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Report on Stablecoins [pdf]

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Re: Report on Stablecoins [pdf]

#301

From the "Recommendations" section: > Legislation should address the risks outlined in this report by establishing an appropriate federal prudential framework for payment stablecoin arrangements.29 In particular, with respect to stablecoin issuers, legislation should provide for supervision on a consolidated basis; prudential standards; and, potentially, access to appropriate components of the federal safety net. To…

Exactly. Regulation can only be long-term good for the space, which is sorely lacking in legitimacy.

Re: Report on Stablecoins [pdf]

#302
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…

There is a very important aspect of opposite pressure.

If DAI price ever loses peg and goes to eg 0.90 anyone with open positions immediately starts buying a shitton of them and closing their position, because they just got a 10% discount on paying off their debt, sending the peg back.

If the price ever goes to 1.10, anyone with free capital around immediately starts minting new coins and floods the market with them, because they just got an instant 10% bump on the size of minted capital, sending the peg back.

Re: Report on Stablecoins [pdf]

#303
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.

Hmmm, I'm aware of some that aren't scams. MakerDAO and OlympusDAO aren't scams. They might fail utterly, but lots of things that aren't scams are just good faith failures.

Re: Report on Stablecoins [pdf]

#304
post #284

Earlier quoted context omitted.

For the vast majority of use cases, the answer is no, though I'm certain someone will dig up an outlier use case or vaporware implementation of blockchain though.

Would it enable any new use cases?

Not sure but it's definitely enabled a lot of new scams.

Re: Report on Stablecoins [pdf]

#305
post #82

Earlier quoted context omitted.

They can make it illegal to buy and sell these stablecoins. The exchanges where the stablecoins are bought and sold would have to delist these coins or face criminal action.

someone has never heard of uniswap

This is probably very literally true. The vast majority of debate on cryptocurrencies is solely informed by bitcoin.

Re: Report on Stablecoins [pdf]

#306

Earlier quoted context omitted.

> Yes, the USD is backed by the most absurd proof of violence the world has ever seen. No organization of human civilization has ever been able to summon as much death and despair as the United States. That has nothing to do with the currency. I'm not saying its good, or bad, I'm saying you've stapled together two unrelated concepts. The US army is a small fraction of GDP and exists to support the defense of the US a…

Without the aircraft carriers, any mildly malevolent nation could print dollars. Some already try. There's no question that a large military is necessary to preserve USD as a world currency. You can't ignore this cost. Maybe the US would cut military spending, maybe not, but as long as it wants USD to be the coin of the realm, there's no choice in the matter.

This is intuitive but wrong, in three ways.

(1) Domestically, the US Army does not enforce law or make sure the dollar is the "coin of the realm." That would violate Posse Comitatus act. US domestic law enforcement enforces laws, domestically - including legal tender laws. I agree you can apportion some of the strength of the US dollar to its legal system, which makes sense, as the currency is an emergent property of the state. However, shifting to BTC instead of USD will simply reallocate the expenditure not reduce or remove.

Counterfeiting is an issue broadly. A small one. Of course, the expense of a Bitcoin transaction (literally 60 days of power for an average US household and 1 iPad of e-waste) far, far, far outweighs the expenditure of the secret service whose job it is to act on counterfeiting. AML and KYC rules, and a counterfeit detection pen will prevent this fake money from turning into a digital representation.

The army isn't generally called in to stop counterfeiting because nation-states have basically zero incentive to counterfeit on a large scale. What good are a few fake paper bills, when the Treasury would just cut you off from the entire world financial system?

(2) How do you explain that countries that do not have armies at all, like Iceland, are able to issue their own fiat currency with value?

(3) If you cannot draw a direct line between switching the currency and reduction in military spending, does it really make sense to apportion value that way?

Re: Report on Stablecoins [pdf]

#307
post #143

From a Coinbase exec: "Tether is a ticking time bomb. Whenever it goes off, it'll be a 70-80% market correction for 2-3 years" Crypto continues to help nobody and achieve nothing in the real world. This administration has been criminally slow in shutting it down, lobby is strong.

No there won’t be a big long term correction from Tether because there are dozens of other stable coins now for people to temporarily sell into. There’s also the ability to short crypto and buy puts on crypto. All of that provides ways for speculators, investors, middle class savers, and early technology adopters to stay in the game. You’re like a doomsday predictor that will never see a doomsday happen. No real valu…

The Quito stock exchange consists of over 300 companies in farming, forestry, power generation, medical care etc. They have physical and human capital and earn profits from their paying customers, whether or not people want to buy stocks which offer them a share of this profit

The AAVE platform consists of individuals lending recently printed tokens to each other to buy other recently printed tokens in what is essentially a zero sum game with no connection to the real world unless they can convince outsiders to pay even more money for some of the tokens.

The fact the latter is notionally valued at higher than the former pretty much underlines the OP's point about the lack of "real value" underpinning the whole thing...

Re: Report on Stablecoins [pdf]

#309
post #143

From a Coinbase exec: "Tether is a ticking time bomb. Whenever it goes off, it'll be a 70-80% market correction for 2-3 years" Crypto continues to help nobody and achieve nothing in the real world. This administration has been criminally slow in shutting it down, lobby is strong.

> Crypto continues to help nobody and achieve nothing in the real world

It's kind of surprising how little progress has been made.

It is absolutely possible to use privacy-respecting low-fee tokens to purchase ebooks, purchase "no advertisement" article reads, or subscribe to periodicals.

Even something like Taler is better than Visa and Mastercard. I would love to know why lwn.net, ars, or the register don't try. I would absolutely pay $0.25-$2.00 per read for the ~50 articles I read per month on these websites.

Micropayments for tech readers seems like a good place to start. Tech readers use ad blockers, but are also willing to try new tools with janky UX.

Re: Report on Stablecoins [pdf]

#310
The elephant in the room is that the US Congress has insufficient power to regulate stablecoins effectively, any more than they can effectively ban the consumption of marijuana in the USA.

This is a lot of handwaving and sure they can make Coinbase stop supporting USDT but that's not going to do it.

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