"US Dollars held in custody accounts are the total balances in accounts held by the Company at federally insured US depository institutions and in approved investments on behalf of the USDC holders at the Report Date."
At this kind of scale, I don't think there's such a thing as plain "cash" free of any counterparty risk - even just holding it in a bank account has risk attached (and most banks probably don't want an account with that much money in it because that would pose risks to them - they have the exact same problems finding somewhere to put it). US treasuries and AAA-rated bonds and commercial paper are about the best you can do.
I remember reading about some folks who wanted to open a bank that wouldn't make any loans, but rather just take store all their deposits as excess reserves at the federal reserve. They would take a few basis points for themselves, but offer their customers a way to have truly cash deposits that earned some interest with the absolute minimum amount of counter-party risk.
The Federal Reserve didn't approve them to do that, because they were worried that it could "destabilize the financial system."
That's called a narrow bank. It's one of those stories you hear about that really make you question the incentives of these large government organizations like the fed. Makes you realize that their goal is not necessarily aligned with the average every day citizen, but rather keeping up this economic system we seem to be stuck in:
> The Fed raises three main objections. 3 The first is macroeconomic: The Fed worries that narrow banks could mess with the implementation of monetary policy, because if they succeed they will keep a lot of money at the Fed, increasing the size of its balance sheet...
> Second, it worries that narrow banks will take funding away from regular banks, making it harder for those banks to trade stocks and bonds (a business largely funded by repo), and maybe even making it harder to make loans...
> Third, the Fed worries that having too safe a bank would be bad for financial stability: In times of stress, everyone will flee from the regular banks to the super-safe narrow banks, which will have the effect of bringing down the regular banks
The deposit rate that customers expect is higher than the rate they would get for storing liquidity with the fed so their spread is already negative. That means there already isn't anything for them to "take a few basis points for themselves" out of.
So on a gross basis this plan already loses them 35bps before any costs they have themselves. If they actually planned to do this and the fed didn't approve the plan, it's because it's not economically viable not because it somehow posed a threat to the system.
For there to be a "deposit only" bank, there must also be a "loan only" bank.
If the money just sits there in a bank account and rots for all eternity you get unemployment and deflation.
The solution to this problem has been to loan out money so that someone else invests the money on your behalf. Inflation exists as an incentive to invest your money and since future incomes are greater (thanks to inflation) it is not very difficult for the borrower to pay the loan back plus some.
Investing doesn't make sense if you have deflation. You can just sit on the money and get rich by on the backs of others. A growing unemployment rate is unavoidable.
To maintain stability you would somehow have to get rid of all the useless people or make them work for goods instead of money.
Short dated treasuries are practically indistinguishable from "cash". They're counted together on corporate balance sheets.
Also, what do you mean "cash"? Printed bills? Deposits in commercial banks' checking accounts? Would savings accounts count too (they can be frozen for some amount of days)? Deposits in Fed accounts?
Yes! And it redeems on demand! But what’s perplexed me is, the Gemini dollar (GUSD) is somehow more volatile than Dai, which uses much more complex, experimental means of stabilizing its value:
That's economics for you! Your perception doesn't not much reality. The idea that because you can redeem at face value for 1:1 and you have stronger guarantees, then it should have a less volatile price.
In reality, it comes down to market makers and market adoption/liquidity. That's why Tether could keep the beg at 1:1 despite having very little liquid cash. Liquidity will come from investors, and actually the more the better. Smaller fish like GUSD will not have that much interest from market makers.
It doesn't need interest from market makers. You want GUSD, you can buy it from Gemini at 1:1. You want to sell, they redeem at 1:1. You don't need market makers unless you want to get ripped off.
Out of curiosity, in the hypotethical future case where the custody accounts would start to "pay" negative interest, what would happen to USDC?
To me, there are only a limited set of options:
1. the peg fails
2. the custody accounts are switched to riskier assets - with or without knowledge of USDC holders. This, of course, has implications to the "stablecoin" status. One could even argue that USDC becomes a de facto fractional reserve bank at this point.
If they redeem tokens net of negative interest, it may not be pegged at 1.000 (as the cumulative negative interest is then rolled into the price of token) but it would still behave the same as competing forms of "electronic USD deposits", so one could argue the peg is not broken.
What would happen if the bank accounts paid interest and the trust wanted to share some of that interest with holders? I think the answer would either be some complicated stock-split-like mechanism, or just have, say, USDC-fixed as the “true” coin and USDC quoted at a floating value to the former such that e.g. 1 USDC-fixed = 1.01 USDC, and creations/redemptions of USDC-fixed happen at $1.01 to capture a compounded interest of 1%
What's weird is that a couple of weeks ago Coinbase launched trading in Tether on Coinbase Pro. You would think this exposes them to much risk. I've been scratching my head about why they did it.
> Could a stack of greenbacks ever be "blacklisted"
Yes. Bill counters at banks capture serial numbers and associate them with your account when you make a cash deposit. Each night the serials are sent to a MCP database where they are checked against a hotlist entered by law enforcement across the country. The bank won't reject the bills on the spot, but depositing too many of the wrong ones will earn you a visit.
The US issued currency during WWII with that explicit plan-- notes counterstamped "HAWAII" in huge letters, or with different colour seals.
If Hawaii fell, or a large stash of notes intended for overseas use were diverted, they could easily demonetize them.
The reason it's not done on a more precise level is probably a UX issue-- you can easily remember "The $10 notes with yellow seals are void" but roadcasting and getting understanding of thousands of "$10 note Series 2024 serial number QL34567846A is void" is infeasible.
I saw something like this happen when I was younger (this was pre-web, in the 80s or 90s, so I unfortunately haven't been able to find any online references to it): there was a big bank heist, and the stolen banknotes were new notes which hadn't been put into circulation yet. The ranges of their serial numbers were widely distributed by the press, and for instance cashiers at supermarkets were supposed to verify whether the serial numbers of the banknotes they received matched any of these ranges (since the banknotes hadn't been put into circulation, they were treated similar to counterfeit money: they officially didn't have any value). The country's currency has changed since then (it was the hyperinflation times), so that whole banknote series is no longer valid nowadays.
You could also open restricted system preference panes by searching for a relevant term in Spotlight and going to a User Guide article. Often they would have a link to open the preference pane which would bypass any restrictions.
>If a request goes through multiple proxies, the IP addresses of each successive proxy is listed. This means, the right-most IP address is the IP address of the most recent proxy and the left-most IP address is the IP address of the originating client.
This blog post[1] has a good explanation of ConfigData updates. The flag would appear to force the install of new Gatekeeper configuration updates.
>To help distinguish Gatekeeper and XProtect updates from other updates in the software update feed, Apple marks them as being ConfigData updates.
>Marking these updates as ConfigData cues the App Store to not display these as available software updates in the App Store’s list of software updates. These updates are meant to be under Apple’s control and to be as invisible as possible.
Which was my point from my earlier downvoted comment. The idea that training Google AI is a condition of use is ridiculous. You have to provide free labor to Google as a condition of paying your electric bill. You also have to share your data with Google — even if you decide not to complete the Captcha.
