Square’s federal comment letter regarding FinCEN’s proposed rulemaking
1–10 of 17 posts
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#2One way to look at blockchain technology (let's specifically look at Ethereum) is that it's an open source platform for value transfer. It's an even stronger claim than that - it's not like Stripe open sourcing all their code but still running all the servers. Ethereum is an open source platform that is totally permissionless, decentralized, and everyone can join it. In this way, it is similar to the internet itself.
What a major US Federal Regulator just announced is that all banks can use blockchains (like Ethereum) to move value, just like they use Swift or ACH https://www.coindesk.com/occ-banks-stablecoin-payments
As smaller companies now have basically no barrier to entry in the bare metal rails of payments, finally serious innovation in this space can happen outside of heavily financed / licensed / oligopolistic / connected entities. Banks can then voluntarily choose to integrate with one or more open source value transfer networks (blockchains).
Look at USDC https://www.circle.com/en/usdc This is a regulated token fully backed by audited reserves (unlike Tether (USDT)). There will be some banks, such as for international settlement, that will find this technology better than the existing. There will be some people in foreign countries who prefer a cryptocurrency wallet on their phone to paper cash USD or their (corrupt) banking system (Venezuela, Lebanon, etc.).
Even if you are skeptical of blockchain, is it clear to you why this is useful? It's the Linux vs. Windows debate, open source vs. closed source, except in finance and payments.
Finally, just as every API added to the internet increases the value of the platform itself exponentially (network effect), every new tool and smart contract on the Ethereum network increases the value of the whole network to its users. It is an operating system for finance! This is the value proposition of the Ethereum experiment.
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#3One way to look at blockchain technology (let's specifically look at Ethereum) is that it's an open source platform for value transfer. It's an even stronger claim than that - it's not like Stripe open sourcing all their code but still running all the servers. Ethereum is an open source platform that is totally permissionless, decentralized, and everyone can join it. In this way, it is similar to the internet itself.…
> What a major US Federal Regulator just announced is that all banks can use blockchains (like Ethereum) to move value, just like they use Swift or ACH https://www.coindesk.com/occ-banks-stablecoin-payments
I see this as a way for Brian Brooks at the OCC to appear to be a “thought leader” as a crypto proponent. I have had to interface with his type more than once (most unfortunately), but luckily it doesn’t appear the Biden administration will confirm him for the role the current administration has been pushing him for.
Many other countries have instant payment networks without the need for crypto or blockchain networks. Zelle already supports instant payments in the US, and the Federal Reserve is rolling out their own instant payment service in 2023. FedWire and similar institutional services are arguably superior when compared to distributed ledgers and their abysmal transaction rates. Are banks not going to keep reserve accounts at the Fed (which is where they’d net and settle)? And with central banks all moving toward digital accounts for citizens, and most of those central banks not considering crypto, this doesn’t seem like that big of a deal.
Ethereum is built for a financial world where trust doesn’t exist, and you must build your logic into smart contracts instead of your application. Very few jurisdictions where the rule of law and trust in the financial system doesn’t exist. I think there’s benefit in open sourcing the components that drive financial services and infrastructure, but believe it’s disingenuous to conflate that with the need for tokenized finance, distributed ledgers, and similar Rube Goldberg mechanizations.
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#4One way to look at blockchain technology (let's specifically look at Ethereum) is that it's an open source platform for value transfer. It's an even stronger claim than that - it's not like Stripe open sourcing all their code but still running all the servers. Ethereum is an open source platform that is totally permissionless, decentralized, and everyone can join it. In this way, it is similar to the internet itself.…
> What a major US Federal Regulator just announced is that all banks can use blockchains (like Ethereum) to move value, just like they use Swift or ACH https://www.coindesk.com/occ-banks-stablecoin-payments I see this as a way for Brian Brooks at the OCC to appear to be a “thought leader” as a crypto proponent. I have had to interface with his type more than once (most unfortunately), but luckily it doesn’t appear th…
You could be right that Ethereum will (at best) be a niche in the banking space. However my experience shows that open protocols tend to become entrenched and eventually overwhelm the proprietary solutions.
If you look at all the payment networks you mentioned, all of them are regional and not peer-to-peer. Ethereum is wide open and can be used peer to peer. Every country, institution, business, and individual doesn't need to trust each other - they just trust the network. And adding new applications to this open network, which is wide open and permissionless, can be done by ramen-powered startups on shoe string budgets. This is why I am so bullish on Ethereum.
It's open source finance vs. closed source. As you observe regulatory entities, even the USA, bend in various ways to crypto, you can see the foothold it has. And I believe it will continue to grow because novel solutions will sprout up from brand new companies accomplishing things no one thought possible.
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#5Earlier quoted context omitted.
> What a major US Federal Regulator just announced is that all banks can use blockchains (like Ethereum) to move value, just like they use Swift or ACH https://www.coindesk.com/occ-banks-stablecoin-payments I see this as a way for Brian Brooks at the OCC to appear to be a “thought leader” as a crypto proponent. I have had to interface with his type more than once (most unfortunately), but luckily it doesn’t appear th…
You could be right that Ethereum will (at best) be a niche in the banking space. However my experience shows that open protocols tend to become entrenched and eventually overwhelm the proprietary solutions. If you look at all the payment networks you mentioned, all of them are regional and not peer-to-peer. Ethereum is wide open and can be used peer to peer. Every country, institution, business, and individual doesn'…
At my day gig, I am required to interface with and report to financial regulators in the US. I don’t share your optimize based on my experience doing so. Financial regulatory frameworks and “they just trust the network” are incongruent. My personal opinion is a desire for more open financial systems to drive towards utility costs (central bank digital currencies held at central banks, for example), but I don’t see crypto as the mechanism by which to arrive at that (as long as the law and legal frameworks supersede technologies).
Just sharing my ground truth. I could be wrong long term. The longer your timeline, the more difficult predictions are.
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#6One way to look at blockchain technology (let's specifically look at Ethereum) is that it's an open source platform for value transfer. It's an even stronger claim than that - it's not like Stripe open sourcing all their code but still running all the servers. Ethereum is an open source platform that is totally permissionless, decentralized, and everyone can join it. In this way, it is similar to the internet itself.…
> What a major US Federal Regulator just announced is that all banks can use blockchains (like Ethereum) to move value, just like they use Swift or ACH https://www.coindesk.com/occ-banks-stablecoin-payments I see this as a way for Brian Brooks at the OCC to appear to be a “thought leader” as a crypto proponent. I have had to interface with his type more than once (most unfortunately), but luckily it doesn’t appear th…
> Very few jurisdictions where the rule of law and trust in the financial system doesn’t exist. I think there’s benefit in open sourcing the components that drive financial services and infrastructure, but believe it’s disingenuous to conflate that with the need for tokenized finance, distributed ledgers, and similar Rube Goldberg mechanizations.
To compare this to open source, why did we need Linux in 1991? If you wanted Unix with paid support from a company, it was available. If you wanted free Unix, the BSDs were available. If you were worried about the BSD lawsuits, then it'd seem more appropriate to encourage this Torvalds fellow to contribute to GNU Hurd, a right proper operating system in development, instead of embarking on a scrappy one person effort.
If you trust the rule of law and the financial system, then you are free to continue to use it and ignore cryptocurrency in your life. But what's the problem with having an alternative for those that don't share your view and wish to develop a system free from the encumberances of trust in third parties?
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#7Earlier quoted context omitted.
You could be right that Ethereum will (at best) be a niche in the banking space. However my experience shows that open protocols tend to become entrenched and eventually overwhelm the proprietary solutions. If you look at all the payment networks you mentioned, all of them are regional and not peer-to-peer. Ethereum is wide open and can be used peer to peer. Every country, institution, business, and individual doesn'…
At my day gig, I am required to interface with and report to financial regulators in the US. I don’t share your optimize based on my experience doing so. Financial regulatory frameworks and “they just trust the network” are incongruent. My personal opinion is a desire for more open financial systems to drive towards utility costs (central bank digital currencies held at central banks, for example), but I don’t see cr…
You are more likely right than not, and this is coming from someone who has devoted the majority of his professional career to crypto / blockchain and whose license plate is 'BCOINS'. So I have fully drank the kool aid!
However you must admit despite your (justified) cynicism that this is very intriguing technology, and no one expected it to grow as much as it did as quickly as it did, and get official regulatory approval in so many ways. I am very optimistic in its future its potential for brand new businesses and ideas to be created and flourish in ways that no one expected.
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#8Earlier quoted context omitted.
At my day gig, I am required to interface with and report to financial regulators in the US. I don’t share your optimize based on my experience doing so. Financial regulatory frameworks and “they just trust the network” are incongruent. My personal opinion is a desire for more open financial systems to drive towards utility costs (central bank digital currencies held at central banks, for example), but I don’t see cr…
You are more likely right than not, and this is coming from someone who has devoted the majority of his professional career to crypto / blockchain and whose license plate is 'BCOINS'. So I have fully drank the kool aid! However you must admit despite your (justified) cynicism that this is very intriguing technology, and no one expected it to grow as much as it did as quickly as it did, and get official regulatory app…
I agree wholeheartedly that Ethereum is novel, but it’s still looking for a fit for its capabilities. I’m pragmatic, but not entirely without wonder and curiosity.
Words and thoughts are my own in the entire thread.
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#9Earlier quoted context omitted.
> What a major US Federal Regulator just announced is that all banks can use blockchains (like Ethereum) to move value, just like they use Swift or ACH https://www.coindesk.com/occ-banks-stablecoin-payments I see this as a way for Brian Brooks at the OCC to appear to be a “thought leader” as a crypto proponent. I have had to interface with his type more than once (most unfortunately), but luckily it doesn’t appear th…
> Very few jurisdictions where the rule of law and trust in the financial system doesn’t exist. I think there’s benefit in open sourcing the components that drive financial services and infrastructure, but believe it’s disingenuous to conflate that with the need for tokenized finance, distributed ledgers, and similar Rube Goldberg mechanizations. To compare this to open source, why did we need Linux in 1991? If you w…
> If you trust the rule of law and the financial system, then you are free to continue to use it and ignore cryptocurrency in your life. But what's the problem with having an alternative for those that don't share your view and wish to develop a system free from the encumberances of trust in third parties?
Nothing, as long as you adhere to financial regulations and related laws where the systems and its users operate. Novel technologies don’t absolve you of adhering to the law.
If that means unnecessary abstractions and overhead, or a handicapping of capabilities, then them the breaks of selecting a technology not fit for purpose. Consider regulations and laws as requirements when building systems that store or transmit value.
Re: Square’s federal comment letter regarding FinCEN’s proposed rulemaking
#10Earlier quoted context omitted.
> Very few jurisdictions where the rule of law and trust in the financial system doesn’t exist. I think there’s benefit in open sourcing the components that drive financial services and infrastructure, but believe it’s disingenuous to conflate that with the need for tokenized finance, distributed ledgers, and similar Rube Goldberg mechanizations. To compare this to open source, why did we need Linux in 1991? If you w…
> If you trust the rule of law and the financial system, then you are free to continue to use it and ignore cryptocurrency in your life. But what's the problem with having an alternative for those that don't share your view and wish to develop a system free from the encumberances of trust in third parties? Nothing, as long as you adhere to financial regulations and related laws where the systems and its users operate…
You are 100% right that the regulators have (and will continue) to come down hard on entities that violate these laws.
But crime is endemic, even in the developed world, and has been long before crypto existed. On the internet itself, TOR allows all manner of illegal IP packets to be transferred, but we have not banned the internet itself.
I know this is a tired argument that is oft repeated, but this is because it's true! We can't ban cryptocurrency simply because it can be used for crime. Society accepts that technology can be used for good or evil.