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The "stable" part in the name suggests that it does in fact offer a return as a defensive investment against the volatility inherent in other crypto assets. If
by pavlov 4y ago
The "stable" part in the name suggests that it does in fact offer a return as a defensive investment against the volatility inherent in other crypto assets.
If Bitcoin is going down, you sell and buy USDT instead, then two months later you trade the USDT for 20% more Bitcoin than what you started with... Measured in Bitcoin, you got a 20% return, and it was made possible by the asset-backed security in which you invested in the meantime.
Regular money market funds didn't pay anything when interest rates were negative. They are still securities.
- Jommi 4y agoAre dollars in your Venmo account securities?
- pavlov 4y agoThe dollars in my Schwab account are securities because they're automatically invested in a money market fund. I would argue that a crypto exchange is more like Schwab than Venmo, and that stablecoins provide a function similar to money market funds.
- Jommi 4y agostablecoins are not automatically invested anywhere you arent accuring any yield
- yokem55 4y agoBut such trading based profits come out of the efforts of the trader, not the issuer of the stable coin. Money market accounts have to be securities because most of the time they do offer some yield. If the SEC is going down this road (and I don't think they actually are - this is more aimed at the bad behavior of Binance) it means they are seriously expanding the "reasonable expectation of profits" prong of the Howey test to include assets that on their own, have no expectation of profits simply because some users of the asset could potentially gain a profit in their use. The current makeup of the judiciary is really unlikely to play along.