AgeUSD protocol[1] can already be used to encode such regulatory forces into the stablecoin itself, if desired.
Regulators should treat stablecoins like banks
61–70 of 224 posts
Re: Regulators should treat stablecoins like banks
#62Earlier quoted context omitted.
>>A currency is a socioeconomic compact between capital and labor, intermediated by subject matter experts (ie the central bank) and government. Currency is an asset with a particular use-case. Its consumers do not enter into some elaborate agreement (compact) in order to use it. They use it because it's useful. Currency predates the government: https://www.sciencedaily.com/releases/2021/05/210506174103.h... It arose…
Correct. The centralized authorities protect the economy against some failure-modes that a distributed process is vulnerable to (currency scarcities, tampering, panics, large-scale theft). They introduce other problems. Whether one thinks they introduce more problems than they fix is pretty much the defining factor on where one stands regarding the utility of fiat currencies.
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Re: Regulators should treat stablecoins like banks
#63Paypal is not a licensed bank. Square, whose IPO was 11/19/2015, only got their bank license in 2020. Why should cryptocurrency be under the purveyance of banking regulations? Cryptocurrency is pulling back the iron curtain and revealing the real Wizard of Oz when you consider unequal regulatory treatment and unequal enforcement efforts. Remember BOA robosigning fake mortgages and commiting widespread fraud? Remember…
Paypal within the EU is indeed a bank.
Who uses it? Aren't debit cards and online bank transfers more common there?
Re: Regulators should treat stablecoins like banks
#64Earlier quoted context omitted.
Which, if it were to fail (which is exceptionally unlikely), is backed by the US Treasury and the Federal Reserve. EDIT: 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.
> 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…
Those two examples followed real world disasters, with two wars and major social changes playing important roles.
These stablecoins appear to be much more fragile.
Re: Regulators should treat stablecoins like banks
#65Earlier quoted context omitted.
Which, if it were to fail (which is exceptionally unlikely), is backed by the US Treasury and the Federal Reserve. EDIT: 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.
> 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...?
Re: Regulators should treat stablecoins like banks
#66Earlier quoted context omitted.
It is extremely unclear what, if anything, you are arguing for or against, other than that banks have recently done some bad things. It seems like you might be against regulating stablecoins as banks, but you also appear to be arguing for harsher punishments for banks that misbehave? Or something?
It's pretty clear that the argument is that the government is hypocritical and unequal in treatment of establishment players vs cryptocurrency.
But that argument (not yours, I know) is really weak: If we have problems with banks behaving in ways that are harmful to others in society, and problems with emergent phenomena that banks don't care to avoid because most of the losses from any collapses won't be on their balance sheets... why would we exactly want to have a bank-equivalent organization that isn't under at least as stringent regulations as the banks?
If the argument were that more regulation is needed, then surely up and coming actors with less to lose are even more important to catch with that regulation?
Re: Regulators should treat stablecoins like banks
#67Earlier quoted context omitted.
As opposed to banks in the US, which legally have a 0% reserve requirement. [1] [1] https://www.federalreserve.gov/monetarypolicy/reservereq.htm
That is misleading. A more relevant number is the capital requirement, which is between 7% and 13% currently for US banks, if I'm not mistaken, corresponding to leverage of 8 to 14. Much more benign. https://www.federalreserve.gov/newsevents/pressreleases/bcre...
Capital requirements are for something else. We're talking about retail customers being able to withdraw their cash, in which case the reserve requirement is the correct number.
Re: Regulators should treat stablecoins like banks
#68> 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...
Tether has pulled this shit regularly.
https://ag.ny.gov/press-release/2021/attorney-general-james-...
> Tether published a self-proclaimed ‘verification’ of its cash reserves, in 2017, that it characterized as “a good faith effort on our behalf to provide an interim analysis of our cash position.” In reality, however, the cash ostensibly backing tethers had only been placed in Tether’s account as of the very morning of the company’s ‘verification.’
> On November 1, 2018, Tether publicized another self-proclaimed ‘verification’ of its cash reserve; this time at Deltec Bank & Trust Ltd. of the Bahamas. The announcement linked to a letter dated November 1, 2018, which stated that tethers were fully backed by cash, at one dollar for every one tether. However, the very next day, on November 2, 2018, Tether began to transfer funds out of its account, ultimately moving hundreds of millions of dollars from Tether’s bank accounts to Bitfinex’s accounts. And so, as of November 2, 2018 — one day after their latest ‘verification’ — tethers were again no longer backed one-to-one by U.S. dollars in a Tether bank account.
I don't see much reason to have faith in the latest round.
Re: Regulators should treat stablecoins like banks
#69> 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.
As opposed to banks in the US, which legally have a 0% reserve requirement. [1] [1] https://www.federalreserve.gov/monetarypolicy/reservereq.htm
The reserve requirement is the amount of money that a bank is required to have sitting in its account at a Federal Reserve bank per total deposits.
That requirement has dropped to 0% because we've developed other ways of mandating that banks have enough cash. These are things like the tier 1 capital requirements, that require the bank to hold a certain amount of capital (which does not include money that depositors put in the bank! Those are assets, not capital) for its total asset composition.
Re: Regulators should treat stablecoins like banks
#70Paypal is not a licensed bank. Square, whose IPO was 11/19/2015, only got their bank license in 2020. Why should cryptocurrency be under the purveyance of banking regulations? Cryptocurrency is pulling back the iron curtain and revealing the real Wizard of Oz when you consider unequal regulatory treatment and unequal enforcement efforts. Remember BOA robosigning fake mortgages and commiting widespread fraud? Remember…
> Why should cryptocurrency be under the purveyance of banking regulations?
This is a straw man [1]. The article calls for regulators "to subject stablecoins to bank-like rules for transparency, liquidity and capital." The title of the article calls for them to be treated "like banks" (emphasis mine). Not as banks.
PayPal and Square are absolutely regulated like banks, as are money market funds, stablecoins' most obvious analog.