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Comment by helsinkiandrew | Hacker News Reader

I wonder what this will do to crypto - my guess is that it will result in a lot more crypto trades and be bad for crypto exchanges

Many institutions want to trade crypto but don't want or can't use the crypto financial system without a lot of effort. If they can buy coins and use the same (trusted, separated, and audited) exchange, clearing, and custodian systems they use for other trades then crypto trades can be added with little compliance effort.

If retail traders can buy and sell bitcoin using their existing retail broker they'll do so rather than open accounts on a crypto exchange.

A USD tethered coin offered by a major institution that used this would likely kill tether etc.

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I think this is slower companies being late to the party. It's possible that people will hold some BTC or ETH in their accounts as a hedge like silver or REITs. But I think the busy trading that is really profitable for exchanges was driven by the alt coins, pump and dumps, wash trades, and all the things regulated exchanges can't really do. I think it will make crypto boring, but not in a bad way.

> this would likely kill tether

I would love for Tether to die, personally. So many lies and violations have surrounded them from Day 1.

Not affiliated with Bitfinex.

Misrepresenting attestations as audits. Stating that they had audits but since they were in Mandarin, they wouldn't be released.

Murky banking connections.

Statements from their bank that implies that the bank is heavily in bed with them ("we can see the flows and orders coming into them...")

and on, and on, and on.

Would not shed a tear.

> I would love for Tether to die, personally. So many lies and violations have surrounded them from Day 1.

Weirdly enough under a FOIA request it came to light that tether provided documents proving (unless they gave false documents to the state of NY) they had 40.6 billion out of the 40.8 billion of tether printed back somewhere in 2021. Including the names of all the (big name) banks where they had gold/ETF/commercial papers/treasuries etc. in custody.

They're definitely more than shady. If they've got the USD backing the tether they say they have, it's probable it all started by printing their way into solvency, creating USDT out of thin air.

But it's also possible a big percentage of the USDT circulating are actually backed by real things. Which came as a surprise to me.

I mean either that or they sent fake documents to the NYAG. But I doubt it because I take it these big name banks have been contacted by US authorities that, I take it, verified the numbers tether gave them?

So, thanks to a FOIA request, it looks like tethers/USDTs were at least up to 2021, backed nearly 1:1.

Now they pulled 40 more billion, doubling that amount, since then, out of some hat. Real or not: I sure have no idea.

> Many institutions want to trade crypto

Is this still true?

Even when it was true, it was more like they wanted to have a small presence in crypto just so they could say they're hip with the times. For others, it was FOMO. None of them were true believers.

I feel like there was also real money to be made, as in any bubble, as long as you weren't a true believer and you got out before the pop. I'm just not sure there is any more.

> A USD tethered coin offered by a major institution that used this would likely kill tether etc.

This exists and it is called the US dollar.

> A USD tethered coin offered by a major institution

Do any banks want to hold 100% reserve accounts? What do they get out of it?

Very few narrow banking offerings available worldwide today.

You can start an E-Money Institute in the EU and get a license to issue a stablecoin under MiCA.

I looked at the laws and there is genuinely no way to earn money except from the difference between the interest payments you get on the custodial accounts (at a normal bank). The only exception is if the contract contains an explicit duration. Then you are allowed to charge a "reasonable" fee for trade ins to Euro. E-Money is not allowed to pay interest. It is basically irrelevant unless you want to do a radically different form of banking.

why would it need to use a stablecoin?

Exactly! The whole point of stable coins is to avoid USD transactions. That's not a problem for a broker who is doing KYC and reporting to regulatory bodies. Why pay a fee to use a stablecoin when you can just hold $s or Euros?

Who pays fees to use stablecoins? In fact, the opposite occurs with USDC:

https://cryptoslate.com/coinbase-raises-usdc-rewards-to-4/

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