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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

#201
post #116

Crypto was supposed to liberate you from the traditional banksters. Instead it’s an impenetrable smokescreen where you’ve got uninsured credit risk with institutions in Silicon Valley and the Bahamas and who knows where, and you won’t know until the edifice cracks and your money is stuck. Not a terrific improvement. Of course the Bitcoin maximalists will shake their heads, mutter about self-custody, and then go on co…

Don’t have any horses in this race, but this feels like a straw man. Getting told to go die by a centralized exchange is exactly the kind of problem that crypto solves. The trouble is a ton of web3 startups (like coinbase) worked to undo this feature to improve usability. Pretty much every crypto person I know who has been in it for more than 5 years will insist no keys no coins. A lot of the innovation in web3 consi…

I think the "no keys, no coins" crowd definitely has the right idea, but the existence of cryptocurrency exchanges is a sign that for many people decentralisation isn't usable enough just yet. These exchanges hold billions exactly because using these currencies just like real money isn't practical enough, or isn't the intended target of the people trading in them.

I think cryptocurrencies suffer from the fact most people seem to use them purely for speculation. I can't remember the last time I've paid by cash but I've never seen any store accept USDC or Dogecoin or anything else. Some online stores used to take cryptocurrencies but they've all stopped as far as I can tell.

Mayne this isn't true in other countries. I can imagine people in Argentina or Turkey or Venezuela using cryptocurrencies because their official currency is even less stable than your average cryptocoin and because foreign currencies often become available in limited numbers when banks struggle to contain their slipping currencies, basically sidestepping the government or the banking system. I haven't seen any evidence for it, though.

Re: Coinbase suspending USDC:USD conversions over the weekend

#202
post #41

Tether, the Sauron of stablecoins, has zero exposure to SVB and is holding the peg just fine. Sorry Patio and friends, maybe next time :)

Tether has lots of experience in this field. They were "pioneer" and they went through a lot worse: Tons of FUD, the Bitfinex exchange hack, lawsuits, bank runs etc... In short, they are battle and stress tested to the maximum.

> Tether has lots of experience in this field. They were "pioneer" and they went through a lot worse: Tons of FUD, the Bitfinex exchange hack, lawsuits, bank runs etc...

They're experts in fraud and deception.

https://youtu.be/-whuXHSL1Pg

Re: Coinbase suspending USDC:USD conversions over the weekend

#203
post #84

Earlier quoted context omitted.

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.

USD is backed up by USA army. If a country refuses to accept USD they will have a democracy problem and get attacked.

So, when will the USA military invade Norway?

I assume per your definition of "country" Norway should be a country as well.

Norway is a major party in selling oil and gas, but doing it so in NOK. Norway is not even part of NATO. At least until now.

So when do you expect an attack by the USA military?

Re: Coinbase suspending USDC:USD conversions over the weekend

#204

Earlier quoted context omitted.

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.

> an implicit ability to wage/counter war and aggression.

In other words, money.

Re: Coinbase suspending USDC:USD conversions over the weekend

#205

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.

You can hedge the risk of your own bank failing by purchasing put options on its stock, assuming it trades publicly and has an active options market. I don’t know anyone who has ever done that, but it’s a neat idea.

Re: Coinbase suspending USDC:USD conversions over the weekend

#206
post #84

Earlier quoted context omitted.

USD is backed up by USA army. If a country refuses to accept USD they will have a democracy problem and get attacked.

So, when will the USA military invade Norway? I assume per your definition of "country" Norway should be a country as well. Norway is a major party in selling oil and gas, but doing it so in NOK. Norway is not even part of NATO. At least until now. So when do you expect an attack by the USA military?

Norway uses US dollar for oil trade.

https://www.investopedia.com/terms/p/petrodollars.asp

Re: Coinbase suspending USDC:USD conversions over the weekend

#207
post #84

Earlier quoted context omitted.

USD is backed up by USA army. If a country refuses to accept USD they will have a democracy problem and get attacked.

So, when will the USA military invade Norway? I assume per your definition of "country" Norway should be a country as well. Norway is a major party in selling oil and gas, but doing it so in NOK. Norway is not even part of NATO. At least until now. So when do you expect an attack by the USA military?

Slight correction: Norway has been part of NATO pretty much since its inception after WWII, but never joined the EU. Same for Iceland.

Its neighbors Sweden and Finland are EU members whose citizens have recently come to widespread agreement that NATO membership is desirable.

Re: Coinbase suspending USDC:USD conversions over the weekend

#208

Earlier quoted context omitted.

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.

The point is that consistent bad behavior is probably better than inconsistent good behavior. That makes you predictable.

Re: Coinbase suspending USDC:USD conversions over the weekend

#210
post #87

Earlier quoted context omitted.

Or maybe you just don't understand it? The whole point of USDC is to have exposure to USD and the US banking system, which is supposed to be stable compared to other banking systems around the world. Could that maybe be why it's called USDC? Hmm. If the US banking system starts failing, it absolutely should affect USD stable coins backed by exactly this banking system.

That's funny. The USD is entirely unaffected. Some deposits at certain banks are affected for large (mostly professional) holders. Retail investors will be made whole (up to 250k), thanks to this banking regulation thingy you might have heard of. USDC is meant to mirror the USD (sure, with its concomitant FX and inflation risk), but it is certainly not meant to introduce credit risk vis-à-vis some bank most people ha…

You’re aware that ~$150B of $200B SVB deposits are not covered by FDIC insurance, correct? I don’t think SVB is going to end up 0, but pointing at 25% of investments being safe and saying “look regulation works so well” seems absurd.
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