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Reminder: If you want a "legitimate stablecoin", get a savings account and/or money-market account and/or money market fund. Prime money market funds are kept

Reminder: If you want a "legitimate stablecoin", get a savings account and/or money-market account and/or money market fund. Prime money market funds are kept at $1 as long as "all is well", while the bank responsible buys and sells dollar-based instruments (such as commercial paper and US Treasuries). Also the whole SEC regulation thing to ensure proper liquidity levels (30% must mature in a week), and other such guarantees. Savings accounts have additional requirements that allow for FDIC insurance. Money market is "risk" but not much risk (one fund dropped to 97-cents per dollar back in 2007 for example). So its possible to "break the buck" but very very rare. And US Laws/regulations changed in response to that 2007 failure. ------ Real life money markets are yielding about 2.95% right now. Anyone offering more than that is taking on risk and/or lying to you. That's what highly ranked commercial paper can get you today. In a few weeks, the Fed is expected to raise rates. We'll be at 3.75%, then 4.5% probably by the end of the year (?? Hard to tell the future though). So we're back into a realm where cash holdings can generate returns. Anyone seeking 10% to 20% returns from a "Stablecoin" is taking on some kind of risk. Much like Celsius, any one returning that much is lying about something (or trusting somebody else's money and that someone else is lying to them).

ikeboy 4y ago
Tether offers 0% returns, though. It's a great business for them, they can get riskless 3% yields and pay nothing on 50B+ in float.
notch656a 4y ago
Those accounts require KYC. >If you want a "legitimate stablecoin", get a savings account and/or money-market account and/or money market fund. In my state, I can walk into a bank and legally carry a concealed firearm without any ID whatsoever -- and yet not be allowed to open an account and put $20, even with a valid US passport (it doesn't show proof of address). Want to put a damper on stablecoins? End KYC/AML/FATCA. If you can be trusted to carry a gun in the bank you ought to be trusted to put $20 into a new account.
- wcfields 4y ago
  So, then the main purpose of stablecoins is crime.
  - notch656a 4y ago
    Perhaps to you. You can confess your crimes here if you like. Where I live, in the United States, there is no requirement to conduct KYC to create a wallet that holds stablecoins and thus creating such a self-custody 'account' is not evidence of crime.
  - matheusmoreira 4y ago
    Anyone opposing the financial arm of total global surveillance must be a criminal, right? What do they have to hide, and all that.
- Eisenstein 4y ago
  I fail to see the connection between carrying a concealed weapon and opening a bank account. How does one correlate to the other? If I am a licensed pyrotechnician and have legal access to high explosives, does that also mean I should be able to open a daycare with no additional checks or licenses? What am I missing?
  - notch656a 4y ago
    Since you conveniently removed the correlation so you could complain the correlation is missing, lets re-insert it. If I am a licensed pyrotechnician and am allowed to bring high explosives in the bank, does that also mean I should be able to deposit $20 into a new account at the bank? I would hope the answer is yes; if you can be trusted with high explosives in the bank you ought to be trusted to open the account and put $20 in.
    - Eisenstein 4y ago
      > I would hope the answer is yes Why? What does holding a pyrotechnician's license have to do with opening a bank account? Can you get a driver's license automatically as well when you are a pyrotechnician? The reason that bank accounts need proper identification is not something that I can comment on with authority, but whatever the reasoning is, it has nothing to do with whether you can carry and operate a firearm responsibly. The two have nothing to do with each other.
smoovb 4y ago
All great US-centric points! If you're living in Venezuela, Turkey, Argentina, Russia, Poland or other country with anywhere from 15 to 167% inflation, you might just be happy to have access to USD via easy to get stablecoins.
- phreack 4y ago
  I'm glad you wrote this. It's eroding to constantly see financial advice that is impossible to apply in countries like these except for crypto and are mostly US/Europe centric. Sometimes, there simply is no other choice and that's crypto's killer use-case.
  - deleted 4y ago
    [deleted]
- notch656a 4y ago
  If the argument it allows these people more stability / wealth to circumvent currency controls of their country, I don't see why the argument can't be extended to first / wealthy worlders as well. To note, I'm for deregulating these currency controls and deregulating the banking system, but giving 3rd worlders a pass while being harsher on those richer than us just seems like crab in a bucket mentality (not accusing you of that, but I've noticed HN exhibiting this duality).
- democracy 4y ago
  what))) nobody in their right mind would buy magic internet coins when you can just buy USD/EUR at any bank branch with zero tax implications/risks.
  - ex3ndr 4y ago
    Is this a joke? Russia literally restricted foreign currency usage, you can't get USD with you anywhere and you can't transfer it overseas. And no-one is able to use banking obviously. I bet in other countries there are the same issues and many people are unbanked.
jcfrei 4y ago
Everything you said is correct, just wanna add that with inflation at around 8% you'll still be losing purchasing power with said money market funds.
- technotony 4y ago
  Depends what you want to buy. Asset prices (property, stocks, bonds) are deflating right now, so your purchasing power is actually increasing in regards to those investments.
  - dharma1 4y ago
    Yep - asset price deflation, consumer price inflation. But there's only so many consumer goods you need to/want to buy. Things to buy with currencies experiencing inflation - hard assets with steady or increasing demand will probably do well over the next decade, but even those still have downside market risk as recession starts to bite, central banks keep tightening and all assets get repriced lower - likely lower than than current inflation. With cash the only downside risk is persistent inflation - holding cash is ok for some time, but not forever. The value will get eaten away with inflation over time. This is assuming you have available access to financial markets and US dollars. If you don't, I can see how stablecoins like USDC become attractive, perhaps even crypto like bitcoin and ethereum. Just stay away from the dodgy stuff - if it looks too good to be true, it probably is.
joshfraser 4y ago
As long as you're not born in the wrong country and wake up to find all your accounts have been frozen like the guy I met last night.
yieldcrv 4y ago
> Anyone seeking 10% to 20% returns from a "Stablecoin" is taking on some kind of risk. Acceptable to me. Consumer/investors just need to be more discerning and pragmatic. There is nothing wrong with risk. There is something wrong with obsessing over there being no risk till you get duped by a fantasy you wanted to hear. Fortunately, many crypto interest rates are really just shares of a revenue stream - usually transaction volume where some value is being extracted - and this revenue collection velocity is repackaged as "interest rates" because it is familiar to passive-income obsessed people. on top of that, the "rates" are juiced by the issuance of an additional new token. So that will remain attractive as a human and capital coordination mechanism.

ikeboy 4y ago

Tether offers 0% returns, though. It's a great business for them, they can get riskless 3% yields and pay nothing on 50B+ in float.

notch656a 4y ago

Those accounts require KYC. >If you want a "legitimate stablecoin", get a savings account and/or money-market account and/or money market fund. In my state, I can walk into a bank and legally carry a concealed firearm without any ID whatsoever -- and yet not be allowed to open an account and put $20, even with a valid US passport (it doesn't show proof of address). Want to put a damper on stablecoins? End KYC/AML/FATCA. If you can be trusted to carry a gun in the bank you ought to be trusted to put $20 into a new account.

wcfields 4y ago
So, then the main purpose of stablecoins is crime.
- notch656a 4y ago
  Perhaps to you. You can confess your crimes here if you like. Where I live, in the United States, there is no requirement to conduct KYC to create a wallet that holds stablecoins and thus creating such a self-custody 'account' is not evidence of crime.
- matheusmoreira 4y ago
  Anyone opposing the financial arm of total global surveillance must be a criminal, right? What do they have to hide, and all that.
Eisenstein 4y ago
I fail to see the connection between carrying a concealed weapon and opening a bank account. How does one correlate to the other? If I am a licensed pyrotechnician and have legal access to high explosives, does that also mean I should be able to open a daycare with no additional checks or licenses? What am I missing?
- notch656a 4y ago
  Since you conveniently removed the correlation so you could complain the correlation is missing, lets re-insert it. If I am a licensed pyrotechnician and am allowed to bring high explosives in the bank, does that also mean I should be able to deposit $20 into a new account at the bank? I would hope the answer is yes; if you can be trusted with high explosives in the bank you ought to be trusted to open the account and put $20 in.
  - Eisenstein 4y ago
    > I would hope the answer is yes Why? What does holding a pyrotechnician's license have to do with opening a bank account? Can you get a driver's license automatically as well when you are a pyrotechnician? The reason that bank accounts need proper identification is not something that I can comment on with authority, but whatever the reasoning is, it has nothing to do with whether you can carry and operate a firearm responsibly. The two have nothing to do with each other.

smoovb 4y ago

All great US-centric points! If you're living in Venezuela, Turkey, Argentina, Russia, Poland or other country with anywhere from 15 to 167% inflation, you might just be happy to have access to USD via easy to get stablecoins.

phreack 4y ago
I'm glad you wrote this. It's eroding to constantly see financial advice that is impossible to apply in countries like these except for crypto and are mostly US/Europe centric. Sometimes, there simply is no other choice and that's crypto's killer use-case.
- deleted 4y ago
  [deleted]
notch656a 4y ago
If the argument it allows these people more stability / wealth to circumvent currency controls of their country, I don't see why the argument can't be extended to first / wealthy worlders as well. To note, I'm for deregulating these currency controls and deregulating the banking system, but giving 3rd worlders a pass while being harsher on those richer than us just seems like crab in a bucket mentality (not accusing you of that, but I've noticed HN exhibiting this duality).
democracy 4y ago
what))) nobody in their right mind would buy magic internet coins when you can just buy USD/EUR at any bank branch with zero tax implications/risks.
- ex3ndr 4y ago
  Is this a joke? Russia literally restricted foreign currency usage, you can't get USD with you anywhere and you can't transfer it overseas. And no-one is able to use banking obviously. I bet in other countries there are the same issues and many people are unbanked.

jcfrei 4y ago

Everything you said is correct, just wanna add that with inflation at around 8% you'll still be losing purchasing power with said money market funds.

technotony 4y ago
Depends what you want to buy. Asset prices (property, stocks, bonds) are deflating right now, so your purchasing power is actually increasing in regards to those investments.
- dharma1 4y ago
  Yep - asset price deflation, consumer price inflation. But there's only so many consumer goods you need to/want to buy. Things to buy with currencies experiencing inflation - hard assets with steady or increasing demand will probably do well over the next decade, but even those still have downside market risk as recession starts to bite, central banks keep tightening and all assets get repriced lower - likely lower than than current inflation. With cash the only downside risk is persistent inflation - holding cash is ok for some time, but not forever. The value will get eaten away with inflation over time. This is assuming you have available access to financial markets and US dollars. If you don't, I can see how stablecoins like USDC become attractive, perhaps even crypto like bitcoin and ethereum. Just stay away from the dodgy stuff - if it looks too good to be true, it probably is.

joshfraser 4y ago

As long as you're not born in the wrong country and wake up to find all your accounts have been frozen like the guy I met last night.

yieldcrv 4y ago

> Anyone seeking 10% to 20% returns from a "Stablecoin" is taking on some kind of risk. Acceptable to me. Consumer/investors just need to be more discerning and pragmatic. There is nothing wrong with risk. There is something wrong with obsessing over there being no risk till you get duped by a fantasy you wanted to hear. Fortunately, many crypto interest rates are really just shares of a revenue stream - usually transaction volume where some value is being extracted - and this revenue collection velocity is repackaged as "interest rates" because it is familiar to passive-income obsessed people. on top of that, the "rates" are juiced by the issuance of an additional new token. So that will remain attractive as a human and capital coordination mechanism.