> Can you do fractional reserve banking with stablecoins where you lend out the underlying dollars to people and don't have full reserves?

In a manner of speaking. You need to trust that the issuers have the reserve they claim. There's no way around this, unless the asset in reserve is equally ethereal (i.e. another cryptocurrency).

Tether, for one, almost certainly doesn't have the reserves.

▲

arcticbull 5 days ago | parent | next [-]

Correct, this is fundamentally the oracle problem. There is no link between the blockchain and the real world which is why only money-like instruments have been successful for whatever value of success this constitutes.

▲

chipsrafferty 2 days ago | parent [-]

Is there a link for Fiat?

	▲	arcticbull 2 days ago \| parent [-]
		First of all, wut. Second, that's irrelevant because stable coins rely on fiat backing (ostensibly) so you're stacking a new problem on top of what you perceive to be a different problem. If you believed that to be a problem then stable coins give you that problem twice as hard. And a whole mess of new ones too, like zero recourse against the newly intermediated offshore issuers in low-or-zero regulation locales.

▲

seviu 5 days ago | parent | prev [-]

You would be surprised about tether though

They are now really backed. It might be they weren’t. Now they definitely are.

https://tether.to/en/transparency/?tab=usdt

All these years all this Fud and so far nobody demonstrated what you clam.

They are also the faster to block their stablecoin whenever there is a hack.

▲

SXX 5 days ago | parent | next [-]

Madoff Ponzi scheme also ran for at least 20 years. And yeah around 1% of total USDT supply is blocked so yeah Tether can very well live on those blocked funds:

https://dune.com/phabc/usdt---banned-addresses

	▲	seviu 5 days ago \| parent [-]
		I don’t discuss the past. In 2017 it was tether the one that caused the bubble that put BTC at almost 20k, by issuing tokens backed by nothing Now they generate more than 10B per year in profits. And they have been using that to collateralize their usdt It’s clear they are now fully backed. Another question is whether they want to comply with regulations (they don’t comply with MiCA, I doubt USDC does either) but that’s another question Hate it or love it, they aren’t going anywhere anymore

▲

ForHackernews 5 days ago | parent | prev | next [-]

Have they ever passed a real audit? Not an attestation, not a pinky-swear from a no-name Caribbean bank?

▲

SXX 5 days ago | parent | next [-]

Hey they didnt scam everyone just yet! This is proof it's very safe. </sarcasm>

▲

seviu 5 days ago | parent | prev [-]

That link contains audits, and proof of reserves. What are you talking about.

They got bad rep with zero proof

▲

ForHackernews 5 days ago | parent | next [-]

An "attestation report" is not an audit.

Tether claims accounting firms won't audit them, but that sounds like a convenient self-serving lie to me:

> In an interview with DL News, he said the Big Four accounting firms — Deloitte, PwC, EY, and KPMG — are afraid to work with Tether because they fear it will damage their reputations.

> “None of the Big Four companies will audit us,” Ardoino said. But he said securing one of them as Tether’s auditor is a “top priority.”

Is that credible to you?

[0] https://www.dlnews.com/articles/markets/tether-ceo-just-told...

▲

seviu 5 days ago | parent [-]

Must admit it isn’t

Usdc is audited by Deloitte on a monthly basis.

It would be pretty stupid for Paolo to end up being naked, now that his business is printing money left and right.

To make it clear I am not pro tether, I am against visceral hate which was justified years ago but I feel it isn’t anymore. Tether gained my sympathy by freezing quite promptly funds from various hacks.

Circle on the contrary have failed every single time.

https://cryptobriefing.com/circle-lazarus-group-accusations/

Anyways this is totally unrelated

It will make for a good Netflix documentary once they get their audit

	▲	topranks 4 days ago \| parent [-]
		There is a grain of truth in what you say, but your conclusions are off. Tether started as a way to pump the Bitcoin price, under the guise of better facilitating payments on crypto exchanges. They’d issue Tethers out of nowhere and use it to buy BTC and wash trade. It was so successful it got to the level many people thought of it as “as good as dollars”. This led to massive demand for it outside of Bitcoin pumpers - with criminals, sanctions evaders, money launderers of all kinds. Your granny needs to buy tethers to send money to the scammer she’s on the phone to. So yes I do think they’ve probably moved away from issuing unbacked tethers. But only because they’ve found another niche which is also extremely suspect. There is nothing to commend these guys. It’s a massive scam.

▲

topranks 4 days ago | parent | prev | next [-]

Not real audits by a major firm.

Just pinkie promises. David Gerard discussed a while back:

https://davidgerard.co.uk/blockchain/2021/03/30/tether-produ...

▲

FireBeyond 3 days ago | parent | prev [-]

Garbage. An audit reviews a trail of origin. Tether got an attestation, that said no more, and no less than, "At this exact moment in time, the balance in this account is $X". You could take a short term loan for the majority of that and no-one would know.

You and I can't buy a house on a mere attestation of accounts - funnily enough, lenders want to see how we acquired that money. But these clowns can stand on stage at Davos and say "Yeah, we've banked over half a billion a day USD for the last two years, trust us, we don't need an audit". I know that comparing investment to revenue is not apples-to-apples, but to get an idea of what that incoming cash looks like? You're on the scale of Saudi Aramco. Samsung. Alphabet.

They kept firing their auditors. They had one done, and then refused to release it, saying "it was not of use to anyone because it was in Mandarin Chinese". What the actual fuck?

Their bad rep is their own fault.

"Tether and Bitfinex are completely independent and unrelated!" Oh yeah, why are the same two people who signed a loan contract on Tether's behalf ... the same two people who signed it on Bitfinex's behalf?

Or let's look at their bank, Deltec, who also made statements to "support" Tether... or specifically, let's look at some of the highlights from a fucking trainwreck of an interview their "Deputy CEO" gave to CNBC:

- was conducted from his gaming rig

- about Deltec's (and therefore Tether's) money movements being several times larger than all the banking in their country was due to people misunderstanding the country's two banking licenses, the names of which HE "couldn't remember right now" (the Deputy CEO of a bank who can't remember the name of the banking licenses where they operate?!?), and he "wasn't sure which [banking license] the bank has, but we might have both"

- oh yeah, said Deputy CEO's "resume": 33 years old, by his LinkedIn claimed to have graduated HEC Lausanne in Switzerland with a Master of Science at the age of 15... celebrating his graduation by immediately being named Professor of Finance at a university in Lebanon. While dividing his spare time between running hedge funds in Switzerland (called Indepedance [sic] Weath [sic] Management) and uhh... Jacksonville, FL.

Once CNBC's viewers started ridiculing and questioning both Deltec Bank and Tether, said Deputy CEO was hastily removed from Deltec's "Leadership Team" page on their website. Once that was questioned, he was re-added...

... and then the entire bank website was replaced with a low-effort WordPress template. Their online banking was Javascript hard coded to refuse all login attempts.

"Sounds legit to me", say the crypto bros.

▲

topranks 4 days ago | parent | prev [-]

This is the company who have never produced a real audit despite years of saying they would?

If they are fully backed they’d get an audit. The fact they don’t should tell you all you need to know.