Binance freezes withdrawals of stablecoin USDC as investors pull $2B

And yet most stable coins have maintained their peg for years now, despite many of them having gone through 2 large bear markets. If 80%-90% down and still pegged doesn't disprove "impossible to do on the downside" I don't know what could.

Clarification: I do think Tether is not fully backed and is likely to depeg some day, but the assertion that it's "impossible to do on the downside" is clearly not true even for Tether. And it's very clearly not impossible to keep a peg if the peg is fully backed, which may be the case for some coins (without naming specifics). DAI, backed by verifiable collateral, has also done extremely well through 2 bear markets.

That is not at all why people need/want USDC. People want stable coins because banks are all too happy refusing/blocking/reversing transactions to/from cryptocurrencies exchanges.

They hypocrisy of both banks and the states on this one is amazing: "it's all a ponzi" / "it's all criminal money" / "only fraustres use cryptocurrencies"

But then...

"Please pay your due taxes made on crypto".

FWIW France, at least, took a less dumb approach than many on the subject: conversions to/from crypto and stablecoins aren't a taxable event. It's only if you manage to cash out (and that's a gigantic "if") to actual EUR that taxes to the state are due. It solves at least the problem where people legally need to pay taxes but concretely cannot get money out of the crypto exchanges.

Sending from, say, Coinbase to a bank for tiny amount is relatively easy. But I'm atm helping someone "cash out" a 7 digits sum in France and it's hard. Extremely hard. It's near impossible actually to get one bank to approve the withdrawal from Coinbase. Saying: "I entered Bitcoin in 2016 and ETH when it was at 50 cents" ain't sufficient. They don't seem to understand that the KYC/AML is done to catch drug and arms dealers, organs traffickers, and pedophiles selling CSAM.

That's why there's KYC/AML right? To catch these guys.

But a 35 years old mom who made bank on crypto? That's no pedophile. No arm dealer. No drug dealer. And yet it's not clear if she'll ever be able to cash out.

That's why people are using USDC. Credit cards withdrawing from your USDC? Bring it on. Coinbase giving x% annual return on your return, please, keep it coming (btw even in France taxes are due on these annual yield). There's a shop here selling high-end second hand watches (you know, the kind of watches worth more used than new) that accepts crypto: maybe a way to get something out of your crypto.

Now I don't know if the short term US treasuries, whose numbers are all published, backing the USDC all actually exist and are really held at BNY Melon. Maybe it's all a scam. Maybe Coinbase shall rug pull too. Maybe BNY Melon shall rug pull.

For all I know, heck, maybe Uncle Sam himself is going to rug pull on the treasuries backing the USDC (I shouldn't give these people ideas but they maybe already fancied the idea anyway: "crypto are only scams, we're defaulting on the US treasuries backing stable coins"... and many idiots would applaude).

But USDC still looks, to me, more legit than USDT / Binance USD / etc.

That's why most people are using USDC: it's the least smelly of them all and the banks do no let people easily sell their crypto for real USD / EUR.

Meanwhile, as I mentioned, the state wants its taxes on crypto gains.

It's the state and the state lovers who want to have their cake and eat it too: they want to prevent people from cashing out their crypto "because pedophiles and criminals" but still want their taxes made on crypto "gains".

That's why people are using stable coins.

If people were actually free to use their money, free to do wire transfer to/from Coinbase at will, there wouldn't be that much need for stable coins.

But people aren't free to use their money as they want.

1. Do not trust any centralized exchange. Hold your own tokens using a secure hardware wallet. Back up your seed phrase securely. This is not really that hard anymore IMO.

2. Let me repeat that, but more emphatically... Centralized exchanges are not to be trusted. They are not "crypto". They are unregulated banks operated by shady characters. Use them as on- and off-ramps from fiat, but get your tokens into a cold wallet ASAP. If you leave your money in them, they _will_ rug-pull you at some point.

3. Crypto token prices are primarily driven by speculation. Do not expect stability. Do not expect a token's price to appreciate just because the project is technically interesting, or solving a real need. Instead, expect prices to fluctuate wildly, mostly in correlation to the same macroeconomic events that impact stocks, with an even higher risk.

4. Not all stablecoins are created equally. Run away from algorithmic stablecoins IMO. Also avoid USDT and any other coins where proof of reserves seem suspicious. I personally prefer USDC. If you _must_ invest in an algo coin, look at DAI, but keep in mind that it is very exposed to USDC as well.

5. USD-pegged stablecoins can all be blacklisted and paused. If they want to do business in dollars, their makers have to accept some degree of US.gov regulation. Do not expect to hold and spend your USDC if the US government wants to stop you.

6. Do your own research, damnit. This is still early days for DeFi and digital assets, and scams are thick on the ground. Do not trust what random internet commentators say, and keep your wits about you.

7. Don't lose hope. While 95% of the economic activity in the space is either scams, fraud, or speculation, the remaining 5% consists of people trying to solve real problems that are not adequately addressed by offline cash and existing payment networks. I know HN loves to point out that crypto is a solution looking for a problem, but the truth is that the current system is not perfect, and crypto brings some much needed transparency and decentralization to the world. Crypto winter is in some ways good for this, as it will disproportionately drive away the scammers and "number go up" crowd, while the real teams will keep building.

Edit, for some specifics of my stack: I use a Ledger Nano X hardware wallet, with Ledger Live for management, Electrum (for Bitcoin), Keplr (for Cosmos ecosystem), and MetaMask (for Ethereum and other Solidity networks). I have a separate Chrome profile that has the latter two extensions installed, and only use it for DeFi crypto things. The only CeFi exchange I use is Coinbase, and I keep my balance there near $0 unless I anticipate a trade within the next 30 days. None of this is financial advice; I'm just a dude on the internet.

(Which is why regulated financial institutions are externally audited and stuff.)