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Regulators should treat stablecoins like banks

economist.com

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Re: Regulators should treat stablecoins like banks

#111

Post by sunshinerag »

mdorazio wrote: post #104
Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

Devil's advocate: 2008 was bad because of regulatory failures (specifically deregulation). Lack of transparency was only part of the problem. So if you want to avoid 2008 in cryptocurrency, the answer would be more regulation, not less.

(OR) these sort of crisis cannot be fixed by regulations. Having more of the same may not necessarily fix the issue.

Re: Regulators should treat stablecoins like banks

#112

Post by shawabawa3 »

njade wrote: post #101
Marazan wrote: post #77

Earlier quoted context omitted.

Isn't DAI backed by USDC and Tether in part?

You are correct. Last time I checked, more than 50% backed by USDC. Makes no sense as the whole point of censorship resistance is defeated.

from https://daistats.com/#/overview it's currently ~26% USDC

It's also 200% collateralised so USDC could go to zero (or freeze all of the DAI locked USDC) without breaking the peg on DAI

Re: Regulators should treat stablecoins like banks

#113

Post by IncRnd »

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

> As a different matter, how can society say "2008 bad", which resulted in little economic progress, and then threaten problem solvers from making new solutions? Innovation is a hedge against regulator lethargy.

What do you believe caused regulators of financial instruments to be created?

Re: Regulators should treat stablecoins like banks

#114

Post by nprz »

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

> I hope to live in a society where economic experiments can be executed

Totally read experiments as experts

Re: Regulators should treat stablecoins like banks

#115

Post by [deleted] »

simmerup wrote: post #4
MattGaiser wrote: post #2

> With estimated leverage of 383-to-1, Tether would be unable to honour all its tokens after losses of just 0.26%—a safety cushion that regulators would never allow at a bank. So even if they are telling the truth, it is still on the edge.

So if 0.26% of tether is withdrawn into currency the coin would collapse? Am I reading that right?

[deleted]

Re: Regulators should treat stablecoins like banks

#116

Post by [deleted] »

JumpCrisscross wrote: post #7
simmerup wrote: post #4

Earlier quoted context omitted.

So if 0.26% of tether is withdrawn into currency the coin would collapse? Am I reading that right?

> if 0.26% of tether is withdrawn into currency the coin would collapse If 0.26% of Tether is withdrawn, it would need to start liquidating assets. That will, most of the time, be fine. Commercial paper is exceedingly liquid. But sometimes, the liquidation will prompt a price fall. This is a fire sale. That, in turn, prompts more redemption, as holders of Tether grow concerned about its stability. This is a bank run.…

[deleted]

Re: Regulators should treat stablecoins like banks

#117

Post by Igelau »

Zamicol wrote: post #74

Firstly, Tether is rat poison. Unfortunately, newcomers to the space identify "stable coins" = "tether" or wrongly assume that other stablecoins share similar mechanisms. There are many alternatives that operate radically differently in the nascent space. DAI is immensely exciting. Stablecoins like DAI are interesting experiments that could powerfully create new online economies. Blockchains like Ethereum are current…

> Tether is rat poison

It would be very useful if we could kill vermin with it.

Re: Regulators should treat stablecoins like banks

#118

Post by grey-area »

jpmattia wrote: post #28

> It says it will update the figures soon and that it is “fully backed by reserves”. The updated report is here (PDF): https://tether.to/wp-content/uploads/2021/08/tether_assuranc...

For certain values of “fully backed by reserves”

Re: Regulators should treat stablecoins like banks

#119

Post by ethbr0 »

beiller wrote: post #110
mdorazio wrote: post #104

Earlier quoted context omitted.

Devil's advocate: 2008 was bad because of regulatory failures (specifically deregulation). Lack of transparency was only part of the problem. So if you want to avoid 2008 in cryptocurrency, the answer would be more regulation, not less.

Hot take: 2008 was caused by over regulation, resulting in broken incentives for rating agencies and preventing any real bad outcomes from them just rating everything as great.

Finding a trustworthy oracle is always a problem.

Either you can let (systemically important) people buy whatever junk they want, or you can mandate a minimum bar.

But if you mandate a minimum, who judges what does or doesn't meet it?

Re: Regulators should treat stablecoins like banks

#120

Post by whateveracct »

lottin wrote: post #65
chroem- wrote: post #31

Earlier quoted context omitted.

> Walking back to first principals, why can't the USD fail? Because you can print whatever adults in the room decide need to be printed to hold the economy up. You cannot do this with a deflationary digital asset, nor one tied to smart contracts. The practical implication of solving large scale bank failures with mass currency printing is hyperinflation. You would only get your money back in nominal terms, but its pu…

The Fed already solved major large scale bank failures in 2008 without causing any semblance of hyperinflation, so your point is...?

seems to be nothing besides "printing money is bad"
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