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Banks are slow in large part because of systems built to support the AML/KYC controls and fraud prevention. (Think about your wire transfer getting screened etc
by jbs789 1y ago
Banks are slow in large part because of systems built to support the AML/KYC controls and fraud prevention. (Think about your wire transfer getting screened etc). New banks do this more efficiently but this is still the bottleneck.
A bank doing stablecoins will still need to implement these controls.
Stablecoins only really work because they are outside the system.
- lottin 1y agoExactly. A 'stablecoin' that is regulation-compliant is undistinguishable from a bank.
- drexlspivey 1y agoExcept you can send payments with an http request
- zaik 1y agoA bank could easily provide such an API without any need for a new coin.
- solumos 1y agoDoes that API support sending $50 to my unbanked aunt in Mexico?
- baq 1y agoDoes Tether?
- arccy 1y agonoone reputable would want to touch Tether and their anti-regulation stance.
- deleted 1y ago[deleted]
- sethhochberg 1y agoI'm curious though, what would she do with that crypto once she had it? Presumably she'd need to exchange it for cash since retail acceptance of crypto is pretty low, and the local exchange place that takes WhateverStablecoin and hands out cash is going to take some commission. And at that point it seems like we've just reinvented Western Union or Moneygram. In your view is the advantage of the hypothetical stablecoin way of doing this that it exists outside of the money-transfer provider ecosystem until its actually exchanged?
- conception 1y agoWestern Union exists, yes.
- wbl 1y agoOr $10,000 to my flexibly financed uncle in Bogota?
- kurthr 1y agoWell, if you're big enough to be TBTF, then you can lever up stablecoin risk because you know you'll be bailed out after they let the little guys tank.
- ETH_start 1y agoThis is nothing more than a trope to absolve government of its responsibility for worsening people's lives. The government imposes massive fines on huge banks, when they are found to have inadvertently banked criminals. And by criminals I don't mean people who were convicted of a crime. Just people a regulatory agency alleged — at some point in time after the bank serviced them — are criminals. So what banks do is become increasingly paranoid about who they will they bank, meaning anyone who falls into the "high risk" category, is extrajudicially punished through systemically high risks of being debanked. In this way, the state can punish certain groups without due process.
- disgruntledphd2 1y agoExcept that you can do FX and global transfers much more quickly and easily.
- glitchc 1y agoNah, most banks globally have a mechanism to send and receive USD. That's sufficient for all use-cases.
- solumos 1y ago> mechanism The mechanism often involves correspondent banks, and is generally pretty expensive ($25-$65). For scale, we’re talking about transfer fees measured in cents with stablecoins.
- glitchc 1y agoAll of the cost is tied to compliance. A Swift message costs pennies, it's the due diligence behind it that banks charge for. Stablecoins will not change the compliance requirements
- MichaelZuo 1y agoHas anyone ever provided an argument against this? I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce.
- x-complexity 1y ago> > All of the cost is tied to compliance. A Swift message costs pennies, it's the due diligence behind it that banks charge for. Stablecoins will not change the compliance requirements. > I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce. Taking the statement literally as-is: Yes, a strictly > 0 amount of overhead is required to perform said compliance activities. But the overhead similarly can *never* be 100% of the money being transferred over. And right now, the transfer costs have only ever been shown to grow, and never shrink in isolation. They only shrink when a new competitor comes in to provide said service, which has rarely ever happened because of said regulations that progressively saddle them with more requirements. ------ > I don’t see how crypto boosters get around the fact that more than 0% of regulations are legitimately desired by most of the world. And those require some non zero amount of bureaucracy and money to enforce. Interpreting this emotionally: You're leaving out the implicitly-made conclusion that most pro-crypto people will make: That the current banking system *has* to be accepted as-is, useless systems & fee-draining & all that jazz, *and* that they should just take it. You've already lost all attempts to convince them with that rhetoric. By not putting in more clarifying statements, the gaps have been filled in with the negative implications that will turn them away from supporting your view. It will be seen by pro-crypto people as own-side points scoring.
- kiitos 1y agoRegulation-compliance is kind of a requirement for, well, everything, stablecoin or otherwise, so not really sure what the point is here...
- conception 1y agoStablecoins don’t need to have proof of reserves or any other normal regulatory requirements banks have.
- hoppp 1y agoCircle has proof of reserves, fully regulated and I can use USDC like a regular ERC20, so I think they want the same.
- kiitos 1y agoFull attestation doesn't guarantee stable 1-to-1 valuation, even with all of those things USDC isn't equivalent to 1USD and treating it as if it were carries risk.
- hoppp 1y agoDefinitely,but the Us dollar also carries risk so really there are no risk free assets.
- kiitos 1y agoI mean, in the absolute sense, sure, but the "risk" carried by USD is a categorically different, exponentially smaller thing than the "risk" associated with any stable coin. They're not really comparable.
- piva00 1y agoCurious what exactly differs between EU and USA to make American transfers so inefficient time-wise. In the Eurozone SEPA instant transfers are settled in seconds (usually under 10 seconds, with max 20 seconds allowed), and AML/KYC regulations are quite strong.
- hocuspocus 1y agoEU directives have forced banks to modernize at a pace that wouldn't have been possible if we just let the free market decide. There are downsides to the heavy regulatory framework, for instance the unhealthy consolidation and size of systemic banks. But we enjoy pretty advanced banking services and arguably the most flourishing fintech ecosystem by worldwide standards, mostly thanks to EU technocrats.
- jorvi 1y agoThe EU is also looking into creating a digital euro ("eurocoin", so to speak). The basic idea being to break the power and thus risk of systemic banks. You'd have an account at the ECB that you can keep your digital euros in and exchange to and for liquid euros. You'd get the ECB interest rate. Then if banks want to convince you to hold your eurocoin on their wallet / exchange / stake it, they'd have to offer better features and better interest than the ECB. Sadly banks are in full swing trying to torpedo the proposal with lobbying, to the point where there's a lot of noise about the ECB only being allowed to be a facilitator and not allowed to be actual competition to the bank, and instead it's banks that should get the sole right to hold digital euro accounts. > But we enjoy pretty advanced banking services and arguably the most flourishing fintech ecosystem by worldwide standards Interestingly enough the US does have very modern financial institutions: credit unions. An American woman I met in Vietnam and traveled together with for a bit had a Charles Schwab account that had more features, more free overseas withdrawals and a nicer mobile app than my Dutch bank. It was almost on par with Revolut / N26 / Bunq.
- solumos 1y ago> Interestingly enough the US does have very modern financial institutions: credit unions. An American woman I met in Vietnam and traveled together with for a bit had a Charles Schwab account that had more features, more free overseas withdrawals and a nicer mobile app than my Dutch bank. Charles Schwab is the 12th largest bank in the US by assets. I do agree that credit unions can be great, however, the experience between them is wildly inconsistent. Some have apps that barely work, and some have decent apps that are a bit dated and clunky. The big banks generally have the best UX/support/etc.
- xiphias2 1y agoPartly it's true, but also all banks in the world are fractional reserve / printing money from thin air from the loans they got from bigger banks. If the big US banks are successful, they can have their own one huge fractional reserve that can be used by people around the world.
- hocuspocus 1y agoNot only this isn't how banks work, but also completely irrelevant to moving money.
- ta12653421 1y agoThen whats your brief description of how banks create new money? While the wording was imprecise, actually this is what banks are doing: Creating loans, based on the deposits of customers.
- hocuspocus 1y agoYou wrote "from the loans they got from bigger banks" which makes little sense. Private banks create money by extending credit, that's it. They worry later about reserve requirements, which in the case of USD or EUR are extremely low. And I still don't understand how this relevant in any way to the topic.
- ta12653421 1y agoI wasnt the OP :) They are expanding credit, but they need customer funds on the central banking level to actually move away the money the created on their local core banking; thats the reason why banks needs customer funds: Without them, their central bank account would be empty and they couldnt transfer any money that they created. the question regarding minimum reserve is another angle and not relevant to the question of how money is technically created and then transfered. EDIT: for sure, they can also acquire central bank money as a credit to make the payments transfer happen, but usually its more easier and convenient to use customer funds instead of borrowing from the central bank or on the interbank level
- LatteLazy 1y agoI don’t think that’s true in this case. I would assume the bank issuing the coin has to know the identity of the people they sell it to. But once those people sell it on, it’s not their problem any more. Sure they could get an order to seize those coins (/wallet) and would have to obey. But I don’t think they’d be required to kyc everyone on the network. Just their immediate counterparties…
- disgruntledphd2 1y agoThe idea is (as I understand it) that to get fiat (which is presumably the end-goal) you need KYC, so if each node which converts stablecoin-fiat then you have acceptable KYC. (I am not a regulator though, so who knows?)
- deleted 1y ago[deleted]