Topic: Stablecoins and Blacklists (Read 1344 times)

Exactly due to the blacklist problem, I would be interested in stablecoins based on the Bitcoin blockchain. (AFAIK the Omni version of Tether can't be blocked based on a blacklist [1], but anyway is deprecated now).

In the last months a new candidate has emerged, called BAMK. It uses the Runes protocol for the stablecoin. The Runes token is NUSD•NUSD•NUSD•NUSD. (yes, that's the correct name, because Runes currently only supports long names to avoid squatting).

I'm not very much a friend of the Runes system, but a stablecoin would not be a harmful application of the technology. Basically it's very similar to Omni, Counterparty and other previous token protocols on Bitcoin.

The BAMK stablecoin, the NUSD, is backed by USDe (Ethena). But there are unfortunately some characteristics of this project that look like red flags. For example, in the FAQs you can see this:


The team has been "doxxed" on "Telegram" according to the website, but there is not really a localizable company behind the project which can be made accountable.

The USDe collateral is held on Ethereum as shown here. There seems to be no technical connection between the reserves and the NUSD on the Bitcoin chain (which would also be quite difficult or impossible to achieve).

Holders of NUSD also earn BAMK rewards for some reason.

So far it unfortunately looks very shady or at least dilettantly built. Makes me actually remember the NuBits project from 2014 a bit ...

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[1] I refer here that Tether can't prevent Omni tokens to be transferred, as they are simple Bitcoin transactions with an OP_RETURN data string. Of course what they can do is to refuse to accept USDT from being redeemed if they come from a blacklisted address. This would mean basically that a blacklisted USDT could be worth nothing. However I think it would be impractical to enforce that, because that means every person accepting USDT-Omni must be aware of the blacklist all the time to avoid being scammed with invalid tokens ...

Why is this a surprise to many? It's obvious that a centralized stablecoin will censor or freeze transactions it deems suspicious. They must comply with regulations or else. Using a stablecoin like Tether, would be no different than using a credit card or CBDC (Central Bank Digital Currency). If you want true freedom and censorship-resistance, I'd suggest you get into decentralized stablecoins such as DAI and USDJ. I mean if you're worried about getting blacklisted in the future. Tether only blacklists addresses tied to criminal activity (money laundering, terrorist financing, etc), so if you have nothing to hide and are a law-abiding citizen, you should have no problem using USDT for daily payments. Decentralized stablecoins are for the true paranoid.

Tether has been shady from the start, so seeing the government investigating it is not surprising to me. As long as the company is strictly abiding with US regulations, it should have nothing to worry about. I think USDC is more diligent in this regard than USDT. But that's just my opinion. The question is: Will Tether survive scrutiny from the US government? Only time will tell.

This is the kind of stuff that inspired The Standard (https://www.thestandard.io/). That said, it's rather unclear if the end result will ever align with the original vision partly gold-backed DAO-managed defi stablecoin.

This alone is good enough to literally not go with USDT if you read what they say. Realizing that they are checked this closely and they are tied to whatever government tells them to do, it is clear that if we put our money into this, then we are taking a risk that we shouldn't be taking and that is why it wouldn't be a smart idea at all.

I believe we are capable of putting our money into many other things, and if you are not really certain about putting it in crypto, just take it out to fiat, you do not have to keep it in tether or any other stablecoin. Fiat itself, is literally better than any stablecoin and this is why you either should be in crypto or be out of crypto, being in stablecoins is like crypto version of fiat, makes no sense to be in there.

"Since its inception, Tether has attracted the attention of the U.S. government 19 times" https://cointelegraph.com/



https://www.coindesk.com/business/2024/10/28/tethers-paolo-ardoino-if-the-us-government-wanted-to-kill-us-they-can-press-a-button/
"Tether is doing "the best we can" to crack down on illicit crypto use, CEO Paolo Ardoino told CoinDesk. USDT's role in illicit finance is a "drop in the ocean" compared to the U.S. dollar's, he added.
The company "doesn't expect any political favors by anyone," he said of Howard Lutnick's role in Donald Trump's campaign.
A WSJ report Friday said Tether is under U.S. criminal investigation, which the company denied."

https://cointelegraph.com/news/tether-usdt-best-friend-united-states-ceo
Tether is ‘best friend’ of US, says CEO Paolo Ardoino

"Tether’s relationship with the US government
While focusing more on developing countries, Tether has not overlooked its ties with the US. According to Ardoino, Tether has a “very good relationship” with the US government that is “much better” than that of competitors due to its compliance efforts with local authorities.

“Tether is the only stablecoin that onboarded the Federal Bureau of Investigation and the United States Secret Service,” Tether CEO stated, mentioning that the company also has 180 law enforcement agencies across 45 countries.

Tether also positions itself as a good friend of the US because it holds about $98 billion of US Treasury Bills, making it one of the largest US Treasury holders globally."

https://www.coindesk.com/markets/2024/06/20/stablecoin-issuers-now-18th-largest-holder-of-us-debt/

"Stablecoin issuers are the world's 18th biggest holders of U.S. debt.
Of the many crypto bills in the U.S. political corridors, stablecoin legislation has been the closest to moving past the U.S. Congress to become law.
The U.S. government debt surpassed the $34 trillion mark early this year and has been growing faster, roughly $1 trillion every 100 years. Interest payments on the debt, also known as the debt-servicing cost, are projected to reach $892 billion in 2024. The burgeoning debt has caused the Treasury to step up bond supplies since 2023.
On Tuesday, the Congressional Budget Office said the national debt could reach $50 trillion by 2034, equaling 122 percent of annual economic output."

https://tether.io/news/tether-advances-beyond-stablecoins-introduces-new-framework-embracing-core-divisions-to-foster-resilient-future-ready-financial-systems/
"Tether, the largest company in the digital asset industry, is embarking on an unstoppable journey beyond its most famous USDT offering. Tether will broaden its mission towards delivering a range of infrastructure solutions for a more inclusive world. Working towards this new framework are four new and distinct business divisions within Tether – Data, Finance, Power, Edu(cation)."

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I understand them. Either they will be integrated into the current picture of the world or they will be destroyed.

https://www.ibtimes.com/tether-blacklists-4-usdt-wallets-1-20-million-balance-3726396
Tether Blacklists 4 USDT Wallets, 1 With A 20 Million Balance
"Two of the wallets blacklisted Tuesday each had a USDT balance of $500,000
Tether blacklisted 28 wallets in December that allegedly "received billions" in USDT
It voluntarily froze around $225 million in USDT in a November collaborative operation with the DOJ"

Tether Introduces New Policy to Strengthen Ecosystem Security
https://tether.to/en/tether-introduces-new-policy-to-strengthen-ecosystem-security/
"In December 2023, the company announced that it was introducing a new policy according to which it would freeze all wallets included in the US Treasury sanctions list."

"There will be six new changes to the USDC and EURC smart contracts and they’ll be implemented through a single v2.2 upgrade for each supported EVM blockchain. The upgrade is fully backwards-compatible, does not introduce any breaking changes to existing integrations, and requires no action from developers or users. All code changes have been audited by Halborn, a leading third-party blockchain security firm.1

Here are the details on the improvements we’re making:"
https://www.circle.com/blog/announcing-usdc-v2.2

https://twitter.com/paoloardoino/status/1698943028541419795
"While @Tether_to reached 72.5B exposure in US t-bills, being top 22 buyer globally, above United Arab Emirates, Mexico, Australia, Spain, ...

$USDt is the most used stablecoin in the world, with a huge focus on emerging markets. For many of these communities USDt is a lifeline to protect themselves and their families from the insane inflation of their national currencies."


https://twitter.com/WallStreetSilv/status/1698593300410708011
"China's ownership of US Treasury debt is down almost $481B from peak levels. The rate of selling is accelerating.

For many years the experts always doubted that China would dump our debt because of the impact on their own economy and currency.   

You can see how the line is steepening. China is getting out of US debt and buying Gold instead."

https://tether.to/en/record-profits-reserve-surpluses-and-usdt-at-all-time-highs-a-look-at-tethers-q1-attestation/

"US Treasury Holdings at All-Time Highs

Over the course of 2022, Tether reduced its commercial paper holdings to zero and began purchasing US Treasuries for Tether’s reserves. As of Q1, Tether’s treasury direct holdings reached an all-time high of over $53 billion representing more than 64% of total reserves. In fact, if you were to rank all of the world's countries in order of how many US Treasuries they own, Tether would be just under Mexico.
Bank Deposits Reduced by Over 90%

Tether reduced its bank deposits from $5.3 billion to $481 million in Q1.

100% of All New Issuance Reserved by US Treasuries & Overnight Repo"

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I am very scared for Tether. Almost all collateral is US bonds, gold and bitcoin less than 6%.

Billions Of Tether’s Reserves Were Stored At Cantor Fitzgerald, Capital Union And Ansbacher
The world’s largest stablecoin moved a massive share of its reserves to Capital Union Bank after settling with New York regulators over claims that it had falsely misrepresented its assets.
https://www.forbes.com/sites/davidjeans/2023/02/10/tether-reserves-cantor-capital-union-ansbacher/?sh=508f97354928

https://www.theblock.co/post/210023/tether-reports-700-million-q4-net-profit-in-latest-attestation-report
Tether reports $700 million Q4 net profit in latest attestation report
Tether issued its latest attestation report, saying its assets exceeded its liabilities as of December 2022.
The company said it had a net profit of $700 million in Q4 — which it says is additional to its reserves.

https://www.foxbusiness.com/markets/unusual-crew-behind-tether-cryptos-eminent-stablecoin
The unusual crew behind Tether, crypto’s pre-eminent stablecoin
"The stablecoin has become a lucrative business at center of crypto economy
Tether Holdings Ltd. operates a $68 billion stablecoin at the heart of crypto’s alternative financial universe. Far more tether trades each day than bitcoin."

It's actually so unfortunate that this could happen without any reason whether genuine or not. I want to believe that issues pertaining to blocking of funds are for transactions involving huge sum of money, because it will not be nice to have my little earnings blocked for no reason. We all need to be careful especially when using tether to avoid issues of this nature.

Tether is first cryptocurrency to take a stand with INHOPE against CSAM January 26th, 2023 — Tether Operations Limited (Tether), the company operating the blockchain-enabled platform tether.to that powers the first and most widely used stablecoin, announced today that they will collaborate with INHOPE, the leading global network combatting online Child Sexual Abuse Material (CSAM).Tether will work with INHOPE to share information, facilitate conversations between stakeholders, and take action to drive bad actors out of the crypto ecosystem. Tether is the first cryptocurrency to take a stand with INHOPE against CSAM.
Tether, INHOPE Collaborate to Combat CSAM in Web3

USD₮ vs USDC
https://tether.to/en/understanding-transfer-volumes-and-why-usdt-remains-on-top/
Looking at this question from a different angle, we can compare the number of unique holders of each coin on their top three chains.

USD₮ has 16,640,097 unique holders on Tron
USD₮ has 3,993,999 unique holders on Ethereum
USD₮ has 449,981 unique holders on Solana
USDC has 1,215,427 unique holders on Polygon
USDC has 1,584,336 unique holders on Ethereum
USDC has 1,430,039 unique holders on Solana
Based on this it's apparent that USD₮ has more unique holders on Ethereum alone than USDC has across Polygon, Solana, and Ethereum, and USD₮ has 4x this number of holders on Tron!

https://www.circle.com/blog/circle-releases-first-annual-state-of-the-usdc-economy
Circle Releases First Annual “State of the USDC Economy” Report
"Dollar Digital Currencies Are Driving the Next Evolution of Money, Payments, and Finance
Ten years ago, I co-founded Circle with the vision that traditional money could be brought natively onto the internet in the form of digital currency and made available on open, interoperable, global networks. Ushering in a world of frictionless value exchange that mirrored the frictionless information exchange and communications that marked the first decades of the internet has animated Circle’s work ever since."

https://medium.com/e-money-com/eeur-stablecoin-unwind-cf945820fb3f
EEUR Stablecoin Unwind
e-Money A/S has decided to cease issuance of its EUR backed stablecoin (EEUR)
The issuance stop is effective as of January 9th, 2023. Under the terms and conditions (available at https://e-money.com/legal), e-Money will support redemption until March 6th, 2023, after which further redemption will assessed case by case.