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Report on Stablecoins [pdf]

home.treasury.gov

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Re: Report on Stablecoins [pdf]

#51

Post by svachalek »

sputknick wrote: post #23
svachalek wrote: post #17

Earlier quoted context omitted.

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?

I'm not the government or even a lawyer. But I'd imagine they'd block companies from trading Bitcoins for dollars or mining Bitcoin. Turn off all the ETFs and options trading. Say Tesla and MicroStrategy can't hold it in their treasury. I doubt they can make it disappear but that would certainly put a dent in US adoption.

Re: Report on Stablecoins [pdf]

#52

Post by [deleted] »

Aaronstotle wrote: post #43
robmerki wrote: post #12

Tether and other pose a critical systemic risk to all cryptocurrency. Anything to increase trust/transparency with stablecoins is a big with for crypto.

Tether absolutely poses a large risk to crypto. If companies do issue stablecoins, they should have links to third-party attestations that verify proof of reserves like Circle (USDC) does. Tether could end all of their "FUD" if they ever published such a report. Circle's reporting: https://www.circle.com/en/usdc#transparency (edited to change audits --> attestations)

[deleted]

Re: Report on Stablecoins [pdf]

#53

Post by DennisP »

vineyardmike wrote: post #33
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 -…

The 9th Circuit ruled that source code is protected under the First Amendment in the Bernstein case, which legalized the export of cryptography. If you just publish the contract and don't have any ongoing administration, I would think that gives you a pretty strong legal defense.

Re: Report on Stablecoins [pdf]

#54

Post by panic »

nostrademons wrote: post #37
williamtrask wrote: post #26

Earlier quoted context omitted.

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…

Why are you so committed to erasing the difference between humans and computers in order to place humans below computers?

Re: Report on Stablecoins [pdf]

#55

Post by deafcalculus »

Animats wrote: post #47

This is good. The backing of stablecoins is a very real issue. As the Treasury points out, there's a very real possibility of a run. Two stablecoins have crashed so far, SafeDollar SDO, and $TITAN. They went all the way to zero. Can Tether survive a net outflow? Probably not. They don't have the collateral. Dai is really a derivative of Etherium. Dai is backed by Etherium at 150%. So value in Dai is at risk if the pr…

You mean what happens when economy does well enough that it starts overheating which forces an exit from the liquidity trap and turns real interest rates positive? I guess we'll find out soon.

Re: Report on Stablecoins [pdf]

#56

Post by nightpool »

nostrademons wrote: post #37
williamtrask wrote: post #26

Earlier quoted context omitted.

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…

Computers are a tool built to improve the lives of people. It does not make sense to consider them an end in-and-of-themselves.

Re: Report on Stablecoins [pdf]

#57

Post by bradly »

Animats wrote: post #47

This is good. The backing of stablecoins is a very real issue. As the Treasury points out, there's a very real possibility of a run. Two stablecoins have crashed so far, SafeDollar SDO, and $TITAN. They went all the way to zero. Can Tether survive a net outflow? Probably not. They don't have the collateral. Dai is really a derivative of Etherium. Dai is backed by Etherium at 150%. So value in Dai is at risk if the pr…

Is Dai similar to Gemini's GUSD stable coin? It too is backed by Etherium. I think Gemini is paying 8 or 9% APR for holding. Where is that money coming from? Are they loaning out for a higher rate than that?

Re: Report on Stablecoins [pdf]

#58

Post by the_optimist »

pjc50 wrote: post #9
vineyardmike wrote: post #3

> 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. > To address concerns about payment system risk, in addition to the requirements for stablecoin issuers, legislation should require custodi…

> Stable Coins will be bank notes What do you call an institution that takes deposits and lends them out, such as by buying ""commercial paper"" that Tether repeatedly talks about? A bank. (Or possibly a money market fund)

You call it a 0% interest money market fund. You do not call it a bank. A bank does something entirely different: create 'bank loans'. A non-bank does not have the ability to create bank loans.

Re: Report on Stablecoins [pdf]

#59

Post by __MatrixMan__ »

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.

I read your comment and then started reading about at MakerDAO's governance model. It doesn't jump out as a scam to me, just a clever bit of game theory.

What am I missing?

Re: Report on Stablecoins [pdf]

#60

Post by Zamicol »

I've previously named Tether "rat poison" and I hope they are regulated/banned. Tether is an easy problem to "solve", and imho, should fall under existing regulation.

However, I would love to see an explanation on how the treasury recommendation of regulating stablecoins as banks should apply to (what I see as beneficial) "algorithmic"/DAO stablecoins.

The treasury's continued omissions, ignoring the real elephant in the room Maker, will only confuse regulators instead of addressing the "hard problem" of Maker.

There are gorging differences between a centralized and "trusted" service like Tether and the algorithmic, automatic, decentralized, and trustless Maker.

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