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Top stablecoins shed $7B in May as traders redeem tokens en masse

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Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#231

Post by lupire »

grey-area wrote: post #140
delusional wrote: post #134

Earlier quoted context omitted.

> Why would anyone buy Tether at this point? There's zero upside potential, after all. Tether, and "stablecoins" in general are known as the casino chips of Crypto. A way to exchange more volatile crypto for what is supposed to be essentially dollars without creating a taxable event. Assuming crypto is still something people want to trade, that's still a valuable service. Tether isn't supposed to be an investment. It…

Technically, isn’t selling one asset and buying another precisely the definition of a taxable event? I don’t see how tether helps you avoid taxes unless you’re going to lie about your transactions and hope nobody notices.

You don't report income on every item you shuffle.

In the spirit of US law (since crypto is t precisely classified), if you are a professional trader, you only pay taxes on your overall annual trading profits, not each individual trade. Same as how a a retail store doesn't have gains and losses on every individual item in inventory.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#232

Post by lupire »

dalbasal wrote: post #85
Animats wrote: post #25

The big question with Tether has been, if they are holding commercial paper, whose commercial paper? Traders who deal in commercial paper of real companies that do real stuff don't see Tether present in that market. The dollar amounts are too big to hide. The suspicion is that their "commercial paper" is high-interest loans to other cryptocurrency companies. With the whole crypto sector in decline, those loans are at…

Either way, unless they are fully backed by USD... stablecoin is just an unregulated bank and it can run. If that's not the case, they have as much rope as they have ability to liquidate. IE they can keep buying their own coin to defend the price for as long as they can. Imo, stablecoins are a good example of everyone knowing the score but systemic risk accrues regardless. Stabkecoins just the worst kind of risk. Low…

Stablecoin is only risky while you hold it. You can convert to Bitcoin or Eth to adjust your risk profile, and take profits occasionally in national currency.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#233

Post by web4 »

FireBeyond wrote: post #194
web4 wrote: post #163

Earlier quoted context omitted.

that limit depends on your bank. for large transfers you will often need to visit your branch in person which can be a multi day process. and yes UK faster payments system is great but it is not yet the backbone of global payment processing. the world is larger than the UK and as we continue to connect globally online and become more digitally nomadic there will be more need to pay users outside of a UK-to-UK bank sy…

If you're the kind of person that regularly wires six digit sums in and out of your personal account, I suspect that one, if not both of the following are true: 1) that you've chosen your banking institution with a view to being expedient in such transfers, and 2) are on a known basis with sufficiently senior branch/bank personnel as to help establish parameters with them on legitimacy of such transfers.

yep. the rich tend to be given access to better banking services than the poor: higher limits, direct line of contact with a bank manager, additional services. when your account reaches a certain wealth threshold the bank will step in to ensure you have a better experience than the poor.

banking is a radically different design philosophy than a protocol where all addresses and transactions are treated equally regardless of wealth, class, and other social factors like race and family connections.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#234

Post by lupire »

thelamest wrote: post #151
nikanj wrote: post #143

Earlier quoted context omitted.

Crashes are a huge wealth transfer from the optimistic to the opportunistic. They’re very good for the few

True, but they’re still a negative sum event. (Putting aside libertarian-ish arguments, ironically overrepresented in crypto, that in the long term a crash is a healthy garbage-collection event.)

Negative-sum events are extremely popular with the winning side, and the winnings are momey, which converts to power.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#235

Post by lottin »

eudoxus wrote: post #193
lottin wrote: post #172

Earlier quoted context omitted.

Why is it safer? Isn't USDC issued by some entity, which promises to convert USDC back into USD?

It's safer cus there are hundreds of crypto exchanges that exist, in jurisdictions all over with varying levels of regulation or compliance. Many of which have run off with customer funds. You can always be sure that your funds are safer in your own wallet than on an exchange. However, USDC is issued by a consortium spear headed by Coinbase which is a publicly traded US company that has a wealth of regulatory complia…

> You can always be sure that your funds are safer in your own wallet than on an exchange.

How is that so? Do you also think that keeping cash under a mattress is safer that keeping it in a bank?

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#236

Post by eru »

Animats wrote: post #25

The big question with Tether has been, if they are holding commercial paper, whose commercial paper? Traders who deal in commercial paper of real companies that do real stuff don't see Tether present in that market. The dollar amounts are too big to hide. The suspicion is that their "commercial paper" is high-interest loans to other cryptocurrency companies. With the whole crypto sector in decline, those loans are at…

> This is how you get a 2008-type crash - loans which seem to be unrelated but are tied to a common market.

Eh, the problems in 2008 were ultimately caused by (many) central banks around the globe letting nominal gdp drop. All loans (and dividends etc) are ultimately paid out of aggregate nominal income; so obviously they are all correlated with nominal gdp: it's basically the same as aggregate nominal income.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#237

Post by thematrixturtle »

wallaBBB wrote: post #111
darawk wrote: post #97

Earlier quoted context omitted.

Chinese real estate would be considerably better than crypto company loans, tbh.

Chinese real estate companies are defaulting on their international bonds en masse and CN government has shown no interest in bailing them on that end.

Better to be backed by overvalued, sketchy physical real estate than nothing at all (see also: TerraUSD).

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#238

Post by zaphar »

thelamest wrote: post #151
nikanj wrote: post #143

Earlier quoted context omitted.

Crashes are a huge wealth transfer from the optimistic to the opportunistic. They’re very good for the few

True, but they’re still a negative sum event. (Putting aside libertarian-ish arguments, ironically overrepresented in crypto, that in the long term a crash is a healthy garbage-collection event.)

Crashing early is better than crashing later because it limits the damage and moderately frequent crashes creates some level of caution in the market. Propping up a market because it's too big to fail can in some cases create worse fallout. It's a judgement call though and I'm not entirely sure we have a really good rule of thumb here.

If there were a way to have enough transparency that we had smaller crashes more frequently it would probably help to limit the damage to those who can afford to lose it.

The truth is that you can only push a correction so far out. It will happen eventually and the farther out you push it the worse it will be.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#239

Post by lupire »

chii wrote: post #27
OtomotO wrote: post #20

The moment I learned that people want to buy crypto as a means to get rich in (evil ;)) fiat money, I knew I had a ponzi scheme in front of me. The interesting idea behind crypto once was to have a totally different system. Yet in reality, with greedy apes on a spacerock, it was an unreachable Utopia

> The interesting idea behind crypto once was to have a totally different system. the problem with this idea is that this idea of a "different" system is just merely going to evolve back into what we have today. The fundamental needs of a financial system doesn't change much, and what we have today is fit for purpose (mostly - there's efficiency to be had and red tape to cut).

Crtyptoc is digital cash (not necessarily all of digital money), with all the benfits and risks that digital provides.

It's like converting your office paperwork to digital. Highly efficient, but you might get hacked or lose your keys and lose it all at once.

Re: Top stablecoins shed $7B in May as traders redeem tokens en masse

#240

Post by eru »

dalbasal wrote: post #85
Animats wrote: post #25

The big question with Tether has been, if they are holding commercial paper, whose commercial paper? Traders who deal in commercial paper of real companies that do real stuff don't see Tether present in that market. The dollar amounts are too big to hide. The suspicion is that their "commercial paper" is high-interest loans to other cryptocurrency companies. With the whole crypto sector in decline, those loans are at…

Either way, unless they are fully backed by USD... stablecoin is just an unregulated bank and it can run. If that's not the case, they have as much rope as they have ability to liquidate. IE they can keep buying their own coin to defend the price for as long as they can. Imo, stablecoins are a good example of everyone knowing the score but systemic risk accrues regardless. Stabkecoins just the worst kind of risk. Low…

Properly unregulated banks are actually less likely to experience runs.

Backing by USD is not required. As you say, anything they can liquidate is good. Doesn't have to be USD. This works best when you are over-capitalised, ie when you have a thick equity cushion, so that when your assets go down in terms of USD, you still have enough balance sheet assets left to cover all your USD obligations.

You are right that trying to be stable makes things more systematically risky. If Tesla stock drops by 20% over night, some people are going to lose money, but the finance system won't collapse. If supposedly stable assets drop by 20%, everything can go wrong.

That's part of why government backed deposit insurance for banks and too-big-to-fail are problems.

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