by kim0 »

For a stable coin to actually work, it needs to be private and algorithmic. The only such crypto I know of, is Haven protocol. This is based on a fork of Monero the largest fungible crypto network, with a system of private synthetic assets on top. Things like synthetic USD, CHF, GBP, also gold and silver...etc. If you find this interesting, read more at https://havenprotocol.org/knowledge/
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