Big banks explore venturing into crypto world together with joint stablecoin

https://www.wsj.com/finance/banking/crypto-stablecoin-big-banks-a841059e

by wslh • 1 year ago

82 235 1 year ago

wslh3• 1 year ago

nailer• 1 year ago

This feels inevitable. Right now stables are dominated by Circle and Tether (depending whether you’re inside or outside the US), with a little PayPal, Sky and other orgs. USDT isn’t headquartered in the US, banks don’t want to assist paxos/coinbase (Circle) and if retail banks can now hold and stake tokens they’ll probably want their own stablecoin.

matthewdgreen• 1 year ago

The question is whether the banks actually find uses for their own stablecoin, or if it just becomes another thing deployed into the crypto ecosystem.

tonyhart74• 1 year ago

"The question is whether the banks actually find uses for their own stablecoin"

if they start buying and Pumping bitcoin, it would be so funny

footlose_3815• 1 year ago

You thought banks laundered money to druglords and dictators, before? just wait until they have their own currency.

metalman• 1 year ago

yes,that, and something else has got there attention in the apearance of a new demographic, who remember bieng in a bank once as a child with a parent, do have online banking, that is only used to cash out random deposits from all over, live in upscale areas, debit/credit purchases limited to essentials, and can be heard laughing about how quaint money and banks are in almost any hipster coffee shop anywhere. relevance, and the future proofing of that likely that a significant number of bank employies have the bulk of there portfolio.....elsewhere

hanniabu• 1 year ago

How far we've come from HN shouting blockchain has no usecase

abxyz• 1 year ago

What exactly are blockchains being used for in the real world?

Specific to this story: most of the world has instant payments without using blockchains or stablecoins, it’s only the U.S. where the banking system somehow hasn’t realised they can do instant payments using traditional banking technology.

Anyone posting that they’re skeptical about the use cases for blockchains on HN 10 years ago will have the same skepticism now. Nothing has changed.

ETH_start2• 1 year ago

Stablecoins are widely used for international remittance, and for gaining exposure to the USD in countries with weak currencies.

sebstefan2• 1 year ago

Banks see an opportunity for stablecoins to speed up more routine transactions, such as cross-border payments that can take days in the traditional payments system

Nothing that crypto is needed for

specialist• 1 year ago

Blockchain (shared tamper-evident ledgers) has many, many use cases.

Cryptocurrency has just one.

smeej2• 1 year ago

Ask the U.S. how important it is to be the world's default currency before you go ignoring the value of getting that one thing right.

sfblah• 1 year ago

Examples of blockchain use cases?

constantcrying3• 1 year ago

Can you name a concrete example?

I do not count money, as crypt is technically inferior to non-blockchain based digital currencies.

hocuspocus7• 1 year ago

A permissioned stablecoin run by big tradfi players is by definition not a blockchain.

highfrequency2• 1 year ago

May be looking at this the wrong way, but I thought the point of stablecoins (as compared to normal USD) is that the banking system is slow, expensive and cumbersome to transfer USD due for regulatory reasons and perhaps legacy tech reasons.

If so, what is the point of stablecoins if the banks themselves are running it? If regulations and technology are no longer an issue, can’t they just make USD transfers fast and easy? Why bother with a wrapper around USD?

logifail• 1 year ago

the banking system is slow, expensive and cumbersome

I think you missed "profitable" from that list.

Ekaros5• 1 year ago

What I have understood that banking as in the money handling process is not that profitable. Keeping track of people account and allowing them to do transfers is not that great. Payment processing is better. But real money comes from gambling and offering gambling services... Also known as investing...

tonyhart74• 1 year ago

"can’t they just make USD transfers fast and easy?"

its cause regulation???, easy and fast to moving money its good until you got hack from state sponsored actor that you can't even do anything (ehm ehm north korea ehm)

in seriousness, people can get away with billions of dollar and "vanish" is wild world if you think about it.

pornel• 1 year ago

UK regulations forced banks to create APIs for money transfers, and UK banks now have instant free transfers: https://en.wikipedia.org/wiki/Faster_Payments

USA is just bad at governing. Tries not to tell corporations what to do, so it ends up with toothless half-assed laws that do nothing except being a tool for regulatory capture.

DennisP• 1 year ago

So your suggestion is that they build a new system that makes USD transfers faster. Isn't that what they're doing?

If they want, then they can make banks the only entities who can hold their stablecoin, and the whole thing would be invisible to everyone else.

If they allow other people to hold the stablecoin directly, then they could still have the invisible system with banks holding it, plus there'd be extra capabilities on top, like letting people use the coin in smart contracts.

yapyap• 1 year ago

the point of crypto was “decentralization”, banks getting involved is not what they were initially meant for at all

bandoti• 1 year ago

And the point of Bitcoin was a means of transacting, yet people are just mining them and holding as an investment asset!

Once AI takes over and these digital currencies are “smart” and tightly integrated, we’re going to be living in a Black Mirror episode.

tm-guimaraes• 1 year ago

Network.

Sending USD from random bank from random country to another random bank from another random country is a network problem. While it’s solved by SEPA in EUR to EUR countries by pan european clearing and settlement systems, out in the big world it’s not as simple. Specially considering cross-border.

You have to somehow get the payment message across banks and decide on how to settle. It fundamentally a hard problem.

Stable cryptos put the message and settlement in the same system and it’s a global one (not just EU/wtv). The problem is then, which stable crypto? The moment the Fed has a USD crypto, our ECB has an Eur crypto, than that problem is solved. In the meanwhile, joining a big stable usd crypto might still provide you better remittance routes (and settlement) than sending messages over swift.

Tldr: stablecoins solve remittance routing “edge cases”, if the stablecoin is adopted enough

Ekaros5• 1 year ago

What I have missed with stablecoins is that how they fix the final settlement. That is say you send money from USA to say Somalia or North Korea. Who in those countries will have dollars most likely to give out for the stablecoin?

highfrequency2• 1 year ago

If Bank of America let anyone in the world easily open a checking account, this wouldn’t be a problem right? But they don’t do that, because of regulations and KYC etc.

Similarly, if BoA supported an Ethereum stablecoin but a random bank in Argentina supports a Solana stablecoin, it’s still going to be a pain to transfer money right?

I’m struggling to see how this is a blockchain issue rather than a regulatory + agreement on international standard issue.

Spooky23• 1 year ago

The banking system can move billions in seconds. Velocity is only an issue for criminals and people trying to avoid taxes.

The people who are the thinkers in this space like to quack like libertarians and look back fondly at the gold standard. For better or for worse, they are driving US policy now. It’s one of the reasons why our government is setting the financial and economic system on fire and destabilizing the dollar.

If you want to provide fan service to the idiots keeping you in office, and get really really rich in this process, what do you do? Pivot to crypto as there isn’t enough gold to capitalize the world, and outsource the new version of the fed to private interests.

This is a way to stay relevant from the banks point of view in what whatever this new world turns into. They add value because there’s inherent trust in day JPMC, UBS or Barclays versus some random crypto bro company.

ForHackernews• 1 year ago

I'm sure they're excited to offer bank accounts that don't pay interest.

Jommi5• 1 year ago

most banks already offer this, its called checkings account

wslh3• 1 year ago

If so, what is the point of stablecoins if the banks themselves are running it? If regulations and technology are no longer an issue, can’t they just make USD transfers fast and easy? Why bother with a wrapper around USD?

I think at a macro level, the key point is that banks were initially unmotivated/uninterested in, and critical of crypto. The long-term effort behind stablecoins to become compliant and aligned with regulatory frameworks has now positioned them as useful infrastructure. Today, banks can simply adopt or acquire the benefits of a system they had no interest in building themselves. The current US administration clearly helps.

dandanua• 1 year ago

Don't try to be reasonable, this is not how cults and pyramid schemes work in this world.

crystal_revenge• 1 year ago

I’ve come to realize I was very wrong when I used to think crypto was a scam and therefore would never succeed.

My error was in believing being a scam had any correlation with whether or not something would be successful or not.

Yizahi6• 1 year ago

The point is absolute control of ALL accounts of some token and every single token in said accounts from a central location. And no, currently digital money are not even close in the level of control.

jrm46• 1 year ago

I mean, to get negative but real.

The point is for banks to remain powerful in a world where cryptocurrency is at thing; in other words, to subvert the point of cryptocurrency.

lioeters• 1 year ago

I'm surprised not many people have pointed at this simpler explanation. It's not about providing a faster better service to the customers and citizens. It's about using their privileged position as the dominant players in the market and government, to secure their power and control by taking over a competing paradigm (cryptocurrency) that threaten their dominance. In the process they will neuter the concept to fit the existing power structure.

thatguyagain2• 1 year ago

Isn't this what Ripple/XRP is intended for? I always wondered why the banks wouldn't just create and own their own network instead of relying on a 3rd party like that.

csomar• 1 year ago

That's what SWIFT is. It doesn't settle which is in the banks interest (since they settle the transfers).

thatguyagain2• 1 year ago

Yes, for the settlement, sure. But I was referring to this:

"Banks see an opportunity for stablecoins to speed up more routine transactions, such as cross-border payments that can take days in the traditional payments system."

mousetree• 1 year ago

There is no settlement in Swift itself as it’s not network. Swift is messaging only. Bank settlements would happen later through networks like SEPA or Fedwire.

Ripple provides both messaging and settlement with XRP

tonyhart74• 1 year ago

but if bank moving to certain network, its not is just make it a "new swift" system??

Gas fees would skyrocket and expensive again

Mengkudulangsat• 1 year ago

Sounds like a race to the bottom.

First, there's Tether > We're the only option in town. Then, there's Circle > We're more legit than Tether, we're based in the US. Now, there's the banks > We're more legit than Circle, we're banks!

Eventually, the Fed itself will start issuing stablecoins and out-legitimize everyone else.

jmclnx• 1 year ago

This, I it has been 17 years since the last big economic crash. I guess the Banks need to make quick $ and cause another crash.

smeej2• 1 year ago

When Coinbase and Circle formed the CENTRE Consortium back in 2018, they were extremely clear, at least internally, that they were trying to build what would become FedCoin. They hoped that, because USDC is already designed such that it can be completely controlled by its issuers (they can freeze any wallet at any time), by the time the Fed realized that CBDCs were inevitable, they would just adopt the existing "legitimate" leader rather than trying to roll their own.

wtmt2• 1 year ago

Eventually, the Fed itself will start issuing stablecoins and out-legitimize everyone else.

That would be a CBDC (Central Bank Digital Currency), which the current administration doesn’t seem to want. One advantage of such a CBDC would be that central banks of other countries could be persuaded to use them (for cross border payments and transfers), whereas a stable coin issued and managed by a group of banks would likely not have this advantage (not saying never though).

hocuspocus7• 1 year ago

I fail to see what a CBDC and/or Fed sanctioned stablecoins would achieve for entities outside the US that need to transact in USD. It would essentially work the same as today under a new name?

The point of a CBDC is government control over an increased share of the money supply. Pretty irrelevant to USD balances held by other central banks.

The point of a stablecoin for an entity with an American banking license is... nothing?

Maken• 1 year ago

Sounds like a race to the top. The issuer with the highest credibility also has the crypto with the highest credibility.

WinstonSmith84• 1 year ago

the Fed itself will start issuing stablecoins and out-legitimize everyone else

That's doubtful everyone else will be out-legitimized ... because ultimately the Fed will issue coins they can fully control (freeze, delete, etc. whenever they wish so). That doesn't make holding such money very valuable. A lot of people understanding this concern will favor USDT or similar privacy oriented coins and thus these coins will keep flourishing (however USDC could disappear for this very reason).

Ekaros5• 1 year ago

The great trick with stablecoins is that you can take people's money, but you can then refuse to give it back. Much harder to do with real money.

tonyhart74• 1 year ago

most "real" money are just digital now adays

I think people don't know how hard to moving actual real money in terms of millions to billions

Etheryte• 1 year ago

Looking at Citi, it's not hard at all, they regularly fatfinger sums like that left and right [0][1].

[0] https://edition.cnn.com/2025/02/28/investing/citigroup-bank-...

[1] https://www.straitstimes.com/business/banking/citigroup-acci...

wtmt2• 1 year ago

It’s not much harder to do with real money. India, a country of 1.3 billion people, did it in 2016 with “demonetisation” of specific high value currency denominations. [1] Some people died because they couldn’t get their own money from the banks. One could say that these people didn’t get their money. Millions lost jobs and their livelihood because they couldn’t get their money.

Other countries have done somewhat similar things over the last century.

On the same topic, real currency can become or be made worthless due to hyperinflation (and even normal inflation).

[1] https://en.m.wikipedia.org/wiki/2016_Indian_banknote_demonet...

glitchc3• 1 year ago

Demonetization is not the same thing as stablecoins. Countries are allowed to withdraw certain bank note denominations and it's been done many times in the past.

In most countries where demonetization occurs, the central bank continues to accept demonetized currency for the foreseeable future, exchanging it for valid denominations at par.

The government of India came down hard on corruption and tax evasion, more politically motivated than anything. But then people voted for it and the majority supported the process. If they didn't, the government would have been discarded in the next election.

jbs789• 1 year ago

Banks are slow in large part because of systems built to support the AML/KYC controls and fraud prevention. (Think about your wire transfer getting screened etc). New banks do this more efficiently but this is still the bottleneck.

A bank doing stablecoins will still need to implement these controls.

Stablecoins only really work because they are outside the system.

lottin• 1 year ago

Exactly. A 'stablecoin' that is regulation-compliant is undistinguishable from a bank.

drexlspivey• 1 year ago

Except you can send payments with an http request

kurthr• 1 year ago

Well, if you're big enough to be TBTF, then you can lever up stablecoin risk because you know you'll be bailed out after they let the little guys tank.

disgruntledphd22• 1 year ago

Except that you can do FX and global transfers much more quickly and easily.

kiitos5• 1 year ago

Regulation-compliance is kind of a requirement for, well, everything, stablecoin or otherwise, so not really sure what the point is here...

piva00• 1 year ago

Curious what exactly differs between EU and USA to make American transfers so inefficient time-wise. In the Eurozone SEPA instant transfers are settled in seconds (usually under 10 seconds, with max 20 seconds allowed), and AML/KYC regulations are quite strong.

hocuspocus7• 1 year ago

EU directives have forced banks to modernize at a pace that wouldn't have been possible if we just let the free market decide. There are downsides to the heavy regulatory framework, for instance the unhealthy consolidation and size of systemic banks. But we enjoy pretty advanced banking services and arguably the most flourishing fintech ecosystem by worldwide standards, mostly thanks to EU technocrats.

edgarvaldes• 1 year ago

Same in Mexico. I just did a bank transfer that took longer than usual. It took around 10 minutes instead of 10 seconds. It was unusual for me.

toast0• 1 year ago

The US has almost 4,500 banks and about the same number of credit unions. They're subject to federal and state regulation. That's a lot of complexity to manage.

However, there's FedNow immediate transfers, Zelle (consortium of banks) immediate transfers, same day ach (several batches daily), same day fed wire transfers within banking hours, and that's just the faster options.

Decentralized systemd are slow to act and slow to change, which is why all of the faster banking initiatives tend to involve a centralized element.

dboreham2• 1 year ago

The US has much more corruption so banks have been able to bribe politicians into not requiring they provide low cost services that would mean their executives have smaller boats.

arandomusername• 1 year ago

just an additional note, the instant transfer is only up to 15k euro

wbl2• 1 year ago

You really don't want one typo costing your entire bank account as a consumer. Settlement delays permit easy rollback.

UltraSane• 1 year ago

US banks like slow transactions due to fraud concerns.

xiphias2• 1 year ago

Partly it's true, but also all banks in the world are fractional reserve / printing money from thin air from the loans they got from bigger banks.

If the big US banks are successful, they can have their own one huge fractional reserve that can be used by people around the world.

hocuspocus7• 1 year ago

Not only this isn't how banks work, but also completely irrelevant to moving money.

LatteLazy2• 1 year ago

I don’t think that’s true in this case. I would assume the bank issuing the coin has to know the identity of the people they sell it to. But once those people sell it on, it’s not their problem any more. Sure they could get an order to seize those coins (/wallet) and would have to obey. But I don’t think they’d be required to kyc everyone on the network. Just their immediate counterparties…

disgruntledphd22• 1 year ago

The idea is (as I understand it) that to get fiat (which is presumably the end-goal) you need KYC, so if each node which converts stablecoin-fiat then you have acceptable KYC. (I am not a regulator though, so who knows?)

nickysielicki5• 1 year ago

If treasuries break all of this is going to unwind in a horrible way. Stable as opposed to what?

IAmGraydon5• 1 year ago

Can you explain what you mean? Treasuries will continue to rise until yields are in the double digits. That, to me, is a foregone conclusion. How does this affect crypto, though?

ptero3• 1 year ago

Why do you expect the treasuries to rise into the double digits? And over what timeframe?

sebstefan2• 1 year ago

Banks see an opportunity for stablecoins to speed up more routine transactions, such as cross-border payments that can take days in the traditional payments system

Nothing that crypto is needed for

rvz2• 1 year ago

Yeah, why didn't they just use FedNow? /s

monero-xmr2• 1 year ago

Hacker news / YC mostly missed the boat on crypto. The comments here are ignorant and misinformed. Lots of M&A happening now, none of which is lining YC pockets. Pretty amazing how the “smartest” people could be 100% wrong on crypto

supplied_demand• 1 year ago

What is the goal of this comment? Who was wrong? What were they wrong about? What percentage of crypto acquisitions involve Web3?

Coinbase was in the Summer 2012 batch. 13 years ago seems like a good sign that they weren’t as ignorant as you claim. There are currently 73 companies listed on YC as being crypto/Web3.

https://www.ycombinator.com/companies/industry/crypto-web3

rvz2• 1 year ago

Except they didn't as YC funded Coinbase.

But you are still correct that the majority of HN missed out on crypto and thus are allergic to it and now they are fans of anything "AI" despite not even knowing that "AGI" is a scam with the real intention of causing a 10% increase in global unemployment.

In fact, AI is more likely to be the cause of another financial crash than crypto, once we see mass layoffs accelerating.

SureMethod• 1 year ago

From your perspective, what are the most exciting or promising developments in crypto right now that others might be missing? I'm very interested to learn more.

kilimounjaro3• 1 year ago

Bitcoin gradually replacing the USD as the global reserve currency is quite an exciting development

monero-xmr2• 1 year ago

I would look at homomorphic encryption, zero knowledge tech (snarks / circuits)

All of the NFT infrastructure will be repurposed for tokenized bonds (Real World Assets or RWAs) and the size of defi and crypto network assets under management will skyrocket, and become deeply intertwined with tradfi

Privacy coins (like my username) are only going to get stronger and harder to kill

It will be much easier to raise funding for tiny startups, like you could back in the pennystock days and IPOing garage businesses. Formalized and strong names / credentials / legal remedies will enable far easier capital formation for risky companies

Jommi5• 1 year ago

Things like Monerium (programmable, regulated EU e-money), card integrations (pay with stables abstracted to current visa/MC), mobile wallets (only build a frontend for a fintech app, everything else is done by soemone else) is a pretty huge combo.

Especially with UX, the likes of https://www.privy.io/ is interesting, now we finally have "non-custodial" wallets with just a google-login. (check how it works, its pretty cool). This means any user for any web app can have a "bank accocunt"

Other stuff is zkEmail/zkTLS for verifiable data portability without exposing raw private data (huge for things like "vampire attacks"), and TEEs with fine-grained, 'OAuth 3.0'-style access control for private compute are compelling.

wslh3• 1 year ago

Hacker news / YC mostly missed the boat on crypto.

I think the point is who won the bet with the current US administration. Also remember that Coinbase was part of YC.

_heimdall3• 1 year ago

I've yet to understand the argument often made that we need a stablecoin to replace fiat for faster or safer transactions.

US banks already create money out of thin air and a vast majority of that money only exists in a database. If they want it faster they could just do that.

XorNot2• 1 year ago

Because cryptobros desperately need a legitimate reason crypto is the future, and thus valuable, and definitely not a round of tulipmania.

_heimdall3• 1 year ago

The argument isn't only made by cryptobros though.

Banks seem to be pointing at the same need and I just don't see why. At best it gets around regulation if a stablecoin isn't treated the same as fiat. With either, though, a bank can already create and give out whatever they want and track it in a database (all be it a more standard db and not a blockchain or public ledger).

Geee• 1 year ago

This is great news. Stablecoins issued by banks are much better digital cash than CBDCs (central bank digital currency). EU is currently trying very hard to implement their own CBDC, and stablecoins will directly compete with it. A CBDC is basically a stablecoin issued by a central bank. The problem is that this digital cash would compete with currency in private bank accounts, and ultimately bank accounts wouldn't be needed any more. I think every bank must start issuing their own stablecoins if they wish to stay in business.

Private banks issuing their own stablecoins will make the banking system little bit closer to the free banking system [0], when banks used to issue their own banknotes i.e. paper currency. This is better, because every stablecoin could have their own risk profile which is associated with the issuing bank, which would lower the overall systemic risk.

On the other hand, a CBDC would be a move in the direction of single-tier banks [1], which centralizes all money issuance to a single bank.

[0] https://en.wikipedia.org/wiki/Free_banking

[1] https://en.wikipedia.org/wiki/Single-tier_banking_system

steveBK123• 1 year ago

Good luck with that given Lutnick is in this admin and has financial ties to Tether.

thunkle• 1 year ago

Just pointing out https://www.worldlibertyfinancial.com/ 60% owned by the trump family and also Steve Witkoff (special envoy to the middle east) just got funded $2B by the UAE. https://en.m.wikipedia.org/wiki/World_Liberty_Financial No conflict of interest here??? Who runs the justice department? Who is not supposed to receive gifts from foreign nationals

[Edit] corrected website URL.

qoez• 1 year ago

I'm getting a phishing warning on that site but not on the one with properly spelled financial so I'm guessing the one you have is wrong

outside1234• 1 year ago

This will get worse and worse if we continue to not protest it

amanaplanacanal• 1 year ago

We have had some let big protests in the US, and they haven't accomplished much. The two solutions that work are voting the bastards out, and armed revolution. You better hope voting works, because unfortunately armed revolution tends to end with even worse people taking power, which the "second amendment solution" folks somehow haven't realized.

ta126534214• 1 year ago

This is a SCAM site.

The correct one is: https://www.worldlibertyfinancial.com/

6stringmerc2• 1 year ago

Actually, they both are scam sites! /s?

ujkhsjkdhf2343• 1 year ago

This is biblical end of days level stuff.

0xy• 1 year ago

I presume you had the same impression during the Clinton Foundation influence peddling operation? Or the Burisma cash-for-access scandal?

scyclow18• 1 year ago

I think what a lot of people are missing about stablecoins is that it's not just about clearing transactions faster than SWIFT. With stablecoins you get programable money without having to deal with the wild fluctuations of crypto.

A simple (and contrived) example: Let's say I want to send you $100 on Tuesday, but only on even-numbered hours. This is a trivially easy smart contract to write. Sure, you could do this with crypto, but if you want to protect yourself against price fluctuations it makes sense to use a stablecoin.

Yizahi6• 1 year ago

Yeah, great innovation. Also allows for many amazing and useful features for us people, such as allowing these tokens to expire and disappear from your account, or programming specific tokens to be only transferable to specific accounts or for specific goods, or for example controlling all token accounts in every single country on earth from the central location. E.g. for example Trump (assuming a USA stabletoken) not only sends you to the Salvador death camp, but also blocks and confiscated all your tokens and blocks you from ever having a token account in the future, all with a single click from NY central bank. Or replace the same with any other country and central bank.

Amazing utopia awaits for us, can't wait to take part in that hell economy :)

GenshoTikamura3• 1 year ago

And we can clearly see that some people are defending their utopia agressively by trying to fade your comment to gray

scyclow18• 1 year ago

Sure, but banks can lock your account without the blockchain, so you're not enabling any new dystopian behavior here. And if you're worried that they can restrict your transaction behavior, then don't hold that coin! Swap your money into a stablecoin that doesn't have spending allowlist logic encoded into the smart contract.

hiddencost• 1 year ago

Or they could use fed now?

tacitusarc2• 1 year ago

This doesn’t feel like a good thing to me. I can imagine a lot of pretty abusive smart contracts.

NoahZuniga2• 1 year ago

How are you going to abuse sending other people money?

scyclow18• 1 year ago

Like what? It's just a streamlined and versatile way to escrow money.

only-one1701• 1 year ago

You could also do this with any other kind of API a bank might expose? Why is crypto necessary here?

solumos4• 1 year ago

In this scenario, imagine that “you” are in a different country or perhaps you don’t have a bank account. Or maybe you don’t want to pay $10+ or X% to receive funds.

arccy2• 1 year ago

crypto isn't necessary... it's just that no bank wants to take on the risk of exposing an api to the regular consumer.

xyzzy95632• 1 year ago

Crypto doesn't require 3rd party permission to send money or verifying anyone's authenticity, real name, or legal compliance. So it's much easier to build APIs around. If you created banking APIs you'd need very extensive controls and monitoring for anti-money laundering and so on.

bo1024• 1 year ago

One thing is stronger guarantees for the receiver, who can verify that the smart contract will automatically transfer the funds. Another is interoperability. The receiver can write a contract to e.g. always donate half of that income to a charity as soon as it is received every two hours. Another is transparency and verifiability, anyone can check that the receiver is giving half this income to charity.

Not trying to get pulled into any arguments about whether cryptocurrency is good or bad, just some potential answers to your question.

jrm46• 1 year ago

E.g. Automatic bill pay to a VPN. Now you have very good anonymity.

scyclow18• 1 year ago

Sure, you could technically wire something together that does this, but maybe the other party wants a strong reassurance that the payment will actually go through. They don't want to rely on your server making the right API call.

gs17• 1 year ago

A simple (and contrived) example

What about a simple but not contrived example (or if no good simple examples exist, a complex one)? Smart contracts are neat but I'm not sure there's any real benefit, especially for banks which likely don't need to do things without trusting each other.

jrm46• 1 year ago

Not sure why op didn't go with "$100 on the 1st of every month."

That's just "automatic bill pay" without a bank, etc.

scyclow18• 1 year ago

I want to buy an event ticket from you, but we're strangers. So I write a contract that releases the money to you once you send the ticket, or vice versa.

GenshoTikamura3• 1 year ago

Sending $100 on Tuesday only on even-numbered hours is not a very likely use case for it.

Paying wages that are only valid for a month, are split into parts which can only buy specific foods and goods inside a geofenced zone and can't be tranfered to any other person are much more likely.

scyclow18• 1 year ago

I said it was a contrived example! But people have really specific payment logic that doesn't seem to make much sense from the outside.

What you're describing can only be achieved by encoding specific logic into the coin's original contract, so you'd know what you're getting yourself into ahead of time. And this is tantamount to agreeing to be paid in a specific gift card with a really small payment network. No need to get crypto or stablecoins involved.

kiitos5• 1 year ago

stablecoins don't protect you against price fluctuations. they don't even guarantee reliable mapping to their underlying currency.

viraptor2• 1 year ago

This is not simple at all.

What happens if you don't have the money available? If you want to provide some guarantee, how would you do it without locking up N x $100 forever? What are even numbered hours - which timezone? What happens if your transaction doesn't get accepted within that timeslot? Etc. etc.

scyclow18• 1 year ago

Okay, I'm simplifying a little bit. It wouldn't work exactly like that. You'd lock up $100 (or approve the contract to spend up to $100), specify the time I'm unix timestamps, and leave it up to the recipient to claim their money.

That's sort of besides the point though. I'm just saying that you have the ability to implement whatever ad hoc or arbitrarily complex payment logic you want without relying on a middleman.

bearjaws• 1 year ago

More centralization is good for bitcoin.

GenshoTikamura3• 1 year ago

As well as less independence from The Banksters. In other words, it is the full reversal of the initial selling points that is good for bitcoin.

So much for Satoshi's cryptoanarchy.

zkmon• 1 year ago

I have seen banks doing this for about 10 years now. Some are at an advanced stage. They tried multiple things - third-party consortium chains, own coins, tokens etc. Now they are starting to realize that the banks need not jump on the bandwagon of public crypto or pegging to some chain. Collectively they can build their own self-sustaining chains.

constantcrying3• 1 year ago

What is the point?

- Banks should have controls over money that are impossible with crypto. It is absolutely vital for any state to control their own currency and the banks need methods to accomplish that.

- Why would banks need a decentralized ledger at all? It makes literally no sense to have banks maintain such a ledger. Banks do not need to solve the double spending problem and you can build a digital currency without a block chain. Not as a theoretical, but right now basically all my banking happens digitally, what is the actual technical point of introducing a block chain to that?

hocuspocus7• 1 year ago

Regarding you second point, the funny thing about this space is that most stablecoins don't even try or pretend to be decentralized.

This news reads like big banks and other major traditional finance players are building a database because FedNow doesn't cut it somehow?

constantcrying3• 1 year ago

The decentralization is my steel man of the idea. If you don't have to worry about the double spending problem, choosing a block chain instead of a normal database is just absurd.

xyst• 1 year ago

Knowing banks, this will take much longer than 4-5 years to architect. Then an additional 5 years to rollout.

This plan assumes the current mercurial administration stays their course on stablecoin to replace USD as reserve currency and future administrations also going along with it.

It’s a massive gamble that depends on many variables.

For now, it’s a PR move.

ujkhsjkdhf2343• 1 year ago

This plan assumes the current mercurial administration stays their course on stablecoin to replace USD as reserve currency and future administrations also going along with it.

You are operating on the assumption that there will be fair election in 4 years and that Dems will retake the White House. Both of those are unlikely. Trump has almost killed democrarcy in 3 months. I'm sure he'll get the job done in another 3.75 years.

rthomas6• 1 year ago

I really wish someone would make a stablecoin not pegged to some currency but to a basket of goods. A CPI-coin, if you will. How would that work? Maybe similar to the programmatic way DAI works, by collateralizing other assets in a way that make DAI some desired price.

How cool would it be to have a decentralized coin that has zero percent inflation.

hansvm• 1 year ago

"zero-percent inflation" relative to some particular basket of goods. If efficiencies and demand change to make that basket relatively less expensive than other things you care about (like land), you'll expect positive inflation in real terms. Negative inflation is possible the other way (e.g., if other baskets of goods wind up being more amenable to automation and the demand curve isn't too inelastic).

kilimounjaro3• 1 year ago

On a long enough time scale, this is bitcoin, with an additional NGU (number go up) characteristic which will persist until it achieves saturating global adoption

acdha4• 1 year ago

Bitcoin is the purest form of fiat currency valued solely based on social consensus, which is why it’s so volatile. Anchoring something based on real-world commodities would be bad for speculators but much more likely to see real-world adoption.

Ekaros5• 1 year ago

Problems with pegs are that someone has to take other side. And that side is often losing one. You peg something to current amount of goods, but you have to be able to stand behind that whatever happens to value of those goods... The value drops, you made profit, the value massively increase. Now everyone is wanting to redeem and you need to be good on promise or whole thing collapses...

kayamon• 1 year ago

Bitcoin is pegged to the cost of electricity and is already a decentralized coin with zero percent inflation.

cariaso• 1 year ago

If the GENIUS Act becomes the law, we're in for a FUBAR situation when a stablecoin issuer ends up insolvent. Even more concerning, if a bank custodian for a stablecoin issuer's reserves ends up insolvent, the claims of the stablecoin investors will come ahead of the bank depositors. That's right. Crypto comes ahead of ma-and-pa.

https://www.creditslips.org/creditslips/2025/05/the-genius-a...

scyclow18• 1 year ago

I think this is why regulation is so important. As the GENIUS Act is written, all funds backing the coin need to be held in cash or Treasuries. And if they go bankrupt, coin holders would have a higher claim on that money than creditors. If stablecoins aren't regulated then what's to stop issuers from creating stablecoin products without those protections?

6stringmerc2• 1 year ago

Great timing! I’m sure they’ll really enjoy being targeted to be the next hop in the cat-and-mouse game of illicit substances and money laundering enterprises /s. LEOs are getting a lot more up to speed with these systems from what I’ve seen in the past couple years. Highly regulated industries like banking should have a really, really, really strong “use case” to get in other than FOMO in my opinion.

SubiculumCode• 1 year ago

Violating the separation of banking from speculative investment never hurt anyone /s

Same God damn story, over and over, but with the inevitable bailout. Heads I win, tails you lose.

jcfrei2• 1 year ago

A lot of people here rightfully questioning what's the use case of stablecoins. US dollars on a bank account essentially just represent a claim backed by a bunch of government debt - ie. US treasuries. But what if these treasuries became undesirable? Either because inflation runs very high or the creditworthiness of the issuer is questionable? what if - as a result - we have to build a financial system not based on government issued debt - but private (ie. corporate) debt? suddenly stablecoins become a lot more interesting.

idiotsecant• 1 year ago

Corporate control of and ownership of the means of exchange is basically inevitable it seems, and it will be an absolute dystopia.

redczar• 1 year ago

It used to be the case that individual banks could issue currency. It was found that having government control this much better overall. It’s not perfect.

NoahZuniga2• 1 year ago

There is no reason to move to corporate debt to back deposits. There is no US credit risk because the US can always print more dollars. Because the debt of other US companies is also denominated in US dollars, it is equally exposed to inflation as US government debt.

US treasuries becoming undesirable doesn't really have an effect on stablecoins, because (at least for USDC and I believe USDT) they hold short term treasuries that expire in a few months. The operator of the stablecoin can just hold the treasuries until they expire. Also if the operator of USDC can't pay out all claims right now, they will be in a few months so an oportunist market maker can buy USDC for 98 cents on the dollar and cash out 100 cents a few months later.

scyclow18• 1 year ago

I'd say that the risk of the US defaulting on Treasuries is definitely higher than zero... but if that happens then we'd probably have bigger fish to fry than stablecoins.

jcfrei2• 1 year ago

A high inflation rate can significantly reduce demand for US government debt. Same applies to corporate debt - that's why inflation indexed bonds exist (called TIPS for US debt). They are not a big part of the bond issuance atm but they could grow massively. In my outlined scenario the US gov won't be able to issue more TIPS because of their fiscal situation while profitable corporate issuers could.

Animats3• 1 year ago

Stablecoins are money-makers now that interest rates are nonzero. With zero interest rates, there was no place safe to put the money, and many early stablecoins were scams. Now, they're profitable to run honestly.

Trump has his own stablecoin, USD1.[1]

But how much does it cost to get in and out? That's the question. FedNow charges US$0.045 per transaction.

[1] https://coinmarketcap.com/currencies/usd1/

Jommi5• 1 year ago

Actually, its looking like nearly every late comer to the stablecoin game outside of Tether is not able to actually make profit on their interest gains.

They need to find business cases elsewhere.

Animats3• 1 year ago

Hm. Why? Anybody can get at least 3.5% safely in Treasury paper. Can't they run a stablecoin business on that margin? With promotional costs, probably not.

alfiedotwtf• 1 year ago

    First they ignore you
    Then they laugh at you
    Then they fight you
    Then you win

Nasrudith• 1 year ago

Stablecoins, like all promised large reserves of liquid currency are an attractive nuisance for fraud and theft. Even pensions suffered from the same thing and got robbed by the mob first. Any stablecoin offer you are safer just assuming it is yet another fraud.

LatteLazy2• 1 year ago

This reminds me of the way Scottish banks used to issue their own notes independently (they still issue them now but are required to have Bank of England notes of equivalent value in storage)

They were not legally currency (or legal tender) but acted as such. It if a bank was viewed to be in trouble its notes would start trading at a discount.

Effectively it was a free market for currency issuance. Which I guess this would be too?

Havoc• 1 year ago

Would that not practically lead to a global financial system in the true sense? Basically SWIFT on steroids.

Or the universal "credits" seen in scifi?

Big banks explore venturing into crypto world together with joint stablecoin

Related Stories