6 ms·

> To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, w

> To address risks to stablecoin users and guard against stablecoin runs, legislation should require stablecoin issuers to be insured depository institutions, which are subject to appropriate supervision and regulation, at the depository institution and the holding company level. > To address concerns about payment system risk, in addition to the requirements for stablecoin issuers, legislation should require custodial wallet providers4 to be subject to appropriate federal oversight. Congress should also provide the federal supervisor of a stablecoin issuer with the authority to require any entity that performs activities that are critical to the functioning of the stablecoin arrangement to meet appropriate risk-management standards. > To address additional concerns about systemic risk and concentration of economic power, legislation should require stablecoin issuers to comply with activities restrictions that limit affiliation with commercial entities. Supervisors should have authority to implement standards to promote interoperability among stablecoins. In addition, Congress may wish to consider other standards for custodial wallet providers, such as limits on affiliation with commercial entities or on use of users’ transaction data. AKA StableCoin operators should be banks. (Stable Coins will be bank notes)?

colinmhayes 5y ago
Tether was invented to provide bitfinex with banking services after the banks refused to deal with them. Not super surprising that regulators are treating this banking replacement as a bank.
eightysixfour 5y ago
I think this is a pretty decent set of recommendations considering the power stablecoin issuers have, personally. > Stable Coins will be bank notes. Exactly.
pjc50 5y ago
> Stable Coins will be bank notes What do you call an institution that takes deposits and lends them out, such as by buying ""commercial paper"" that Tether repeatedly talks about? A bank. (Or possibly a money market fund)
- the_optimist 5y ago
  You call it a 0% interest money market fund. You do not call it a bank. A bank does something entirely different: create 'bank loans'. A non-bank does not have the ability to create bank loans.
  - JumpCrisscross 5y ago
    > A bank does something entirely different: create 'bank loans'. A non-bank does not have the ability to create bank loans. I agree with you, broadly, though I have to comically point out that Tether was absolutely also originating loans.
    - the_optimist 5y ago
      This might be right (though to my knowledge, it's not what they claim to be doing). To originate a loan, Tether would simply issue and lend their coin (Tether), specifically ignoring dollar backing. Can you provide a discussion of them doing this?
  - cinquemb 5y ago
    > A non-bank does not have the ability to create bank loans. A decentralized derivatives protocol can lend its credit balance (and fractions of its stablecoin balance, if it exists at all at the point when a position is opened) to a decentralized liquidity pool when there is demand by end users to open a position (ex. a user can deposit frax to buy options/forwards/interest rate swaps/etc against a liquidity pool while the exchange allows the pool to borrow collateral into existence [and destroyed when the users position is closed, modulo the type of derivative the user bought]) without the liquidity pool providing all or any the collateral to back the position if it ends up moving against the liquidity pools exposure. Such a protocol can also issue debt against their stablecoin flows in accordance the protocol code, that can also float on a dex at a premium or a discount and also be used as collateral in other decentralized stable coins that allow for differing collateral underlying (like some decentralized credit/debt backed stablecoins out there now, or allow themselves to be collateralized by any combination of ERC20 underlying).
5faulker 5y ago
We've seen that card played before.
- lottin 5y ago
  What card?
wpietri 5y ago
Stablecoin issuers are already effectively banks. In particular, wildcat banks: https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Wildcat_banking Spoiler alert: there's a reason we had 150 years without wildcat banks.
- CryptoPunk 5y ago
  The popular conception of the so-called free banking era, and the cause and prevalence of wildcat banking, is wrong. https://www.alt-m.org/2021/07/06/the-fable-of-the-cats/ https://www.alt-m.org/2021/07/06/the-fable-of-the-cats/
  - deleted 5y ago
    [deleted]
  - NationalPark 5y ago
    Even the Cato blogger here concedes that wildcat banks failed more often and were probably fraudulent from the beginning some of the time (but you can't prove it!). His argument more or less boils down to regulation being inherently bad, therefore it's worth it to try this all over again with stablecoins, in case it works this time, also sometimes people got back like 95 cents on the dollar so if you don't count those cases as wildcat banks the story looks a lot better. Not surprising, but it's a lot of words to make such a banal point.
    - CryptoPunk 5y ago
      You've totally missed and mischaracterized the point of the article. That wildcat banks failed was never in dispute. They failed, by definition. As the monetary historian notes, wildcat banks were very rare, and the cause of wildcat banking was not, as alleged, lack of centralized regulatory gatekeeping: the failures were generally directly due to regulatory intervention that exacerbated risk, like prohibitions on bank branching which precluded diversification.
      - deleted 5y ago
andred14 5y ago
Screw governments and screw legislation. After all the damage and destruction and lies of these past couple years such as the FAKE pandemic i do not wish to be governed. Good day to you.
andred14 5y ago
The government has no right to pass laws about something just because it feels like it. Cryptocurrencies are harming nobody. In reality our leaders just want to destroy this thing that is enabling the people to succeed and exit from the perpetual slave/debt/fiat system.

colinmhayes 5y ago

Tether was invented to provide bitfinex with banking services after the banks refused to deal with them. Not super surprising that regulators are treating this banking replacement as a bank.

eightysixfour 5y ago

I think this is a pretty decent set of recommendations considering the power stablecoin issuers have, personally. > Stable Coins will be bank notes. Exactly.

pjc50 5y ago

> Stable Coins will be bank notes What do you call an institution that takes deposits and lends them out, such as by buying ""commercial paper"" that Tether repeatedly talks about? A bank. (Or possibly a money market fund)

the_optimist 5y ago
You call it a 0% interest money market fund. You do not call it a bank. A bank does something entirely different: create 'bank loans'. A non-bank does not have the ability to create bank loans.
- JumpCrisscross 5y ago
  > A bank does something entirely different: create 'bank loans'. A non-bank does not have the ability to create bank loans. I agree with you, broadly, though I have to comically point out that Tether was absolutely also originating loans.
  - the_optimist 5y ago
    This might be right (though to my knowledge, it's not what they claim to be doing). To originate a loan, Tether would simply issue and lend their coin (Tether), specifically ignoring dollar backing. Can you provide a discussion of them doing this?
- cinquemb 5y ago
  > A non-bank does not have the ability to create bank loans. A decentralized derivatives protocol can lend its credit balance (and fractions of its stablecoin balance, if it exists at all at the point when a position is opened) to a decentralized liquidity pool when there is demand by end users to open a position (ex. a user can deposit frax to buy options/forwards/interest rate swaps/etc against a liquidity pool while the exchange allows the pool to borrow collateral into existence [and destroyed when the users position is closed, modulo the type of derivative the user bought]) without the liquidity pool providing all or any the collateral to back the position if it ends up moving against the liquidity pools exposure. Such a protocol can also issue debt against their stablecoin flows in accordance the protocol code, that can also float on a dex at a premium or a discount and also be used as collateral in other decentralized stable coins that allow for differing collateral underlying (like some decentralized credit/debt backed stablecoins out there now, or allow themselves to be collateralized by any combination of ERC20 underlying).

5faulker 5y ago

We've seen that card played before.

lottin 5y ago
What card?

wpietri 5y ago

Stablecoin issuers are already effectively banks. In particular, wildcat banks: https://en.wikipedia.org/wiki/Wildcat_banking https://en.wikipedia.org/wiki/Wildcat_banking Spoiler alert: there's a reason we had 150 years without wildcat banks.

CryptoPunk 5y ago
The popular conception of the so-called free banking era, and the cause and prevalence of wildcat banking, is wrong. https://www.alt-m.org/2021/07/06/the-fable-of-the-cats/ https://www.alt-m.org/2021/07/06/the-fable-of-the-cats/
- deleted 5y ago
  [deleted]
- NationalPark 5y ago
  Even the Cato blogger here concedes that wildcat banks failed more often and were probably fraudulent from the beginning some of the time (but you can't prove it!). His argument more or less boils down to regulation being inherently bad, therefore it's worth it to try this all over again with stablecoins, in case it works this time, also sometimes people got back like 95 cents on the dollar so if you don't count those cases as wildcat banks the story looks a lot better. Not surprising, but it's a lot of words to make such a banal point.
  - CryptoPunk 5y ago
    You've totally missed and mischaracterized the point of the article. That wildcat banks failed was never in dispute. They failed, by definition. As the monetary historian notes, wildcat banks were very rare, and the cause of wildcat banking was not, as alleged, lack of centralized regulatory gatekeeping: the failures were generally directly due to regulatory intervention that exacerbated risk, like prohibitions on bank branching which precluded diversification.
    - deleted 5y ago

andred14 5y ago

Screw governments and screw legislation. After all the damage and destruction and lies of these past couple years such as the FAKE pandemic i do not wish to be governed. Good day to you.

andred14 5y ago

The government has no right to pass laws about something just because it feels like it. Cryptocurrencies are harming nobody. In reality our leaders just want to destroy this thing that is enabling the people to succeed and exit from the perpetual slave/debt/fiat system.