If they want stable currency they could just buy dollars. Why would they want to buy a high risk currency instead? The only possible outcome of this is you rigging them.
And I don't think I would characterize this as a high-risk currency; it's essentially a digital receipt for a dollar, backed by US treasuries (https://www.circle.com/transparency).
if you trust your banking system to be a better custodian of your money than Circle, you're one of the lucky ones. billions of people in the world don't have that kind of luxury (see: https://www.bbc.com/news/world-asia-68778636), hence a part of the reason why stablecoins have grown to a little under a quarter trillion
If I have a wad of tea shillings, how do I use this app to hold stablecoins ?
1. a means of bypassing US sanctions
2. a means of bypassing the US dollar / Western order during international trade
3. a means of transacting without Visa, Mastercard, Chase; cutting out banks and fintechs and their margins.
Stablecoins are pitched to investors as #3, but are more frequently used as #1 and #2.
If stablecoins catch on and can build a large network, it poses a real threat to American hegemony. You wouldn't need the dollar for international trade or settlement. You could trade, move large balances, etc. in stablecoins and never need to hold dollar reserves.
It's wild to see the US funding and developing this tech.
These stablecoin issuers are enormous buyers of US treasuries: "Tether Holdings owned $97.6 billion worth of US Treasuries in June 2024, a new high. Hence, Tether now owns more US Treasuries than the governments of Germany, the United Arab Emirates (UAE), and Australia. Hence, Tether is now the 18th largest holder of US Treasury bonds" (https://medium.com/coinmonks/tether-usdt-is-the-third-larges...)
Dollars are also more dominant as a reserve currency in stablecoins (~97%) than they are in real-world trade (https://digitalchamber.org/stablecoinreport/).
I.e., we see stablecoins as extending dollar dominance, not reducing it.
They have a shady past but quickly realized they had lucked into a WILDLY profitable business. That first 10% of their existence is debated constantly and is what you see referenced constantly online when Tether is labelled as shady.
They make a disgusting amount of money and it keeps snowballing. This annoys people who want them to implode for earlier crimes.
For context they are more profitable than Blackrock.
or similar. They have $100bn dollars and their only job is not to lose any of it.
If you think 1% is a reasonable number, that’s 1BN per year at current market cap. Tethers been around for 10 years. Dead funds also compound.
Let’s say Tether was grossly insolvent (ie only had 50% of reserves) for the first 10BN in market cap (in other words, for the first 5 years of their existence). In addition to the 6BN+ of interest income they earn every year, there’s 1BN of reserves that will never get redeemed added every year
If Tether was insolvent before, they just need time to change that
This is very roughly similar to banking. It’s an unregulated bank, but it’s not inevitable that they’ll implode.
And this company is US-based
And you use it to avoid US-sanctions
I'm really not sure that it works like that
The biggest usage of stablecoins would be as a hedge on crypto itself. Don’t like where the current market, park it without needing to off-ramp and then on-ramp again when the conditions change.
And now that you’re in crypto-land 24/7, no need to skip weekend movements because offices are closed or accounts don’t get updated until Monday morning.
User A sends local currency to User B's fiat account.
User B sends stablecoins (earned via salary, trading, mining, etc.) to User A's digital wallet (that we've created for them).
Definitely a few places that we'd probably avoid. But also plenty of others (e.g., Kenya, LatAm, Turkey, etc.) that have been quite friendly and would be fine to visit.
Do you check the laws for this in each country you are available in?
Do you notify user B of this fact and the potential legal risks?
Do you verify if they have the license?
It's MUCH more complicated than that in several countries, particularly the US.
Because if you are involved in washing illegally earned money in many places that's a criminal act.
What, other than money laundering, would motivate a person who had a supply of such stablecoins to want to supply them to into a market with currency controls? Is the concept there “I make my expat wages in dollars, I want to turn them back into $CURRENCY at the black market rate”?
(Plus a whole bunch of pretty words to make it sound like they're saving the world.)
It's so funny to read Americans who constantly downplay the problems that people in developing countries have
What I probably should have said was that the platform should be offering a USD (or Euro, or whatever) denominated account, much easier for trading.
And then trigger an Interpol Red Notice for the founders.
(even if you can set up dollar-denominated accounts at a domestic bank, that doesn't mean your claim will be honored. stablecoins aren't dollars but they might be more stable than your average dollar-denominated bank account in some countries)
Plus what the post says about restrictions on foreign currencies for a lot of people in developing nations.
I have a Capital One credit card that was advertised as "no foreign exchange fees", and its exchange fee is 1%. I wish it would stop lying about the absence of fees, but I can live with the 1% fee.
Even I as an American has known so many people from countries like Argentina where just maintaining your bank balance is basically impossible due to inflation and currency controls.
Believing that this is easy or solved is a very Americentric viewpoint.
Unfortunately with money there will always be good and bad guys with it. We all need it. Have to do the best we can with not assuming everyone is a criminal re money laundering.