Because they are legally barred to doing the same thing in USD. Which is exactly what’s going to happen to this once enough people actually use it.

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dcposch 6 days ago | parent | next [-]

Many skeptics assume that stablecoins are just about regulatory arbitrage.

That's part of it, but:

1. Progress often depends on evolving obsolete regulation.

Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc) and yet in the early years they had to work around taxi regs.

2. Blockchains are a fundamentally more robust way to run a ledger.

If any of you have ever written software touching tradfi custody you'll know about "reconciliation"--start of every business day, you get a dump of files in your FTP server in various proprietary formats. You parse the transactions and they don't add up. The Recon team hand-corrects and recategorizes edge cases so that the balance deltas match transaction totals and everything ties out.

This type of absurd duct tape is ubiquitous, and it's a major reason why trad rails have multi-day settlement times and even longer for international. Inflates team size and cost required to run a product. SWIFT is a messaging system -- bankers use it to essentially text each other about wires to figure out issue resolution. Some lower-level trad payments regulations are written assuming that this level of manual oversight is required to prevent ledgering errors and ensure sound accounting.

Stablecoins run on transparent, precise ledgers with machine consensus. This doesn't solve everything, but there are large categories of issues that can occur in trad payments that do not exist onchain.

3. Control is liability.

Some important regulations actually encourage blockchain-based payments. For example, money transmitter law places significant requirements on custodial money transmitters (you take money from Alice, with a promise to give it to Bob) that do not apply to noncustodial channels (you give Alice a mechanism to send directly to Bob).

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rfw300 6 days ago | parent | next [-]

I wonder if some of the non-robustness of the tradfi system is a feature, not a bug. If my account tries to send someone $3 million, I'd prefer that it's intermediated by a confused bank employee staring at a screen rather than a beautifully efficient, irreversible machine consensus. The bottlenecks and intermediaries create friction, sure, but that isn't per se bad.

My hang-up with crypto is that it solves the ledger-keeping part of running a financial system, but it isn't clear that's actually the hard part! Preventing and remediating fraud, money laundering, etc. are, and crypto makes those issues worse, not better.

	▲	dcposch 5 days ago \| parent [-]
		> If my account tries to send someone $3 million, I'd prefer that it's intermediated by a confused bank employee staring at a screen This is a nice lens for looking at when stablecoins make sense. If you're an American using your Chase account to buy coffee at Starbucks, the permissioned, heuristically fraud-checked, slow-settling tradfi system is well optimized for you. If you are an importer buying $3m worth of bulk coffee from Kenya, you would much rather have an instant 1:1 USD transfer on beautifully efficient machine consensus. In many countries in the world, the banking system is extractive and unreliable. The "confused employee" is not there to help you. The two weeks of money in transit is no benefit, just a source of additional counterparty risk, cost, and delay. An immutable and transparent ledger is not for everything but it is a useful primitive.

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CPLX 6 days ago | parent | prev [-]

> Uber works much better than taxis (once upon a time, people could "call a dispatcher" an hour in advance, wait on hold, etc)

Uber rides ARE taxis.

The innovation of Uber wasn't done by Uber it was done by everyone having a GPS enabled always connected phone and computing device in their hand at all times.

	▲	onesociety2022 6 days ago \| parent [-]
		Uber isn't just taxis - if a bunch of taxi companies just got together and developed a taxi ordering app that looks just like Uber, it still won't be Uber. Uber is a whole bunch of things combined: - very intuitive taxi ordering UX (for riders) and dispatching UX (for drivers). - circumventing regulation so there are no more artificial limits on taxi supply in a given city. - enabling gig economy: because you can use your own personal vehicle, you can work anytime you want for however long you want. You don't need to lease a taxi for an entire week or an entire month. You can choose to work for 4 hours on a weekend only during surge times if you wanted to. So it allows supply to be elastic to meet demand while also offering flexible work arrangements for part-time drivers.

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wmf 6 days ago | parent | prev | next [-]

The situation has changed. The US is now leaning pro-crypto and they're also for sale.

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jimkleiber 6 days ago | parent | next [-]

Is the US leaning pro-crypto or the current administration in power? My guess is that it's like saying the US is leaning towards tariffs, which may or may not be stable.

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baggachipz 6 days ago | parent | next [-]

It's clearly the current administration, seeing as how they profited immensely by offering their own personal shitcoins. I don't think public sentiment has changed much.

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root_axis 6 days ago | parent | prev [-]

You can be assured that future administrations will not be turning off anyone's money spigot, now that the door is open it's impossible to close.

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jimkleiber 6 days ago | parent [-]

Hmm, I think plenty of administrations (or rather, legislative bodies, if we actually want to get back to the Constitution) have acted in a way that made it less profitable for businesses to operate, so I think it's very possible to close.

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root_axis 6 days ago | parent [-]

Cryptocurrency regulation isn't a cause that most people are passionate about in either direction, so reeling it back in won't afford politicians any popular support. All it can do is create rich enemies who spend lots of money to attack political threats. There's simply no incentive to crack down on it.

	▲	jimkleiber 6 days ago \| parent [-]
		No incentive? Besides a ton of fraud and regulation skirting? Not all crypto breaks laws but a lot does

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foobarqux 6 days ago | parent | prev | next [-]

I think he's talking about foreign governments control on monetary policy, which is essential for managing the economy. Even a poorly run government will insist on retaining control over monetary policy and it provides a necessary forced coordination mechanism for allowing the economy to recover given that it's a prisoner's dilemma otherwise, with every individual preferring to opt out of taking a loss.

This end-run around foreign government monetary control has been touted by Stripe executives as one of the main selling points for USD stablecoins but I don't see how foreign governments don't clamp down on this is in the same ways the clamp down on other uses of USD in the country; most monetary transfers have some physical presence or touchpoints the government can control.

More importantly the US itself is eventually going to come to the conclusion that it does not want people holding US dollars for similar reasons: it also loses control over monetary policy, with excessive inflows un-intuitively leading either to unemployment or excessive debt (c.f. Michael Pettis)

That said, it's possible stablecoin networks succeed for other reasons, particularly having a widely-accepted "API" that is developed at the pace of modern technology companies instead of laggard banks.

	▲	wmf 6 days ago \| parent [-]
		The US used to have a policy against dollarizing other countries but I think that's gone now.

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sroussey 6 days ago | parent | prev | next [-]

Other countries have controls on currency movements inside and outside their borders.

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jcfrei 6 days ago | parent | next [-]

Blockchains (due to constantly changing validators, nodes, etc.) are much harder to shut down than some dedicated service. I think the current administration understands that loose stablecoin regulation further cements US dollar hegemony, curtails other countries attempts to deprive their citizens of payment and savings alternatives and creates more demand for US treasuries (because that's where stablecoin reserves end up). It's a win-win for the US government and bad for governments with a track record of poor fiscal and monetary policy.

	▲	fruitworks 6 days ago \| parent \| next [-]
		Not if the blockchain is developed and administered by a single company!
	▲	martin8412 6 days ago \| parent \| prev \| next [-]
		You don’t need to shut down the actual blockchain network participants to kill it for your citizens.
	▲	foobarqux 6 days ago \| parent \| prev \| next [-]
		In practice this isn't true; very few services (in terms of $ spent/earned) are purely virtual and have no physical presence in the country.
	▲	Imustaskforhelp 6 days ago \| parent \| prev [-]
		To be honest, a nitpick that i have in this comment is that there are other stablecoins aside from us dollar but most people don't seem to use it. There are gold tokens which I genuinely feel like it can be the best thing ever. Because bitcoin is "digital gold", lmao.... I laugh a lot on this statement nowadays because we genuinely have trustworthy way of having "digital gold" and we don't use that as much as there is hype about bitcoin... But yes currently, it might benefit the us govt. overall

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wmf 6 days ago | parent | prev [-]

Which Tempo will just ignore.

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Onavo 6 days ago | parent | prev | next [-]

And yet USDC has a sanctions mechanisms built in.

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thrance 6 days ago | parent | prev [-]

If by "pro-crypto" you mean the current president and his wife both did crypto-scams on his first day of presidency, then yeah. Other than that, I wouldn't base anything off of a Trump promise.

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6 days ago | parent | prev [-]

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