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Discussion
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Hi, questions for your show you may consider.
I think it may even be relevant for your business.
Please read the thinking...
Stable coins are a IOU. You give the issuer real money and they tokenize the money someone payed them. You can however redeem the stable coin for real FIAT.
Stable coins are a separate pool of IOUs i.e. most common form of money. If you can not pay your bills or shop in a store with them they don't affect insulation in the same way money in the real world economy do, issuing stable coins do not affect inflation in the issuing economy but is purely exported inflation
Stable coins backed by T-Bill's is tokenized debt where the debt is a blanco loan without yield. The owner of the loan is a creditor of that loan, but note, a stable coin owner is not a creditor in any legal sense.
Stable coins issued in the US must be backed by T-Bills, are also real dollars allowed?
Banks are going to be allowed to use their reserves, up to 5Trillion dollars to lend them out by buying T-Bills and in return use the T-Bills as backing for issuing stable coins, i.e. banks are free to lend out their money to the government and issue the same amount of stable coins, this is a consequence/construction of the GENIUS Act. I.e banks will have no reserves and can issue 5T in stable coins.
What happens if the price of a USDC or USDT fall below the dollar value? Someone with buy those stable coins and try to redeem them for dollars, I.e a bank run. How is that going to happen if the the backing asset for insurance is money the issuer lended out, i.e. a T-Bill?
Who would do such a thing? A bank for instance, they issue money i.e. stable coins using their reserves. Then redeem those stable coins for real money. Due to inflation on the internet they will be able to buy let's say Bitcoin, for a tokenized debt, or redeem the stable coins. If they release a huge amount of stable coins and buy Bitcoin they can later sell those Bitcoin and buy stable coins below face value and redeem them to real dollars. How will Tether survive such a bank run by banks? There's no liquidity since it's backed by T-Bills, and what liquid reserves the company has will be drained in no time.
Will redeeming stable coins be possible or are they going to become just another crypto scam on an epic scale?
Also, how will banks survive a bank run if they have no reserves?
Br.
Sorry that questions is sloppily formulated but due to noice, maybe it's not even worth asking here.
Br.
But systemic risk and shit show beyond epic proportions is in the making.
I now understand why they call it the GENIUS act.
So, to attempt to pose te question and consider consequences is worth while for everyone, please bring up and lets educate our self's on the consequences.
Br.
Also considered law, forgot it's name, regarding securities and fraudulent behavior doesn't forfitt asset, named stakeholders are protected.
That subprime loan debacle.
It plays in and is relevant. As a lot of these things end up being securities somewhere.
*insulation = inflation
*insurance = issuance
typical bitcoiner 20 feet away from the damn mic
