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Report on Stablecoins [pdf]

home.treasury.gov

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Re: Report on Stablecoins [pdf]

#31

Post by ajross »

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…

> Overall I get the sense that the government is still people/organization centric and cannot wrap its head around a future where reality is determined by computer code and people are bit players in the script.

Conversely, people in government tend to view crypto folks as senselessly computer-centric and unable to view macroeconomics as the result of human interaction.

There is no such thing as value without exchange. That's a definitional thing. Coins themselves are just numbers.

Re: Report on Stablecoins [pdf]

#32

Post by eightysixfour »

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…

I think they approached it from two directions:

One is that they broke down stablecoins into the following activities:

* Governance

* Management of Reserve Assets

* Custody of Reserve Assets

* Settlement

* Distribution

Just because one, more, or all of those functions are managed by smart contracts does not mean that the others cannot be regulated. Regulation may be the requirement to have regular contract audits for example and, in the case of Dai, the Maker Foundation would be responsible for adhering to those regulations.

Second, I don't think the writers of this paper perceive nearly as large of a risk from algorithmic stablecoins as they do institutions which claim to maintain asset backing in the normal financial system. The former have the transparency of the chain as a backing, and that transparency makes the currency peg safer. The latter have no transparency and regularly seek to obscure, which makes them extremely dangerous as they grow in scope.

DAI has a market cap of ~$6.5b and the transactions happen on chain. USDT has a market cap of ~$70.3b and has 0 transparency. It is clear where regulation should be focused.

Re: Report on Stablecoins [pdf]

#33

Post by vineyardmike »

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…

> there is no central issuing authority; Dai is minted in exchange for Ethereum (and other cryptocurrencies), not fiat currencies

Its not fiat-stable, which is probably their focus. fiat-stable coins are basically crypto bank notes:

https://en.wikipedia.org/wiki/Banknote

Also,

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

Corporations are "things" in a legal sense - but they're still managed by people, created by people and owned by people. DEFI contracts and orgs are still made by people, and sometimes also managed by people. You can probably be held liable and tied to your misbehaving contract.

Re: Report on Stablecoins [pdf]

#35

Post by paxys »

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…

It is the government's job to translate abstract concepts to be people centric, simply because the world itself is people centric. Digital bits have no power unless they is a shared recognition of that power, same as a written contract, a book of laws, an election or anything else.

Re: Report on Stablecoins [pdf]

#36

Post by erikerikson »

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.

As opposed to a reality determined by physics? Perhaps you're referencing AI overlords? I suggest that you may not understand the purpose of states. Even algorithms are the expressions of people.

Perhaps you can explain what you meant in a way that I'll more easily understand?

Re: Report on Stablecoins [pdf]

#37

Post by nostrademons »

williamtrask wrote: post #26
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.

I'm value-neutral in this comment thread, I'm just describing a.) how things are and b.) how the authors of this report are making assumptions about how things are. I can see plusses and minuses for both people-centric and code-centric approaches.

I get that it's pretty natural that people would consider it a bad thing for people to hand over power to computer code. It makes perfect sense if you consider yourself not as a person but as a collection of electrical impulses floating around in your brain, though. Computers are the same thing, they just transmit those electrical impulses millions of times faster.

Re: Report on Stablecoins [pdf]

#38

Post by wegwerfbenutzer »

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…

DAI is not considered an algorithmic stablecoin, but an asset backed stablecoin. Algorithmic stablecoins like FEI do not seem to work as well as asset backed stablecoins.

Re: Report on Stablecoins [pdf]

#39

Post by RC_ITR »

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…

I mean what's the point of that other than to serve the very small number of people who own the resources to edit 'the computer code'?

The internet and computers, despite being very complicated tools, are still just made by humans to serve humans.

I suggest you ask yourself which humans want the outcome you described and why.

Re: Report on Stablecoins [pdf]

#40

Post by vineyardmike »

felixbraun wrote: post #20

Interesting to see Mastercard, Square, Stripe, FIS, Fiserv and Visa all mentioned in "Market Participants". None of those actively today use/settle stablecoins publicly?

> None of those actively today use/settle stablecoins publicly?

No but they settle financial transactions today, and the SEC is basically saying there should be no difference.

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