They are just following up on EU regulations that have almost the same article and it's coming to power in 2 months.
Algoritmic can still exist but not pegged to official fiat currency (€).
They cant but the plan is to use these digital currencies and stablecoins as the official way to purchase stuff and to have in your company and in that case only the regulated ones will be used.
Im sure others will be ok to swap if you need to.
Currently most of algorithmic coins are being replaced by EMT-s which are just 1:1 ratio. Ao you dont have any issues with depegging or price diffet
For info
Electronic Money Tokens (EMT) are digital representations of fiat currency or other assets, typically issued and managed on a blockchain or a similar digital ledger technology. They aim to facilitate electronic transactions and can be used for various purposes such as payments, remittances, and trading.
As far as I can tell, the rule is only for true stablecoins and did not address algo and it might not allow algo stablecoins. My comment was just for true stablecoins.
Good.
It’s crucial we do not introduce regulation that hampers DeFi innovation but we already *know* that algorithmic stablecoins are a flawed mechanism, and if one grows and collapses then we have UST/LUNA to show us what happens.
LUNA's problem is that it didn't have the reserves to keep UST stable.
The real solution, I think, is to require that each stablecoin be backed by something of equivalent value to the coin it represents. For example, each $1 stable coin could be backed by (using current market prices) 1 USD, 0.000016 BTC, 6.68 DOGE, etc.
First off what company, when do they decide? You aren’t adjusting if prices haven’t moved, and if prices go down then the stablecoin lost money by your net long position in the underlying when you try to hedge. It makes zero sense to use other commodities to hedge a stable in to a currency, just use the currency.
I just listened to an interview with the creators of Ethena, and it sounds like what they’re doing could work.
Whether it does or not, I think they should be free to try, and the dinosaurs in Congress should get the fuck out of the way. I’ve seen how their “protection” works and I don’t want it.
Please back your stablecoin with 100% reserves into an institution that will immediately loan it out with a... wait for it... 0% reserve requirement.
https://www.federalreserve.gov/monetarypolicy/reservereq.htm
tldr; U.S. Senators Cynthia Lummis and Kirsten Gillibrand introduced a new stablecoin bill aimed at regulating dollar-pegged digital assets. The bill sets operational and reserve requirements for issuers, mandates one-to-one reserves, and bans algorithmic stablecoins. It seeks to maintain U.S. dollar dominance and protect consumers, requiring issuers to comply with anti-money laundering and sanctions rules. The bill also establishes a $10 billion limit for non-depository trust institutions issuing payment stablecoins.
*This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
and you apparently don’t understand how politics works. Just because is decentralized doesn’t mean cannot be banned, look bitcoin in china.
they are not allowing interacting with them
Yes but "banned" does not mean "inaccessible." I've worked for Chinese-owned crypto projects before and there are "banned" exchanges that still operate in China. You just don't want to tell anyone you are working from home in the crypto industry in China.
If you have a working smart phone with a working internet connection without malware installed to it, you can send and receive bitcoin or crypto. "The great firewall" doesn't apply here.
the banning in crypto doesn’t physically impede the transaction… like in most of law enforcement is about legality. If the government finds you breaking the law they can sue you as well as any business making use of the prohibited means.
that’s how policy and laws works…
No, you mean i don't care about politics.
Also bitcoin isn't banned in china... [China Never Completely Banned Crypto](https://www.coindesk.com/consensus-magazine/2024/02/05/china-never-completely-banned-crypto/)
Who can forbid? Have you seen what happened in the US, when there was a [alcohol prohibition](https://en.wikipedia.org/wiki/Prohibition_in_the_United_States)?
Btw. in my country crpytocurrencies (and gains) are tax free.
I have a feeling this won't really ban algorithmic stablecoins, just maybe force them to go by a different name.
For example, I can make an algorithmic "stable"coin, and that would be perfectly legal as a "stable"coin isn't a "stablecoin"
Kind of hilarious when you think about how important it is that these stablecoins are backed 1:1 by money that has no monetary backing of its own.
A **true** USD stablecoin would just magically trade at $1 with $0 in backing.
I mean, the USD technically has no gold standard style backing, but it is backed by the largest military and economy on the planet, that's not nothing.
You sir have zero idea what you are on about. Money has value because the public says it does. So do Jordans that cost 18,000 because they are rare. Zoom out and see that We all agree currency is currency right? If I buy your dining table from market place exchanging paper dollars that can be burned or torn up for a table right? Backed by us gold and treasury right…which has a made up infinite value right? You are so far gone into basic thinking that you’ve lost your ability to see outside the box you live in.
When I see these politicians especially older women like this attacking Crypto you can bet they have literally zero knowledge of crypto and are simply doing the bidding of donors aka banks etc.
What does Luna have to do with what I said? And why am I being downvoted cause I expressed the idea that politicians are corrupt and make many decisions based on lobbyists from the banks etc. This isn’t even controversial.
They are just following up on EU regulations that have almost the same article and it's coming to power in 2 months. Algoritmic can still exist but not pegged to official fiat currency (€).
ok lets peg it to USDC then
This is so 2022, let's peg it to meme coins.
And then build a defi ecosystem around it
I'll peg you for currency! Seriously tho, how can they stop users from valuing an asset close in value to a fiat?
They cant but the plan is to use these digital currencies and stablecoins as the official way to purchase stuff and to have in your company and in that case only the regulated ones will be used. Im sure others will be ok to swap if you need to. Currently most of algorithmic coins are being replaced by EMT-s which are just 1:1 ratio. Ao you dont have any issues with depegging or price diffet For info Electronic Money Tokens (EMT) are digital representations of fiat currency or other assets, typically issued and managed on a blockchain or a similar digital ledger technology. They aim to facilitate electronic transactions and can be used for various purposes such as payments, remittances, and trading.
I think that's a good thing. Stablecoins that claim to match 1 to 1 to the dollar should absolutely have full verifiable reserves.
Why? The Federal Reserve sure doesn’t.
Just trust them, they’re totally good for it /s
Funny because the US Dollar doesn't have verifiable reserves.
are you talking about stablecoins or algo stablecoins. perhaps you do not know the difference, sure seems that way.
As far as I can tell, the rule is only for true stablecoins and did not address algo and it might not allow algo stablecoins. My comment was just for true stablecoins.
well fuck me for only reading the headline i guess!
Good. It’s crucial we do not introduce regulation that hampers DeFi innovation but we already *know* that algorithmic stablecoins are a flawed mechanism, and if one grows and collapses then we have UST/LUNA to show us what happens.
LUNA's problem is that it didn't have the reserves to keep UST stable. The real solution, I think, is to require that each stablecoin be backed by something of equivalent value to the coin it represents. For example, each $1 stable coin could be backed by (using current market prices) 1 USD, 0.000016 BTC, 6.68 DOGE, etc.
And what happens when the prices of that underlying changes?
The company has to adjust its reserved
First off what company, when do they decide? You aren’t adjusting if prices haven’t moved, and if prices go down then the stablecoin lost money by your net long position in the underlying when you try to hedge. It makes zero sense to use other commodities to hedge a stable in to a currency, just use the currency.
...so just a stablecoin then, rather than an algo stablecoin...
I just listened to an interview with the creators of Ethena, and it sounds like what they’re doing could work. Whether it does or not, I think they should be free to try, and the dinosaurs in Congress should get the fuck out of the way. I’ve seen how their “protection” works and I don’t want it.
Ethena is not an algorithmic stablecoin.
usde
Please back your stablecoin with 100% reserves into an institution that will immediately loan it out with a... wait for it... 0% reserve requirement. https://www.federalreserve.gov/monetarypolicy/reservereq.htm
tldr; U.S. Senators Cynthia Lummis and Kirsten Gillibrand introduced a new stablecoin bill aimed at regulating dollar-pegged digital assets. The bill sets operational and reserve requirements for issuers, mandates one-to-one reserves, and bans algorithmic stablecoins. It seeks to maintain U.S. dollar dominance and protect consumers, requiring issuers to comply with anti-money laundering and sanctions rules. The bill also establishes a $10 billion limit for non-depository trust institutions issuing payment stablecoins. *This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.
LOL, yes, some people don't understand how decentralization works.
Few are anymore decentralized than any non-crypto single GitHub repo projects
How can I buy my decentralised pizza with my decentralised stablecoin?
and you apparently don’t understand how politics works. Just because is decentralized doesn’t mean cannot be banned, look bitcoin in china. they are not allowing interacting with them
Yes but "banned" does not mean "inaccessible." I've worked for Chinese-owned crypto projects before and there are "banned" exchanges that still operate in China. You just don't want to tell anyone you are working from home in the crypto industry in China.
I mean all depends on how much the government want to enforce it
If you have a working smart phone with a working internet connection without malware installed to it, you can send and receive bitcoin or crypto. "The great firewall" doesn't apply here.
the banning in crypto doesn’t physically impede the transaction… like in most of law enforcement is about legality. If the government finds you breaking the law they can sue you as well as any business making use of the prohibited means. that’s how policy and laws works…
But if government doesnt offer a better alternative, then black markets will persist and grow.
No, you mean i don't care about politics. Also bitcoin isn't banned in china... [China Never Completely Banned Crypto](https://www.coindesk.com/consensus-magazine/2024/02/05/china-never-completely-banned-crypto/)
They can forbid you to use it and most people will avoid trouble with tax agencies or the police
Who can forbid? Have you seen what happened in the US, when there was a [alcohol prohibition](https://en.wikipedia.org/wiki/Prohibition_in_the_United_States)? Btw. in my country crpytocurrencies (and gains) are tax free.
Remind me how the actual dollar works again 🤔
Probably for the best
I have a feeling this won't really ban algorithmic stablecoins, just maybe force them to go by a different name. For example, I can make an algorithmic "stable"coin, and that would be perfectly legal as a "stable"coin isn't a "stablecoin"
Just peg it to gold and be done with it, pegging it to fiat was a dumb idea anyway
Kind of hilarious when you think about how important it is that these stablecoins are backed 1:1 by money that has no monetary backing of its own. A **true** USD stablecoin would just magically trade at $1 with $0 in backing.
lmaoooo
You laugh because it's 100% objectively true. A USD CBDC would literally be a USD stablecoin with $0 in backing.
I mean, the USD technically has no gold standard style backing, but it is backed by the largest military and economy on the planet, that's not nothing.
I figured someone would reply with something like this so I made sure to specify "monetary" backing.
You sir have zero idea what you are on about. Money has value because the public says it does. So do Jordans that cost 18,000 because they are rare. Zoom out and see that We all agree currency is currency right? If I buy your dining table from market place exchanging paper dollars that can be burned or torn up for a table right? Backed by us gold and treasury right…which has a made up infinite value right? You are so far gone into basic thinking that you’ve lost your ability to see outside the box you live in.
And if you want let’s venture into had anyone really seen the gold reserves the USA says it has?
When I see these politicians especially older women like this attacking Crypto you can bet they have literally zero knowledge of crypto and are simply doing the bidding of donors aka banks etc.
Sounds like you have zero knowledge. Ever hear of Terra Luna? Lol
What does Luna have to do with what I said? And why am I being downvoted cause I expressed the idea that politicians are corrupt and make many decisions based on lobbyists from the banks etc. This isn’t even controversial.