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Coinbase suspending USDC:USD conversions over the weekend

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Re: Coinbase suspending USDC:USD conversions over the weekend

#191

Post by dantheman »

pclmulqdq wrote: post #182
espadrine wrote: post #75

Earlier quoted context omitted.

What could the Federal Reserve learn? The structure of risk is similar for both Tether and Circle, AFAICT. While USD risk is heavily distributed across many regulated banks and there are measures in place to mitigate bankruptcy, USDC/T is fairly centralized and the fall of a single bank can put the entire currency at risk, cause sudden and extreme inflation (as is the case now), and potentially stop being accepted by…

Perhaps they could learn that doing consecutive 50-75 bps rate hikes for an entire year will bring with it a lot of adverse effects in a world where they are expected to hike 25 bps at a time? Nobody pricing interest rate risk would have priced what happened last year correctly - it would have been considered a one-in-a-million event, not a routine response to high inflation.

I'd say they should learn that super low interest rates are nonsense.

Re: Coinbase suspending USDC:USD conversions over the weekend

#192

Post by theGnuMe »

davidwritesbugs wrote: post #142
xref wrote: post #91

Earlier quoted context omitted.

Unlucky for the UK coffee shop that wouldn’t take my USD this morning I guess? Not quite sure what you’re trying to say, if a country doesn’t want to accept usd…they don’t have to

His point is that fiat currencies are issued by, and backed by, the state and the that trust is, ultimately, based on its enforcement capacity - the police/courts/US army rather than convertibility with gold or other hard asserts.

I think it’s about peace and trust more than anything. It’s not about war and aggression.

Re: Coinbase suspending USDC:USD conversions over the weekend

#193

Post by __MatrixMan__ »

mtlmtlmtlmtl wrote: post #112
null0pointer wrote: post #105

Earlier quoted context omitted.

Plenty of clearnet businesses accept crypto.

Sure, and paying with crypto is always going to be more painful unless you use an exchange, which is just a bank with less regulation(ok maybe not in the US, since banks are barely regulated there anyway). Which again means it will never catch on unless it just becomes a conventional currency. Which, btw is a sociological inevitability anyway(I will die on this hill, try me). Decentralisation never lasts, see countle…

> Decentralisation never lasts

Mycorrhizal networks, to pick just one of myriad counterexamples, would like a word. Decentralization is just something that humans are (so far) bad at designing for.

> paying with crypto is always going to be more painful [than fiat] unless you use an exchange

Always is a long time. As governments figure out how to add features to fiat via CBDC's I can definitely image some bloat that would make paying in fiat needlessly complex. It's not like cryptocurrency has the market cornered on bad decisions.

Re: Coinbase suspending USDC:USD conversions over the weekend

#194

Post by pibechorro »

cornholio wrote: post #62
kersplody wrote: post #4

USDC is managed the Centre consortium, which was founded by Circle and includes Coinbase as a member. Circle held around $3.3 billion in Silicon Valley Bank, leading to a run on USDC which resulted in it trading for as little as $0.95 on some exchanges today (Mar 10, 2023). This represents around 30% of USDC's cash reserves and 7% of its total reserves. The balance of reserves are held in T-Bills, which are liquid an…

It was all fun and games while the crypto bubble was inflating. You basically could do no wrong, any mismanagement would be hidden away by the exponential appreciation of the underlying assets; just hodl until the next bull run and everything would be fine again. When things stabilize and start going down, it's like the morning after the frat-party, bad things come to light. Crypto is fundamentally a negative sum gam…

Lol crypto is not what people launder with, its cash and major banks that have been caught over and over again taking dirty deposits. Cartels don't trade in public blockchains. Your ignorance is stunning.

Re: Coinbase suspending USDC:USD conversions over the weekend

#195

Post by Claudeppl90 »

Startup A had 10M in SVB. Startup B had 10M in USDC.

Startup A is probably closing down, let's hope not and wait until Monday for a bailout.

Startup B cut losses and walked away with ~9.2M, on a weekend.

There is something to learn here about counterparty risk and outdated regulations/legislations. SVB from a time when no credit cards existed, USDC from a world where the iPhone had already been invented.

Re: Coinbase suspending USDC:USD conversions over the weekend

#196

Post by newjersey »

theGnuMe wrote: post #192
davidwritesbugs wrote: post #142

Earlier quoted context omitted.

His point is that fiat currencies are issued by, and backed by, the state and the that trust is, ultimately, based on its enforcement capacity - the police/courts/US army rather than convertibility with gold or other hard asserts.

I think it’s about peace and trust more than anything. It’s not about war and aggression.

Peace and trust are backed in part by an implicit ability to wage/counter war and aggression.

Re: Coinbase suspending USDC:USD conversions over the weekend

#197

Post by verteu »

kart23 wrote: post #43

So USDC is currently trading at $0.93. Which, if you believe in Coinbase, is free money. And if you don't, then its very bad news for the company and possibly worse news for the banks that are keeping the USDC reserves, because they are about to have a massive bank run on monday. https://coinmarketcap.com/currencies/usd-coin/

It's only free money if the probability of depeg/collapse/bankruptcy is zero. One thing I've learned from Anchor protocol, Celsius, FTX, etc: The probability is never zero.

Re: Coinbase suspending USDC:USD conversions over the weekend

#198

Post by jeroenhd »

elAhmo wrote: post #170

So, another “stablecoin” showing up to be not stable? How many of them need to fail before it is clear this is not a viable mechanism?

I'd call it stable as long as everybody who wants to trade their cryptocoins for real money can still get their dollars out. If that's the case, you can sell the cryptocoins online for less money if you want, but that'd be a bad sale because you're essentially giving up 10% of the value for no. Good reason (at the time of writing, value will fluctuate).

If this panic turns out to be nothing and the value will recover, some people panic trading right now are going to be at a loss. If trading in tokens for dollars doesn't come back spoon, the value may drop more and the panic sellers may be the ones that made the right choice by selling early.

The stability now hinges on whether or not cryptocurrency can be turned into real currency. At the moment, conversions are dropped, so it makes sense that the value has dropped. I don't believe for a second that this has to do anything with "banks closed during the weekend", I'm assuming the people behind the platform are now trying to figure out how to get liquidity with billions tied up in a shut down bank for the foreseeable future (or forever if SVB turns out to be insolvent after all). Maybe they can sell shares or trade other kinds of cryptocurrency reserves to make up the difference so exchanging USDC for real money can continue (probably bringing the price back up to a dollar immediately), maybe they can't and they're doomed.

If you have faith in the stablecoin, this may be the right moment to basically buy dollars for a 10% discount. If you don't and you have some money tied up in crypto exchanges, this is the moment to consider getting your money out before the impact of the depeg spreads.

If they can get enough real dollars to fulfil the demand, this may just prove that this is a viable mechanism, showing how stablecoins can survive with a significant amount of their real money inaccessible. It ain't over till the fat lady sings!

Re: Coinbase suspending USDC:USD conversions over the weekend

#199

Post by bananapub »

pclmulqdq wrote: post #50
rippercushions wrote: post #48

Earlier quoted context omitted.

There's something deeply ironic about a flight to safety in the form of Tether , which has famously been described as being "quilted out of red flags". But if you can't redeem it and it's not backed by anything remotely approaching normal assets, I guess you can't have a bank run on it either... until the music stops and the insiders propping it up run out of chairs.

There's something to be said for everyone knowing the risks of doing business with you, and behaving consistently (consistently badly) so that those risks don't change. That's the regime of Tether. Nobody will even be mad when the rug gets pulled. The federal reserve could stand to learn a thing or two, honestly.

> Nobody will even be mad when the rug gets pulled.

this is one of the silliest comments I've ever seen on HN.

Re: Coinbase suspending USDC:USD conversions over the weekend

#200

Post by capableweb »

bombolo wrote: post #186
tarunupaday wrote: post #162

Earlier quoted context omitted.

India is a developing country. Are you somehow under the impression that the US army will attack a coffee shop in New Delhi if they stop taking US dollars? Even in those parts of Mexico and Caribbean countries where the economy is heavily dependent on US tourism - and the US dollar will be accepted at retail shops; the price difference between paying in dollars and paying in local currency is going to be against the…

I said "a country"… are you under the impression that "a coffee shop" is "a country"? How could you mistake a coffee shop for a country? Seems like you want to misread me on purpose?

Many "countries" don't do business in USD, they do business in their own currency. Why haven't those countries already been invaded if what you're saying is true?
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