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Wait so USDC is linked to existing USD in a bank somewhere, so what's stopping coinbase from just nulling the locked usdc and minting 262MM new ones? Sorry if i

Wait so USDC is linked to existing USD in a bank somewhere, so what's stopping coinbase from just nulling the locked usdc and minting 262MM new ones? Sorry if it's a dumb question Im not sure how stablecoins work.

rawtxapp 5y ago
Because those tokens are fungible, they can "blacklist" certain addresses and refuse deposits from them coming to their exchange, but they can't "null" some random addresses holdings.
- gruez 5y ago
  The smart contract itself has a "blacklist" function[1], which presumably can be used to prevent those tokens from being moved. [1] https://etherscan.io/token/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48#writeProxyContract https://etherscan.io/token/0xa0b86991c6218b36c1d19d4a2e9eb0c...
gruez 5y ago
>Wait so USDC is linked to existing USD in a bank somewhere Yep, short of the fed issuing USD tokens directly that's always going to be how USD stablecoins work. >so what's stopping coinbase from just nulling the locked usdc and minting 262MM new ones Nothing, other than that they have zero incentive to do it. I doubt whatever goodwill they get will come close to the $262 million that they don't have to pay back.
- dragontamer 5y ago
  > Yep, short of the fed issuing USD tokens directly that's always going to be how USD stablecoins work. Or... you could just lie about the USD and issue a stablecoin anyway.
runbathtime 5y ago
USDC represents a claim on USD, but why would Circle want to help out this contract and lose 262 million? If a stablecoin issuer like USDC can make arbitrary decisions to null any USDC token and they use that power, that is a good argument for the point that they are not following aml/kyc on every hop or transaction of USDC, even though they are allowing the transfer of dollars behind it. USDC can be charged with violating money transmission / bsa / aml/ kyc requirements.
- ganzuul 5y ago
  > but why would Circle want to help out this contract and lose 262 million? Probably a rhetorical question, but they might decide that it's a price they can pay for trust in their system. Not sure if I understood where the real value currently is though.
  - runbathtime 5y ago
    USDC's system didn't fail. The money transmitter (smart contract- IRON/TRON) failed, if the USDC is indeed 'locked' or not able to be transmitted. USDC can't be compelled by anyone to 'fix' this. If USDC can revoke any p2p transaction of USDC, that means that they can revoke the transmission of movement of dollars/reserves that USDC token represents. Implicit in that, means they have ultimate control or authority of all p2p transactions or transmissions, and they are not doing kyc/aml on all p2p transactions, thus in violation of money transmitter laws.
    - easrng 5y ago
      I don't remember if there's a way to lock a specific token but I've read the contract and 1. It's behind an UpgradabilityProxy so it can be changed and 2. It includes functions to blacklist addresses and even temporarily pause all transactions.
    - tornato7 5y ago
      Circle can in fact ban addresses from transacting USDC and has done so working with law enforcement: https://www.coindesk.com/circle-confirms-freezing-100k-in-usdc-at-law-enforcements-request https://www.coindesk.com/circle-confirms-freezing-100k-in-us...
marton78 5y ago
Why should they? Suddenly they're over-collateralized by 262 millions, they might just as well spend that money.

rawtxapp 5y ago

Because those tokens are fungible, they can "blacklist" certain addresses and refuse deposits from them coming to their exchange, but they can't "null" some random addresses holdings.

gruez 5y ago
The smart contract itself has a "blacklist" function[1], which presumably can be used to prevent those tokens from being moved. [1] https://etherscan.io/token/0xa0b86991c6218b36c1d19d4a2e9eb0ce3606eb48#writeProxyContract https://etherscan.io/token/0xa0b86991c6218b36c1d19d4a2e9eb0c...

gruez 5y ago

>Wait so USDC is linked to existing USD in a bank somewhere Yep, short of the fed issuing USD tokens directly that's always going to be how USD stablecoins work. >so what's stopping coinbase from just nulling the locked usdc and minting 262MM new ones Nothing, other than that they have zero incentive to do it. I doubt whatever goodwill they get will come close to the $262 million that they don't have to pay back.

dragontamer 5y ago
> Yep, short of the fed issuing USD tokens directly that's always going to be how USD stablecoins work. Or... you could just lie about the USD and issue a stablecoin anyway.

runbathtime 5y ago

USDC represents a claim on USD, but why would Circle want to help out this contract and lose 262 million? If a stablecoin issuer like USDC can make arbitrary decisions to null any USDC token and they use that power, that is a good argument for the point that they are not following aml/kyc on every hop or transaction of USDC, even though they are allowing the transfer of dollars behind it. USDC can be charged with violating money transmission / bsa / aml/ kyc requirements.

ganzuul 5y ago
> but why would Circle want to help out this contract and lose 262 million? Probably a rhetorical question, but they might decide that it's a price they can pay for trust in their system. Not sure if I understood where the real value currently is though.
- runbathtime 5y ago
  USDC's system didn't fail. The money transmitter (smart contract- IRON/TRON) failed, if the USDC is indeed 'locked' or not able to be transmitted. USDC can't be compelled by anyone to 'fix' this. If USDC can revoke any p2p transaction of USDC, that means that they can revoke the transmission of movement of dollars/reserves that USDC token represents. Implicit in that, means they have ultimate control or authority of all p2p transactions or transmissions, and they are not doing kyc/aml on all p2p transactions, thus in violation of money transmitter laws.
  - easrng 5y ago
    I don't remember if there's a way to lock a specific token but I've read the contract and 1. It's behind an UpgradabilityProxy so it can be changed and 2. It includes functions to blacklist addresses and even temporarily pause all transactions.
  - tornato7 5y ago
    Circle can in fact ban addresses from transacting USDC and has done so working with law enforcement: https://www.coindesk.com/circle-confirms-freezing-100k-in-usdc-at-law-enforcements-request https://www.coindesk.com/circle-confirms-freezing-100k-in-us...

marton78 5y ago

Why should they? Suddenly they're over-collateralized by 262 millions, they might just as well spend that money.