Evidently the payment rails can use some maintenance or maybe an upgrade. I hope this proposed USDF stable coin will only be a path to faster and more secure payments. If the banks involved have stepped out of their comfort zone and are eying blockchain technology as an improvement and benefit to consumers, then I applaud their innovation. But will it present as decentralized or will it be just another product offered by the banking industry.
The SEC has put a 2 year halt on other stable coins, so I guess the banking industry knows something we don't. I'm sure it's just a typo that only the bankers and the Feds have not discussed yet.
A membership-based association of FDIC-insured banks calling themselves "The USDF Consortium" decided to jump into the stable coin fray and participate with this newest (to them) financial tool.
A question yet be answered by the largest regulator in the Fiat kingdom is insurance for the reserves backing this new coin. FDIC insurance. I also suspect that adoption of this novel asset by the banking industry was one of the reasons Gary Gensler argues that stable coins do meet the "Howey Test" and are therefore securities. The 2nd portion of the Howey Test is arguably basis to reject this premise.
And yet, stable coins do not present in themselves as an expectation of profit. They do not have a family resemblance expressed by the Howey Test every time they are purchased or sold. They are used in a second order to produce profit, but only like a US Dollar is used. Most users have volatility in mind as they buy and sell stable coins; using the stable coin as its name suggests to keep a transaction within certain perimeters until the transaction can be completed. Simply a tool to smooth out the volatility inherent in this nascent crypto market .
From the 1946 SEC vs Howey Supreme Court decision. 4 conditions describe an instrument as a security.
It is an investment of money
There is an expectation of profits from the investment
The investment of money is in a common enterprise
Any profit comes from the efforts of a promoter or third party
There is so much more to this story that has not been revealed or is waiting to manifest itself. The SEC and CTFC both want control over crypto. They both are regulating and penalizing various crypto platforms. When approached for guidance to approve a platform the crypto entity is usually fined or sued. So much for help.
Yet in 5 years there have been no new regulations that pertain to crypto. So without congressional oversight, the SEC moves ahead and flips a coin as they go to court; knowing that the coin toss is the best way to predict the outcome of an enforcement action because few judges understand the basis or concepts of blockchain presented to the court for judgement.
Even if a judge does not understand the concepts presented he/she does not have the option of not rendering a decision. How many sitting judges today in the entire world understand the concept and intent of Crypto? The conclusion and decision in this case is a 50/50 proposition. A coin toss for either side is the best you can expect.
There is so much more to this story that has not been revealed or is waiting to manifest itself. The SEC and CTFC both want control over crypto. They both are regulating and penalizing various crypto platforms. This obvious turf war is only confusing all the issues at hand.
The un-banked population of the world is huge and presents as an amazing new source of customers. I could see how being on this leading edge of banking services that can be adopted by a huge new group of customers is a strategic move to outpace their competitors.
If capitalism works as well as I think it does, this last outcome could save the current wildcatting crypto crowd via the adoption of regulated securities that are stable coins. My fear is the common consumer will be left behind because of the requirements of "Know your customer" (KYC). The rest of the world will move forward as America will only allow "accredited" investors to buy crypto instruments.
Again, and as always; The opinions expressed here are my own. And are worth every penney you have paid for it. I do not own any stable coins if you are wondering.
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