Stablecoins Do Not Deserve Special Treatment

stephendiehl.com

25 points·rc00··6 comments

Stablecoins are securities, in my humble opinion, and should be regulated as such. I believe that is the point the author was making as well.

Why? Securities include a reasonable expectation of profit. Investors in a stablecoin expect their dollar investment to hold stable and remain unchanged.

According to the internet (and the first result from google)

"Securities are fungible and tradable financial instruments used to raise capital in public and private markets"

It's a financial instrument, tradeable, and used to raise capital in public markets.

How is a stable coin not any of these?

SEC uses Howey test to classify an asset as security, which includes “expectation of profits.”

How do people who use Stablecoins to route around regulation not expect profit?

Stablecoins are used for a variety of reasons. Using them to skirt taxes or laws is a poor choice. USDC for example will freeze funds at the request of authorities, Circle's goal is to design a regulatory compliant stablecoin.

A user might decide to use a stablecoin as a fast and low-fee transfer mechanism for remittances and donations, or to manage a multisignatory account, or to hedge against the falling price of a crypto asset, or for some application of escrow in a smart contract.

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