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Comment by 6gvONxR4sf7o | Hacker News Reader

Isn't it because the stablecoins are asserting 100% reserves?

Can you walk me through why that's relevant? Is the implication that it's because we (or some) think the stablecoins are lying about their reserve levels, and we let banks hold fractional reserves approaching zero because they just admit this outright?

Yeah, exactly. It's the authorities making sure that these groups are doing what they say they're doing.

Not so sure. The authorities are in charge of determining the bank reserve requirements. The fact that they allowed zero reserves at these institutions is troubling and deserves to be discussed. This is like the Free Banking Era, except back then the States were in charge of enforcing reserve requirements.

If you search online for the Fed's own explanation for these policies, they make some overconfident assertions about "ample reserves" and how their policy assumes there are now "ample" reserves, so they can just set the reserve requirements at zero. Seems to me some political doublespeak in order to provide the unprecedented level of Keynesian stimulus that was planned to be released.

"Buy my stablecoin, it's 100% backed by actual dollars and therefore cannot crash"

"OK, can we see behind the curtain?"

"Absolutely not"

"Can I cash them in with you to get the dollars back out?"

"Hell no"

That's why it's relevant. Because this is not a bank or bank-like situation, and comparisons to fratctional reserve are spurious. They're sold specifically on not being fractional.

So now that we know, does it still apply?

https://www.ft.com/content/529eb4e6-796a-4e81-8064-5967bbe3b...

You mean now we know they’ve committed multi-year multi-billion dollar fraud against their users?

I would have thought that would be a fantastic reason never to go anywhere near the entire ecosystem, personally. Especially as their website is still doing it (or at least using weasel-words to heavily imply it) -

“All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD) and are backed 100% by Tether’s reserves.”

Tether has lost dominance, the markets are moving away from them hopefully.

Could you go into what you mean by “Lost dominance?” Looking at CoinMarketCap, it looks like they (Tether) have the largest stablecoin market cap by 50%, and their 24h volume was an order of magnitude greater than the next closest stablecoin.

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