Tether does have the ability to freeze any holder of USDT and does work with law enforcement across the world to freeze accounts involved in illegal scams, amounting to 100s of million of dollars of frozen tether a year.
So when using them there is a fine but undefined line that you need to walk when doing questionable transactions. OTOH, Tether gets to decide what is frozen and what is let through, not any government (at least not directly).
Wildcat banking is great until something goes wrong, like maybe those tether coins are NOT backed 100% by US Treasury holdings. Ooops.
SWIFT is slow because it's junk technology. Banks have been capable of instantaneous and near zero overhead transactions since the 1970's, without crypto. SWIFT reminds me of those old dial up 2400bps modems. Fix SWIFT and get rid of US government hegemony obsession and the rationale for tether disappears, especially because real banks are regulated and so can't just issue unlimited coins not provably backed by US treasury assets.
Don't be another technology/finance idiot bamboozled by complicated crypto jargon. Wildcat banking has always existed, and it always ends in tears.
Some additional perspective on the underlying interests and competitive dynamics between Tether (USDT) and Circle (USDC)...
The recently appointed US Secretary of Commerce is also the CEO of Cantor Fitzgerald, a company that also has a de facto minority interest in Tether (via a convertible note instrument which has better public optics than equity). Cantor Fitzgerald also acts as custodian for Tether's US Treasury holdings.
Circle's establishment ties are its traditional finance investors which include Blackrock, Goldman Sachs, and Fidelity. In addition to corporate investment - Blackrock is also a strategic partner acting as Circle's primary asset manager of USDC cash reserves, and Circle's capital markets arranger.
Stable coins are convertible to US dollars, so obviously it must hold dollars. Tether may use non-US banks, but dollars in a non-US bank are in that bank's account at the Fed. You can avoid some US banking regulation, but you can't avoid the Fed if you own dollars (unless they are cash). As you point out, seizing dollars threatens the credibility of the system, which is why the seizure of Russian assets was stupid. That stupid action is a factor in why these work arounds came into being. But please note, your dollars can always be frozen by the Fed, no matter what bank they are in.
Tether does have the ability to freeze any holder of USDT and does work with law enforcement across the world to freeze accounts involved in illegal scams, amounting to 100s of million of dollars of frozen tether a year.
So when using them there is a fine but undefined line that you need to walk when doing questionable transactions. OTOH, Tether gets to decide what is frozen and what is let through, not any government (at least not directly).
True, but please have a look at my comment on this thread for additional perspective.
Wildcat banking is great until something goes wrong, like maybe those tether coins are NOT backed 100% by US Treasury holdings. Ooops.
SWIFT is slow because it's junk technology. Banks have been capable of instantaneous and near zero overhead transactions since the 1970's, without crypto. SWIFT reminds me of those old dial up 2400bps modems. Fix SWIFT and get rid of US government hegemony obsession and the rationale for tether disappears, especially because real banks are regulated and so can't just issue unlimited coins not provably backed by US treasury assets.
Don't be another technology/finance idiot bamboozled by complicated crypto jargon. Wildcat banking has always existed, and it always ends in tears.
Some additional perspective on the underlying interests and competitive dynamics between Tether (USDT) and Circle (USDC)...
The recently appointed US Secretary of Commerce is also the CEO of Cantor Fitzgerald, a company that also has a de facto minority interest in Tether (via a convertible note instrument which has better public optics than equity). Cantor Fitzgerald also acts as custodian for Tether's US Treasury holdings.
Circle's establishment ties are its traditional finance investors which include Blackrock, Goldman Sachs, and Fidelity. In addition to corporate investment - Blackrock is also a strategic partner acting as Circle's primary asset manager of USDC cash reserves, and Circle's capital markets arranger.
Stable coins are convertible to US dollars, so obviously it must hold dollars. Tether may use non-US banks, but dollars in a non-US bank are in that bank's account at the Fed. You can avoid some US banking regulation, but you can't avoid the Fed if you own dollars (unless they are cash). As you point out, seizing dollars threatens the credibility of the system, which is why the seizure of Russian assets was stupid. That stupid action is a factor in why these work arounds came into being. But please note, your dollars can always be frozen by the Fed, no matter what bank they are in.
Very interesting - thanks Kevin.