Exactly. A 'stablecoin' that is regulation-compliant is undistinguishable from a bank.
Well, 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.
This 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.
Except that you can do FX and global transfers much more quickly and easily.
Nah, most banks globally have a mechanism to send and receive USD. That's sufficient for all use-cases.
> 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.
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
Has 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.
> > 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.
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> 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.
But crypto isn’t the only way to change the banking system.
In many cases you can now transfer money instantly and free across European countries. If there’s a will there’s a way.
Turning crypto into an acceptable banking system is probably just as hard, if not harder, than making the existing banking system better, faster and more user friendly.
We’ve been promised crypto would revolutionise payment for more than a decade now. In the same timespan I’ve seen my little country develop a common payment app shared by all banks which has made payment to shops and between people instant and super easy. We didn’t need crypto to make progress.
If banking regulations were relaxed to the point where crypto could be used more widely, traditional banks would also be able to innovate much more quickly without crypto.
In the end, I don’t find it entirely unlikely that banks may use a blockchain to do some of their international settlement. It’s a nice algorithm in the cases where you don’t want a single master arbiter. But it’ll probably be a fairly boring behind-the-scenes kind of thing.
well, they won't change the compliance costs, but those pennies for the swift message will turn into hundreds of dollars for the blockchain gas fee
you probably hold an antiquated notion of how much transaction costs are on blockchains nowadays. It would do good for you to update your priors on this one - you'd be surprised!
That tweet doesn't appear to explain anything about this at all. I take it the information is in the comments? I'm not able to view those.
i don't click on x links, but i bet one trump coin it talked about offchain without taking into account opening up to double spend.
Yes, but the mechanism involves multiple banks in a chain transferring money and messages between each other like it's 1559. So if a single bank in the chain demands more KYC or has an issue, it can take ages for the transaction to sync.
Except you can send payments with an http request
A bank could easily provide such an API without any need for a new coin.
Does that API support sending $50 to my unbanked aunt in Mexico?
I'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?
Regulation-compliance is kind of a requirement for, well, everything, stablecoin or otherwise, so not really sure what the point is here...
Stablecoins don’t need to have proof of reserves or any other normal regulatory requirements banks have.
Circle has proof of reserves, fully regulated and I can use USDC like a regular ERC20, so I think they want the same.
Full 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.
Definitely,but the Us dollar also carries risk so really there are no risk free assets.
I 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.