Stablecoins: Growth potential and impact on banking
federalreserve.gov
federalreserve.gov
As with the traditional heat pump there is a working fluid - the coins. These coins have a price (in dollars) - this is their temperature.
The market is cycled just as a heat pump, with the working fluid being squeezed by buying pressure to raise the price, then released by selling to reduce the price and start the cycle again.
By controlling the cycle (e.g. by printing USDT out of thin air), the scammers ensure that the marks are buying in when the price is high, because they believe it will continue rising, and sell when the price is low, because they fear a further drop. Thus money is pumped from the marks to the scammers.
MOON->FOMO->HODL->DUMP->MOON->
MOON - scammers buy in to start raising the price. Early marks start entering and the scammers can reduce their buying as the price takes off.
FOMO - late marks come in wanting some of the action. Scammers are now shifting to selling, with max selling as the top is reached and marks buying power becomes exhausted.
HODL - price is dipping, scammers still are selling, but marks are holding expecting prices to recover.
DUMP - heavy price falls are now frightening the marks, who start closing their positions. Scammers are quietly hoovering up the excess, and gradually put a floor to the price.
Repeat.
Note that the scammers coin holdings are conserved across the whole cycle - but because of the price differential between their buying and selling phases, they make a profit over that cycle.
BTC has gone through 2 such cycles in the last year or two, maybe it is just entering the MOON phase again now?
The question must become "what is the other mechanism?". In the case of Tether, which has the largest market cap of any stablecoin, as far as I know, the scam is this. If I want to have liquidity on Bitfinex, I need to go buy tethers. If I try to make a transaction for bitcoins with dollars on the exchange, it could take days to process. There's no particular reason for this, You're just trading shares of a large wallet. So I must first go buy some tether from bitfinex, but wait, USD to Tether liquidity is also artifically capped. If I try to buy tether for dollars, it can also take days.
It follows that the only way to obtain liquidity on one of these exchanges is to buy and hold stablecoins. This is the premise upon which the exchanges that print these currencies can then turn around and lend the dollars used to buy them.
If you discovered, suddenly, that a casino had 78 billion dollars in chips just floating around, you would rightly wonder what the hell was going on, although the explanation would likely be different.
Tether is not a cryptocurrency, it's a casino chip. An escrow account that the bank is illegally investing in risky securities, entirely for the profit of its executives, investment in which is entirely funded by manipulating access to the wider crypto market.
For one, in theory, one useful aspect of a stable coin is to allow a user to get in and out of numerous crypto currencies while minimizing fees and delays.
Any engagement with the fiat banking system will typically cost time and/or money basically due to the potential for fraud and existing anti-fraud measures both for the banks as well as the exchanges.
As such, stable coins in theory should be a reasonable proxy for fiat for folks who trade crypto aggressively (e.g., day trading).
In practice, you get the train wreck that is Tether and Bitfinex. I realize that Tether is huge, but it’s not the best poster child for what a stable coin should be or can be.
I think some smart folks have realized that running solidly backed stable coin — that is, with actual currency rather than proxies like more crypto, bonds/loans, etc. — is a something worth pursuing. Perhaps for reasonable profit, perhaps for power… who knows? I think proper stable coins will become more prominent moving forward.
A second mechanism, and I think this is a big one, is that stable coins managed directly or indirectly by nation states (specifically US and China and maybe EU) will be a big deal in developing countries for both savings as well as transactions. China is already doing this on a small scale. Without getting into the nitty gritty, being a winner in this area will provide the issuer of the stable coin a tremendous amount of influence on the world economy.
I know little about finance but I don't understand why it is smarter to back a stable with cash rather than with bonds and loans for instance.
I'm not impugning fractional reserve banking per se here, just the idea that a stable coin backed by bonds is the same as a stable coin backed by the asset it represents.
It’s probably not a bad idea if done in good faith.
I probably should have said “sketchy bonds/loans”.
What bitfinex has been doing is extremely sketchy and (imho) probably won’t survive a run (if a run ever happens).
The primary reason for delays between buying crypto and actually receiving it is your bank. Not the exchange. Your bank is fucking around with your money and not sending it to the exchange immediately and even after they send it they have the ability to reverse the transaction, so the exchange needs the guarantee the money will not be taken from them.
The rest of your comment is just nonsense. Tether is a cryptocurrency I don't even understand how you could argue its not. You should look into all the laws traditional banks break using your money too.
The fact that the market isn't totally efficient doing USD/BTC transactions directly and the fact that Tether is clearly far more risky than USD kinda indicates something is up. Who knows, they could be playing it safe and be well capitalized, but if they're not, it becomes a very similar situation to when Soros made a mint "breaking" the Pound.
I am by no means a fan of tether or any other stable coins, but they are just as legitimate as our current banking system.
What precisely does that mean?
Attestations vs. audits, what purpose each one serves in an accounting sense, and why an organization would opt for one over another; these are conversations I don't see being had, but conversations that, I think, would clear a lot of the frustration and confusion up, on the part of the skeptics.
Zero reserves means print as much as you want, subject only to the bank's own underwriters. The banks went and minted trillions of dollars in unbacked currency. Most of our fiat money supply comes from M2 and M3 money issued by banks.
Meanwhile, algorithmic stablecoins like DAI have 150% reserves, yet the government doesn't trust them as much as the banking system?
If you search online for the Fed's own explanation for these policies, they make some overconfident assertions about "ample reserves" and how their policy assumes there are now "ample" reserves, so they can just set the reserve requirements at zero. Seems to me some political doublespeak in order to provide the unprecedented level of Keynesian stimulus that was planned to be released.
"OK, can we see behind the curtain?"
"Absolutely not"
"Can I cash them in with you to get the dollars back out?"
"Hell no"
That's why it's relevant. Because this is not a bank or bank-like situation, and comparisons to fratctional reserve are spurious. They're sold specifically on not being fractional.
https://www.ft.com/content/529eb4e6-796a-4e81-8064-5967bbe3b...
I would have thought that would be a fantastic reason never to go anywhere near the entire ecosystem, personally. Especially as their website is still doing it (or at least using weasel-words to heavily imply it) -
“All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by Tether’s reserves.”
Aka if you loan 1T dollars and get 50B in interest payments after expenses and 40B in loan defaults you didn’t lose money.
Certainly this can go sideways when they don't understand the risk in one type of loan, like 2007-2008, but most of the time, they can figure this out.
Second Banks want to have outstanding loans. They are going to issue new ones as the old ones are paid off. Therefore cash on hand + outstanding loans get modified by defaults, new loans, principal payments, and interest payments. Suppose from that 1,000B in loans they got 5B in interest, 3B in principle payments, and had 4B in defaults and issued 7B in new loans. They now have 1,000 - 3 - 4 + 7 = 1,000B in loans and an extra 5 + 3 - 7B = 1B in cash.
Those changes can be calculated on a day by daily, monthly, or yearly basis, but dividends means a bank can make money in some year and still fail. Which is why regulators care about bank reserves not profitability.
The "zero reserve requirement" means that banks are now required to keep $0 in their account with the Federal Reserve Bank for every $100 of deposits they take in--a literal pile of cash in their bank vault would not count a dime. That is the only thing that qualifies as reserves for that requirement, and hopefully you understand that that is by no means an accurate reflection of any lay person definition's of "reserve".
Instead, modern financial regulations use capital requirements instead of reserve requirements. In essence, banks need to keep a buffer of their own cash--this isn't part of the assets/liabilities calculation--that can be raided if assets prove to be undervalued, and the amount that is needed depends on the risk of the assets. Something safe like cash requires no equity to be covered, while something like a mortgage might require about 3.5% of the par value in equity, and something like cryptocurrency 100%.
Note that you can also judge banks by how much their assets exceed liabilities. A typical bank is seen as perilously close to insolvent if their assets are "only" 107% of liabilities. By this metric, I will point out that Tether's assets are about 101% of liabilities the last I checked--and that's assuming that Tether's statement of its assets are in fact accurate, which given their history of lying, is not necessarily a safe assumption.
Why do so many crypto critics pretend DAI doesn’t exist?
HN comments are 'worried' that Tether (and other Stable coins) injecting money into the bitcoin/crypto markets are artificially inflating prices and makes the whole thing a scam. Yet that's pattern is the underlying premise of Quantitative Easing that kept the stock market from crashing (or inflated the bubble depending on your point of view) for the past 2 years.
I'm open to a conclusion that both are a scam. I'm also open to a simple and understandable explanation for how these two approaches are fundamentally different from each other. But if someone's viewpoint is one approach is better then the other because a) USD has worked fine for USA up to this point or b) USD is back by USA govt and it's military, then i think they should realize that those are factors are not some unalienable truth that's guaranteed to continue forever. An anti-fragile system would consider hedging against them.
So yes, USD, Tether and my poker chips at home do share a fundamental characteristic of any method of exchange, a subjective belief about their worth that is ultimately decided by collective agreement. That does not mean they are anywhere close to the same thing, or scams.
> If there is a problem with a bank, there are several legal and financial consequences for everyone involved, enforced by the government.
What if that bank is the central bank? Which entity is responsible for judging the actions of that bank and deal out consequences if their actions cause more harm then good? And who would end up on the receiving end of those consequences (guessing not any individuals)? Time will tell if the doomsday folks (3 sigma bubble) are right or the mainstream folks (everything will go back to normal after a few interest rate hikes) are right but I'm pretty certain nobody will face meaningful consequences for being wrong.
The problem with unstable collateral is that it unwinds in market downturns, making the stable coin less useful when most needed
When crypto markets are volatile there's more demand to cash out of crypto and into a stable coin, but volatility is also when people take on the least amount of leverage meaning that it's also when there's the least amount of DAI available.
When crypto markets are not volatile, then the utility of a stable coin goes down and yet that's also when people assume the most amount of leverage and hence when the most amount of DAI is available.
The end result is that the incentives for DAI don't really work out all that well.
Matt Levine wrote a great article explaining how stablecoins could actually be too safe, and that concerns the Fed, possibly to the point of action [0]:
> A less obvious risk of stablecoins is that they might be too stable. A stablecoin is, among other things, a substitute for putting money in a bank. Banks are generally very safe places to put money, but they are not perfectly safe. There can be runs on banks; banks can fail. For most U.S. retail bank accounts this is not a very salient problem, since they are backed by government deposit insurance, but many large institutional pools of money (corporate cash accounts, money-market funds, etc.) park their money in short-term bank instruments and are sensitive to risk. If a bank gets riskier, it will lose deposits. And if a stablecoin is so stable that it is safer than a bank, then banks generally will lose deposits.
> Why is this a risk? Well, banks do useful stuff. Classically, they take people’s deposits and lend them out to other people to start businesses and buy homes. The provision of credit by banks helps the economy grow. More to the point, the withdrawal of credit by banks hurts the economy, and the risk here is wrong-way. If people get nervous about banks and pull out all their money to put it in safer stablecoins, then (1) that will probably happen at a time when the economy is shaky and (2) that will definitely make the economy shakier. The bulk of the response to the 2008 financial crisis involved preventing runs on banks, because those would have made all of the problems of the crisis much worse.
The critics are asking for something that's a little ridiculous and not in line with a) how banking works or b) accurate according to what the definitions of "attestation" and "audit" means in accounting.
[0] https://www.bloomberg.com/opinion/articles/2022-02-01/hedge-...
It's amusing (to me) how the cryptocurrency community has managed to convince its members to accept ridiculous amounts of commoditization and middlemen in exchange for anonymity properties that are strictly worse than cash, and arguably worse than payment cards.
Tornado Cash is a decentralized protocol based on zero knowledge proofs. Its smart contracts are immutable, have no admins.
Besides that, let us not forget that the Mastercard/Visa middlemen charge us large fees for using their services and knows everthing about our purchase habits.
(unless you're living a cash based life, but that would make you an exception)
> Besides that, let us not forget that the Mastercard/Visa middlemen charge us large fees for using their services and knows everthing about our purchase habits.
This is a common refrain, but it isn't quite accurate: the payment card networks charge merchants to use their services.
And sure, they know what you buy. But my Aunt Susie doesn't, nor does the next person who I pay using my payment card. Privacy as a concept is described by the security or threat model one is trying to conform to; cash and payment cards both protect me from unrelated prying eyes. Cryptocurrencies can also protect me from prying eyes, but they charge me for the privilege. By default, both my Aunt Susie and my neighborhood restaurant can see that I've been unfaithful and tried a new place for dinner.
[1]: https://torn.community/t/fee-how-much-does-it-cost-to-use/68
Privacy is difficult on the blockchain but not impossible. The tools continue to get better. I anticipate the privacy tools in the blockchain world will improve faster than any semblance or hope of privacy in the traditional financial world.
I do not operate under the delusion that I will stop my bank or payment card provider from seeing my transactions, or that my government can't obtain a lawful order to inspect the details of my finances. My interest is in protecting my privacy from people who are not in those domains: my local bodega owner, a bored Internet denizen who decides that They Just Don't Like Me, a snooping relative. I do not want to live in a world where those people, by default, get to see and evaluate my financial behavior. That, so far, is the only world that immutable public ledgers currently offer me.
Thus far, privacy in the blockchain space seems to have become more expensive, not "better" in either the statistical or colloquial sense of the word. I'll believe it when I see it. In the mean time, the dollars I use to buy my morning coffee are about as anonymous as they were yesterday, last week, and last year.
When people say “unit of account” basically what they are saying is:
Cryptocurrency is an Open Source rewrite of the banking systems that currently run on Cobal. “Banks, please start using them as your database and reconciliation layer instead of your legacy software.”
Meanwhile, users continue to use credit / debit cards as they do now, and they continue to see some number on their bank accounts going up and down regardless of where the “money” actually is. Which is the same as today. That’s why we see “Pending” across so many of our transactions.
It's worth going through eary adopter hassles if the eventual result is better, but crypto won't ever be better.
If the current trajectory is any indication, it's more likely that everyday users would mostly hold custodial accounts at organizations (e.g. Coinbase, like banks) and use stablecoins that way, which control aggregate wallets, and trackability stays within the org level (also like banks). Probably not as easy for the public to access (possible in data hacks) but just as easy for government access.
Once we have layer 2 payments using zk-rollups, transaction costs will fall to a few cents and many apps could easily integrate these technologies to tumble your wallet (taking all funds and send them through this tech into a new wallet) any time you want for a dollar or two. Or they could automatically do this after every transaction.
Then everyone will have access to easy completely anonymous payments in any currency they like.
We're just in the early days of this tech, like the internet when we used http everywhere and no one knew what a VPN was.
Not with the same volume as on mainnet, but still gradually increasing.
Like why can't/shouldn't the government claim that a USD "coin" is just another name for... USD? And therefore maintaining a balance or reserve of it is equivalent to maintaining a bank account? (edit: or maybe I should say "fiat deposit account", which may not be FDIC insured)
Assuming the organization behind it appears to be good for the 1/1 USD/USDC exchange at all times that system works, but stuff gets weird if that peg ever moves.
USDT is a proof that some shady unregulated organization owes you an equivalent amount of good. "Backed by USD" is just a claim (99% lie, in reality).
- Gov can easily collect consumption taxes through transaction fees
- Make transactions completely anonymous (similar to cash)
- Ease government infrastructure as we no longer need to print physical currency that can be lost or destroyed. Also potentially helping with counterfeit money. I'm also assuming coins would be pre-mined.
The major disadvantage I see is: Gov could reduce anonymity and further invade privacy of everyday citizens. I see this as too much power the dream of authoritarians.
I don't think you would need the public/private transaction paradigm (like zcash). We can watch transactions from wallets and know the owners without knowing who transactions are going to. This would operate the same way cash businesses operate. In a business wallet you'd still have to report everything on your taxes. We can still see when businesses make and lose money by tracking just their wallets. I think the best way to do this is not have wallets with special privileges nor privileged transactions. If we have to explicitly make transactions private they can do the same thing they do with encryption: "only bad guys use encryption because they have something to hide".
That's the Federal Reserve being themselves. Buy US dollars, use US dollars as the global currency. It makes a lot of sense for the USA, not necessarily for the rest of the world. But the Federal Reserve represents it's country interest, so it makes sense.
I do know some parts of the US govt has complained about the pegging because it made US workers more expensive than Chinese workers.
And the I remember the £ in the 90's crashing out of the Exchange Rate Mechanism when it was pegged to the German DM as Germany had(still has) a strong economy which sent interest rates soaring to something like 12 or 15%!!!
So pegging currency to others must be more nuanced than that it seems.
Because the US makes it easy for you to trade dollars around. The dollar's dominance will collapse the moment that significant restrictions are introduced around who can hold it, how they can hold it, and what they can trade it for.
China doesn't care one whit about making it easy for a foreigner (or a local) to trade its money (or derivatives) around. China cares about stabilizing its economy. If the CPC decides tomorrow that currency controls are necessary to stabilize their economy, you're going to be SOL. If the CPC decides tomorrow that USD, or BTC, or RMB can't flow out of China, you're SOL. And so on, and so on.
I wouldn't recommend making investments when you don't understand the risks.
This is the FederalReserve taking a measured analysis, saying "wow all those luddites were hilariously wrong and have no idea what they're talking about, but we're going to stop just short of saying this is already pretty amazing".
There's just no way traditional FX can compete when you can instantly swap a USD token for a token of any other currency at tiny cost everywhere in the world. Crypto exchange already does this, and sometimes better, it's just harder for people to figure out.
Even the half-way situation we have today of USD stablecoins trading for local currency in other countries is likely going to obliterate traditional FX in a few years. It's already happening, and really fast.
This is basically saying everyone can get more money because the Fed is less bound by its cash liabilities. This could allow them more direct control over the money supply which is less tied to physical cash deposits. Cautiously optimistic here but this seems like a good thing overall.
One problem scenario: banks invest more with larger balance sheets. What if those investments fail? Now they have liabilities for their deposits which are backed by stable coins which, in turn, are backed by the Fed, which has slightly more cash than before (due to households replacing cash with stable coins) but likely not enough to cover the difference. Could this be a problem or would the Fed simply print more stable coins?
Stables have the transferability properties of crypto (borderless, fast, no counter-party risk) without the downside of the erratic price fluctuations. A common critique of crypto is that it's too volatile to be paid in, or spent day-to-day, which is fair. Stables solve that mostly.
Other issues with backing/reserves and who is getting rich off the interest are important but I feel that stables are a valuable piece of the financial space and I hope they can be regulated lightly to eliminate some of those black-box characteristics.
[Edit] And now that I've actually read some of the paper it makes sense the Fed would be ok with backing some stablecoins with reserves. It provides the government a way to get a taste of an invisible tax on it via inflation (as all stablecoins are exposed to inflation).
Another angle I had not fully comprehended before is the governments complaint that stablecoins are only fractionally backed. While the reserve system is obviously a fractional reserve system, crypto represents solely the cash component of that system just as the US dollar does. Crypto does not represent a reserve split circuit money system. So, in order for crypto to operate as a fractional reserve it is doing something distinct (and a little more dangerous) from our current reserve system and hence why crypto is getting heat for this behavior.
And of course any currency system operating freely outside of the reserve system is a challenge to the Fed's authority so there will naturally be pressure to get crypto tied in somehow. The Fed's other paper released this month with the open call for CBDC feedback would seem to tie nicely into this one. In that paper they quickly realized that they needed to take over that last 10% of the US population that don't use banking services in order to successfully kill off cash. The other branch of that problem they did not discuss in that paper is tying crypto into the reserve system.
We're doomed the moment Congress blesses the Fed with the legal authority to issue CBDC backed by reserves. It's coming.
https://www.federalreserve.gov/publications/files/money-and-...
https://headlineusa.com/bank-of-international-settlements-ch...
They even know the word "composability" and have lended credibility to the term and context as morphed by the smart contract space.
> . On public blockchains, this also allows for 24-hours-a-day/7- days-a-week/365-days-a-year transactions.5 Second, stablecoins are typically built on DLT standards that are programmable and allow for the composability of services.6 In this context, “composability” means stablecoins can function as self-contained building blocks that interoperate with smart contracts (self-executing programmable contracts) to create payment and other financial services.7 These two key features underpin the current use cases of stablecoins and support innovation in both the financial and non-financial sectors.
> The public algorithmic stablecoin sector is highly innovative and difficult to categorize. However, one can generally think of the design of these stablecoins as based on two mechanisms: (1) the collateralized mechanism and (2) the algorithmic peg mechanism
Democratic government is the people; it is the people having power over things. Other sources of power, like big business and wealthy people, like to spread ideas deriding government (e.g., the Koch Brothers), so that the power shifts to them.
Who has power over your favorite cryptocurrency? If government gives up regulatory power, who gets that power?
Reasonably, the American people want control over the currency and money supply in their own country.
Unless by "true democracies" you meant "direct democracies" since that's absolutely true, almost no one does.
Even as a representative democracy, the distribution of power is by Supreme Court decision not one-citizen, one-vote, one unit of power over the government.
The US Supreme Court ruled in Citizens United v. Federal Election Commission essentially that money was free speech and so its effects on elections could not be limited.
So the wealthy, or any wealthy interests internationally that have national entities that can spend money, have a hugely disproportionate hold on elections due to their ability to frame the information and motives behind elections, often with large amounts of coordinated misinformation.
So both financially, and informationally, the US democracy is not only legally corrupt, but any corporation that needs to negotiate with the government at any level, is virtually forced into participating in that legal corruption or be at a severe disadvantage.
The non-wealthy also suffer from that severe disadvantage, but have no wealth to balance it. So in the zero sum game of power politics, they have lost considerable power relative to any formal democracy, representative or not.
The legal corruption is both self-perpetuating and a malignant motivator for new scales and means of further corruption. The people in government, and people with money, are both being selected and incentivized, with stick and carrot, to be, and to further enable via their levers on government, even worse systemic corruption.
The US is not a healthy representative democracy and it isn't unreasonable to wonder if it is on a runaway path to worse outcomes without a clear mechanism for a turnaround in sight.
All assignments to the Supreme Court and its Circuits follow a Technocracy system, not a Democracy.
Citizens in their daily affairs are subject much more to a Bureaucracy system than to the results of a Democratic system of government.
The "intelligence community", for example, part of this Bureaucratic system of government, has extremely strong power.
This is true for the US and most - if not all - other self-claimed "democracies" nowadays.
I think Democracy accounts for <50% of what governments can influence in our lives. I'd personally say it's less than 10%, but being conservative. Anyway, it's certainly not the majority of it, so I wouldn't say we live in a Democracy. It's a mix of Technocracy/Bureaucracy, with a thin veil of Democracy.
I see current self-claimed "democracies" as a mix of Oligarchy, Technocracy and Bureaucracy, with Democracy influencing a tiny fraction of actual results of government action in citizens' lives.
And I don't see a path to a truly democratic system without a major cultural change and, most importantly, change in the individual level.
It's what the people who want to shift the power from democracy like to say (including the empty, general nature). We don't live in perfect democracies, of course, but we will never live in perfect anything - these are human institutions, and it's humans all the way down.
But lots of powerful people and institutions invest enormous amounts of resources in persuading the public - the entire world of news opinion (including, first among peers, most of Murdoch's news operations), massive disinformation operations, all the corporate PR spin, etc. etc. etc. Those are enormous investments for something that doesn't matter.
No person I've ever admired, current or historical, ever advised despair and quitting. It's a sure way to lose, and hand over your power to someone else. Who are you handing it to?
> Reasonably, the American people want control over the currency and money supply in their own country.
Sure and they can keep it, I just don't know why they need to control everyone else too. I'm on the other side of the planet and the only relevant politics is the US, whether or not I get to own a home in my lifetime depends on one guy deciding how strong he wants the dollar to be ... I don't find this system particullary reasonable.
> There are no democratic governments, we have republics which are just a bit better oligarchies.
That's what people who want a true republic or oligarchy will tell you - quit, give up, it's hopeless. We not only have democracy, they work well - but they are made of people. If you vote out the bad people, they leave. If we the people do a bad job, we'll have bad results. If you do a bad job, that's what you'll get. If you don't even show up, we will fail. It's straightforward. I'm counting on you.
> Of course in every system there is a possibility of corruption, but for crypto that's obvious and people are actually working on sloving this as a problem while in the real world that's a feature.
People are and have been working on that in real life for centuries, with great success. Democracies are far less corrupt than other systems of government, and until recently - until people started quitting and not supporting the work - they have been continually improving. What have you done to help?
> crypto
It's a sci-fi story; what you say is happening is a fiction (like many things on the Internet). We need to get serious about the real world and our real communities, now. We are losing ground every day.
Its basically saying "wow DeFi is amazing".
at this point I'm not sure who else other people need to hear it from, but let's see.
did we not just print billions of extra dollars out of thin air…?
Surely that must have some impact on inflation or the world economy in some sense
Purely algorithmic stablecoins are a joke so far, whereas algorithmic overcollateralized stablecoins are doing great. The other even bigger ones backed by dollars somewhere.
No real dollars are being created anywhere in any of this - it is all simply a astonishingly complicated mechanism for transferring wealth from the marks to the scammers (and to pay some enormous electricity bills).
For example, printing USDT out of thin air and buying BTC with it supports the BTC price, this BTC is then brought onto the Tether books to back the newly printed USDT. The scammers then sell their own BTC into this price rise, receiving USDT which they (as privileged USDT account holders) can turn back into real dollars. The real dollars of course are coming from the marks who see BTC rising and dump their life savings into it, needing to buy USDT in order to buy the BTC.
It is almost beautiful in a way - and absolutely should be shutdown real soon now.