16 Comments
Feb 14, 2023Liked by Dirty Bubble Media

Great piece

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Feb 14, 2023Liked by Dirty Bubble Media

thank you for your time on this, much appreciated.

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This is great research/writeup. One thing to consider though; Circle does actually have the ability to freeze any of the USDC on Ethereum (roughly 85% of all USDC in circulation) and I'd imagine they have the ability to the same on the other chains. As I understand it, the ERC-20 token contract is freeze-enabled. So essentially, when Circle (or any government nudging entity) decides a wallet address that is using USDC is up to no good, that USDC can be frozen. I believe Circle actually blacklisted quite a few ETH addresses in response to OFAC/Tornado Cash. Tether did as well for what it's worth... The point is, Circle may not be freezing to a large degree yet, but there is considerable risk in doing illegal shit with USDC.

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very interesting

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The Fed doesn’t want a competitor. It’s currently the sole issuer of untraceable bearer dollars (federal reserve notes). USDC is a threat to the Fed’s power.

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Was hoping for an article about this! Curious what your response would be to people who say 1. there's no expectation of profit when you mint a stablecoin and therefore they aren't securities and 2. cash can be used without government oversight as well so why should they know how every dollar of stablecoin is spent.

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True, they’re not securities. But they look an awful lot like deposits, which only banks can issue. Circle could be looking at jail time. See 12 USC 378

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Great point and share!

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Nobody’s doing transactions that big in cash. It’s physically impractical, like using a bicycle for hauling instead of a semi truck. Besides, the bank reports deposits >$10k, so to actually use it and keep it hidden, you’d have to launder it.

Also there absolutely is an expectation of profit when issuing stablecoins, it’s called “net interest income”.

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By that argument, cash wouldn't be used by criminals at all and yet it remains the most widely used tool in illicit transactions, much ahead of stablecoins. True, banks have to report cash deposits but that's where money laundering comes in with banks often facilitating the process by failing relatively simple KYC requirements (frequently highlighted when regulators issue fines, mostly in the US, the UK and various EU member states).

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Uh, so they launder it. Like I said...

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Yes, but the point is that laundering money doesn't work without legitimate facilitators. In many cases it's facilitated by banks (unknowingly or because of lax KYC standards), but it may also be other professionals. Real estate agents are a perfect example if they are helping to facilitate cash purchases despite a requirement on them to notify relevant authorities (which is not even a legal standard everywhere in the world).

In short, there are certainly issue with stablecoins and these should be regulated. However, the fact that a stablecoin may be used to facilitate illicit transactions is definitely not one of them. The same can be said about any other type of financial asset.

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Yes, literally anything of value can be used. It could even be equity. It’s not exactly uncommon for medium sized business owners to be approached by characters who want to make cash investments.

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Crazy times. Wonder what Stable coin one should use if all going to blow up.

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DAI

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Dai isn't safe really because it is partially backed by USDC.

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