[unyttigfjelltol]

It's pathetic that the U.S. Federal Reserve and Treasury allowed anyone but the U.S. Government to mint a coin 'tethered' to USD, and named anything remotely similar. It's bizarre and a complete reversal from prior practice.

[pid-1]

IMO letting crypto die by itself is the best way to prove it sucks.

If any blockchain was forbidden, there would be a huge PR stress and infinite arguments about their viabilities.

Just let morons fail.

[IdEntities]

Yep. Too many regulators have been on the trail of Tether and its ilk for too long for any of what's about to come to take them by surprise. Crypto being strangled in the crib by regulators makes them look like exactly the villains all the crypto advocates portray them as. Crypto being detonated by a huge number of blatant Ponzi schemes, on the other hand, is nothing but upside for the regulators.

Tether may also have been allowed to proceed as a sort of test bed for the CBDCs which seem to be on the agenda. Now the narrative can be "the public has already demonstrated strong demand for USD-type cryptocurrencies, we just need to supply an official version."

[DelaneyM]

Plenty of countries have currencies which have a fixed exchange with USD, including my own (1 KYD = 1.2 USD).

It just takes a shit-tonne of capital, and it helps to have a functioning internal economy and flexibility to be able to defend against malicious agents.

I suspect there are other legal issues with creating an alternative currency in the us though, which is why these aren't currencies but securities. Which is still fine! A tethered coin is conceptually _similar_ to a 0-yield bond.

Presenting it as being "safe" without it actually being so is the problem here.

[nikanj]

It’s trivial to mint tokens that are on a fixed rate to USD - assuming you are ready to keep the full amount of USD locked up somewhere.

Disaster strikes when someone sees the mountain of money and thinks ”If we invest this money, we get to keep the gains”

[MichaelBurge]

It's not a theoretical problem, but there's a practical one: Banks themselves loan out the money, so a run on a stablecoin can cause a run on actual banks. And FDIC isn't enough to cover the full amount.

This can be mitigated by using many banks, but it's hard to find banks willing to deal with cryptocurrency. So in practice all the deposits are at 1-2 banks.

A stack of paper USD in a safe would work, but there's risk of theft/fire/etc.

[xvector]

As long as someone pays for cryptocurrency somewhere in the world, you will be able to algorithmically mint a coin tethered to USD or any other asset, and there is absolutely nothing the US Government or anyone else can do to stop it. The Pandora's Box is open.

[SilasX]

That’s … what banks and credit card companies do all the time. The only true dollars are physical cash and accounts at the Federal reserve. Everything else is a derivative pegged to those.

[anamax]

You mean like Disney Dollars?

[unyttigfjelltol]

Only if they were called USDD.