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Yes, a true "stablecoin" would be 100% backed by deposits in a known and verifiable money market account and able to be withdrawn into USD or other real currenc

Yes, a true "stablecoin" would be 100% backed by deposits in a known and verifiable money market account and able to be withdrawn into USD or other real currency on demand at a 1:1 ratio. None of the things called stablecoins today meet this very simple set of criteria.

FabHK 4y ago
Does USDC not fit that description?
- DebtDeflation 4y ago
  https://en.wikipedia.org/wiki/USD_Coin https://en.wikipedia.org/wiki/USD_Coin >The wording on the Circle website changed from the previous "backed by US dollars" to "backed by fully reserved assets" by June 2021. >USDC reserves are regularly attested (but not audited) by Grant Thornton, LLP This is the same bullshit that Tether has repeatedly pulled.
  - FabHK 4y ago
    Ah, thanks for the info. I thought Coinbase was more reputable.
  - noneeeed 4y ago
    What's the difference between "attested" and "audited" in this context. That really sounds like a linguistic cop-out.
    - vkou 4y ago
      My understanding is that an attestation that you have a billion dollars looks at your bank balance, and observes that you have a billion dollars in your accounts. An audit looks at the history of your overall financials, to ensure that you didn't just borrow that billion dollars two days ago for the sole purpose of passing the audit. Or that you didn't, like, cash a half-billion dollar check from yourself to yourself, and have the money immediately show up in the destination account, before it was debited from the source account.
      - noneeeed 4y ago
        Oh, well that doesn't sound shady at all... I definitely feel like this is one of those situations where "if you have nothing to fear you have nothing to hide" actually applies. I couldn't get a mortgage without a thorough check that income was indeed real income, the idea that billions in assets could be "attested" and not actually audited is incredibly shady.
    - DebtDeflation 4y ago
      Read the actual report to see what they are attesting to: https://www.centre.io/hubfs/PDF/2022%20Circle%20Examination%20Report%20March%202022.pdf?hsLang=en https://www.centre.io/hubfs/PDF/2022%20Circle%20Examination%... 1) There are 51.39 billion USDC in circulation. 2) On a particular day (the Report Date) Circle held an amount of USD-denominated assets at least equal to the number of USDC in circulation in a segregated account. Note what is absent: No statement as to what these assets are. No statement as to where they came from and whether they were in the account the day before or the day after the Report Date.
      - Animats 4y ago
        On a particular date and time - 11:59 PM on March 31, 2022. In the crypto world, where you can borrow a few billion dollars for a few seconds cheaply, that doesn't mean much.
    - dylan604 4y ago
      I attest that the last time I looked under the cushions, there was money there, but nobody has audited my claims. Has anybody trusted the attestations, but verified (audited)?
    - ceejayoz 4y ago
      > What's the difference between "attested" and "audited" in this context. Attestation: "Person X has $50 million dollars in an account." Audit: "Person X has $50 million dollars in an account, and we know how it got there, who has claims on it, and whether it's fairly likely to still exist tomorrow." As a concrete example: https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen... > On the morning of September 15, 2017, Tether opened an account at Noble Bank. Later that day, Bitfinex transferred $382,446,847.71 from Bitfinex’s account at Noble Bank into Tether’s account at Noble Bank. Friedman conducted its verification of Tether’s assets as of 8:00 p.m. EST. https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-... > 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. An audit would've flagged this. An attestation does not. It's like a kid who answers "are you eating cookies before dinner" with "no" because they stopped when you asked the question and are not currently eating one.
  - bcaffrey 4y ago
    The market cap of USDC is something like $52 billion. No bank or banks would allow Circle to hold all that in a commercial bank account, so they diversified into holding treasuries. I don't really see the issue with that.
    - DebtDeflation 4y ago
      Then why not replace "US dollar denominated assets" with "cash and short-dated U.S. government obligations, consisting of U.S. Treasuries with maturities of 3 months or less" in the actual report and have Grant Thornton attest to that?
      - bcaffrey 4y ago
        Their website says: "USDC is fully backed by cash and short-dated U.S. government obligations". I'm sure they'd absolutely love an official audit of that, but given the murky regulatory environment for crypto, I'm also sure that Grant Thornton is refusing to do anything more than it already is. I admit I'm biased, I've used USDC personally & professionally, and I know people involved with running USDC. They're not evil geniuses. And even if they were, you could make so, so much money by breaking it ala Soros & the Bank of England, that I think it would've happened by now.
        DebtDeflation 4y ago
        I'm sure Grant Thornton would be happy to do a full audit of Circle's assets IFF Circle was willing to hand over all of their banking/brokerage statements and allow them to contact those institutions. Verifying the quantity of cash and Treasuries sitting in an account, the length of time they have been there, and the counterparties to their largest transactions is trivial and doesn't compromise any trade secrets which is why it's such a huge red flag for Circle (and Tether) that they refuse to do this while continuing to tease that they will do it at some point in the indeterminate future.
    - zepolen 4y ago
      You don't see an issue that USDC has not had a real audit for that $52 billion? I could say my pencil is worth $52 billion and therefore I have the assets to cover $52 billion USDC and that would be the same as their 'transparency' reports which don't itemize a single asset, just an 'attestation' that the amount is covered.
omnibrain 4y ago
> Yes, a true "stablecoin" would be 100% backed by deposits in a known and verifiable money market account and able to be withdrawn into USD or other real currency on demand at a 1:1 ratio. But where would be the money in that?
- lokedhs 4y ago
  You could invest it in bonds issued by the central bank for the currency you're tied to. But that would only provide a stable income with essentially zero risk (since your binds are denominated in the same currency you're linking to). But that won't be enough money for these people, of course
  - tdhoot 4y ago
    That's not without risk -- you might have to sell the bonds at a loss if there is a run on the currency.
pojzon 4y ago
> Yes, stable currency would be 100% backed by gold deposits in a known and verifiable storage facility and able to withdrawn at on demand ratio. > None of the things called “real world currencies” meet today this very simple set of criteria. —- I dont own crypto but Im able to see the hypocrisy in our current global financial system.

FabHK 4y ago

Does USDC not fit that description?

DebtDeflation 4y ago
https://en.wikipedia.org/wiki/USD_Coin https://en.wikipedia.org/wiki/USD_Coin >The wording on the Circle website changed from the previous "backed by US dollars" to "backed by fully reserved assets" by June 2021. >USDC reserves are regularly attested (but not audited) by Grant Thornton, LLP This is the same bullshit that Tether has repeatedly pulled.
- FabHK 4y ago
  Ah, thanks for the info. I thought Coinbase was more reputable.
- noneeeed 4y ago
  What's the difference between "attested" and "audited" in this context. That really sounds like a linguistic cop-out.
  - vkou 4y ago
    My understanding is that an attestation that you have a billion dollars looks at your bank balance, and observes that you have a billion dollars in your accounts. An audit looks at the history of your overall financials, to ensure that you didn't just borrow that billion dollars two days ago for the sole purpose of passing the audit. Or that you didn't, like, cash a half-billion dollar check from yourself to yourself, and have the money immediately show up in the destination account, before it was debited from the source account.
    - noneeeed 4y ago
      Oh, well that doesn't sound shady at all... I definitely feel like this is one of those situations where "if you have nothing to fear you have nothing to hide" actually applies. I couldn't get a mortgage without a thorough check that income was indeed real income, the idea that billions in assets could be "attested" and not actually audited is incredibly shady.
  - DebtDeflation 4y ago
    Read the actual report to see what they are attesting to: https://www.centre.io/hubfs/PDF/2022%20Circle%20Examination%20Report%20March%202022.pdf?hsLang=en https://www.centre.io/hubfs/PDF/2022%20Circle%20Examination%... 1) There are 51.39 billion USDC in circulation. 2) On a particular day (the Report Date) Circle held an amount of USD-denominated assets at least equal to the number of USDC in circulation in a segregated account. Note what is absent: No statement as to what these assets are. No statement as to where they came from and whether they were in the account the day before or the day after the Report Date.
    - Animats 4y ago
      On a particular date and time - 11:59 PM on March 31, 2022. In the crypto world, where you can borrow a few billion dollars for a few seconds cheaply, that doesn't mean much.
  - dylan604 4y ago
    I attest that the last time I looked under the cushions, there was money there, but nobody has audited my claims. Has anybody trusted the attestations, but verified (audited)?
  - ceejayoz 4y ago
    > What's the difference between "attested" and "audited" in this context. Attestation: "Person X has $50 million dollars in an account." Audit: "Person X has $50 million dollars in an account, and we know how it got there, who has claims on it, and whether it's fairly likely to still exist tomorrow." As a concrete example: https://ag.ny.gov/sites/default/files/2021.02.17_-_settlement_agreement_-_execution_version.b-t_signed-c2_oag_signed.pdf https://ag.ny.gov/sites/default/files/2021.02.17_-_settlemen... > On the morning of September 15, 2017, Tether opened an account at Noble Bank. Later that day, Bitfinex transferred $382,446,847.71 from Bitfinex’s account at Noble Bank into Tether’s account at Noble Bank. Friedman conducted its verification of Tether’s assets as of 8:00 p.m. EST. https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal https://ag.ny.gov/press-release/2021/attorney-general-james-... > 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. An audit would've flagged this. An attestation does not. It's like a kid who answers "are you eating cookies before dinner" with "no" because they stopped when you asked the question and are not currently eating one.
- bcaffrey 4y ago
  The market cap of USDC is something like $52 billion. No bank or banks would allow Circle to hold all that in a commercial bank account, so they diversified into holding treasuries. I don't really see the issue with that.
  - DebtDeflation 4y ago
    Then why not replace "US dollar denominated assets" with "cash and short-dated U.S. government obligations, consisting of U.S. Treasuries with maturities of 3 months or less" in the actual report and have Grant Thornton attest to that?
    - bcaffrey 4y ago
      Their website says: "USDC is fully backed by cash and short-dated U.S. government obligations". I'm sure they'd absolutely love an official audit of that, but given the murky regulatory environment for crypto, I'm also sure that Grant Thornton is refusing to do anything more than it already is. I admit I'm biased, I've used USDC personally & professionally, and I know people involved with running USDC. They're not evil geniuses. And even if they were, you could make so, so much money by breaking it ala Soros & the Bank of England, that I think it would've happened by now.
      - DebtDeflation 4y ago
        I'm sure Grant Thornton would be happy to do a full audit of Circle's assets IFF Circle was willing to hand over all of their banking/brokerage statements and allow them to contact those institutions. Verifying the quantity of cash and Treasuries sitting in an account, the length of time they have been there, and the counterparties to their largest transactions is trivial and doesn't compromise any trade secrets which is why it's such a huge red flag for Circle (and Tether) that they refuse to do this while continuing to tease that they will do it at some point in the indeterminate future.
  - zepolen 4y ago
    You don't see an issue that USDC has not had a real audit for that $52 billion? I could say my pencil is worth $52 billion and therefore I have the assets to cover $52 billion USDC and that would be the same as their 'transparency' reports which don't itemize a single asset, just an 'attestation' that the amount is covered.

omnibrain 4y ago

> Yes, a true "stablecoin" would be 100% backed by deposits in a known and verifiable money market account and able to be withdrawn into USD or other real currency on demand at a 1:1 ratio. But where would be the money in that?

lokedhs 4y ago
You could invest it in bonds issued by the central bank for the currency you're tied to. But that would only provide a stable income with essentially zero risk (since your binds are denominated in the same currency you're linking to). But that won't be enough money for these people, of course
- tdhoot 4y ago
  That's not without risk -- you might have to sell the bonds at a loss if there is a run on the currency.

pojzon 4y ago

> Yes, stable currency would be 100% backed by gold deposits in a known and verifiable storage facility and able to withdrawn at on demand ratio. > None of the things called “real world currencies” meet today this very simple set of criteria. —- I dont own crypto but Im able to see the hypocrisy in our current global financial system.