Stablecoin censorship

[Yogee]

Because they are less monitored than the reserves themselves, so far I have not found a case of stablecoin freezing below $5k even though it was proven to be the proceeds of crime.

you can losing your entire balance, as happened with LUNA, or it may happen if the legal restrictions on these stable currencies are tightened, especially since we all know that they do not possess any reserves that would allow them to print more of these coins.
These are opposite things. If the stablecoin has a large market capacity, regulatory restrictions will increase on it, which may mean freezing even small deposits, and the stablecoin with a small market capacity does not have enough reserves to maintain the value of one dollar.

The risks of holding stable coins are only increasing by the day, now that governments want to release their CBDCs the first coins they will want to target will be stable coins, because if people have easy access to stable coins which they have used for years already then why use CBDCs? So I really think that governments are going to begin to make the life of stable coins holders very hard, and when I consider all of those factors it makes less and less sense to keep holding stable coins.

I can already imagine the negative articles and lawsuits aimed at USDT and USDC but Banks would probably focus on private businesses as their main target users so these issuers of other stable coins can still have time to enjoy their profits. It's like CBDCs are for B2B while those private-backed are for P2P.

[Fundamentals Of]

USDT and USDC are the two most notorious when it comes to stablecoin censorship. Ironically, they're also the two largest stablecoins in cryptocurrency. They're the easiest to use because they're accepted almost everywhere. This is also the reason why I used them many times even if I don't really like them for the reason that they easily freeze funds.

DAI is a better option but not as popular as them. There will definitely come a time when these censorship issues will make users realize how risky it is to use them and transfer to a better option. For now, most people just use whatever stablecoins are the top in the market.

[GreatArkansas]

This banned or stablecoins being frozen are common in some hacking incidents. Like in any centralized entities or even DeFi entities we have now in the cryptocurrency market.
It's just sad because the essence of cryptocurrency is being disregarded here, let's say for example if you are just normal person and your funds just got frozen without any doings, then it means you really don't own your cryptocurrency.

[PIMPdev]

This banned or stablecoins being frozen are common in some hacking incidents. Like in any centralized entities or even DeFi entities we have now in the cryptocurrency market.
It's just sad because the essence of cryptocurrency is being disregarded here, let's say for example if you are just normal person and your funds just got frozen without any doings, then it means you really don't own your cryptocurrency.

Well, besides BTC there are not so many currencies that are fully in your hands.

[Blitzboy]

Stablecoin censorship? These issuers seem to have missed the idea of cryptocurrency. This behavior by Bitfinex and Circle is incomprehensible. What do they offer if they mimic bank restrictions? Dont you see the obvious contradiction?

Question the narrative being promoted. Why are investors buying stablecoins that seem to betray decentralization? Wheres the autonomy if every transaction and move is monitored? Its like receiving a golden cage. Though dazzling and tempting, its still a cage. Rise up, crypto community, and demand more from issuers. Otherwise, why bother?

[noorman0]

you can losing your entire balance, as happened with LUNA,

Yes, I know that, but our discussion focuses on censorship, not the potential loss of value due to the badness of the stablecoin company itself.

-snip-
These are opposite things. If the stablecoin has a large market capacity, regulatory restrictions will increase on it, which may mean freezing even small deposits, and the stablecoin with a small market capacity does not have enough reserves to maintain the value of one dollar.

Currently the total daily market cap of stablecoins has reached $123k billion, if we assume the number of retail users increases rapidly from today, I think the opposite is true, censorship is increasingly difficult to do for small values.

[Xal0lex]

Stablecoin censorship? These issuers seem to have missed the idea of cryptocurrency. This behavior by Bitfinex and Circle is incomprehensible. What do they offer if they mimic bank restrictions? Dont you see the obvious contradiction?

Question the narrative being promoted. Why are investors buying stablecoins that seem to betray decentralization? Wheres the autonomy if every transaction and move is monitored? Its like receiving a golden cage. Though dazzling and tempting, its still a cage. Rise up, crypto community, and demand more from issuers. Otherwise, why bother?

There is no contradiction. These companies offer the services for which there is a demand. Crypto users have a great demand to link cryptocurrencies and fiat. Fiat with cryptocurrency will never have a decentralized union, it's nonsense. The crypto community itself is to blame for the industry moving towards centralization. Because for most crypto users, the main idea of using cryptocurrencies is to exchange cryptocurrency for fiat as profitably as possible.

[Fundamentals Of]

Stablecoin censorship? These issuers seem to have missed the idea of cryptocurrency. This behavior by Bitfinex and Circle is incomprehensible. What do they offer if they mimic bank restrictions? Dont you see the obvious contradiction?

Question the narrative being promoted. Why are investors buying stablecoins that seem to betray decentralization? Wheres the autonomy if every transaction and move is monitored? Its like receiving a golden cage. Though dazzling and tempting, its still a cage. Rise up, crypto community, and demand more from issuers. Otherwise, why bother?

There is no contradiction. These companies offer the services for which there is a demand. Crypto users have a great demand to link cryptocurrencies and fiat. Fiat with cryptocurrency will never have a decentralized union, it's nonsense. The crypto community itself is to blame for the industry moving towards centralization. Because for most crypto users, the main idea of using cryptocurrencies is to exchange cryptocurrency for fiat as profitably as possible.

I agree. There is no contradiction. To remove censorship is a Bitcoin idea. But crypto has since grown in all directions, with a wider scope. Bitcoin is crypto, but crypto isn't Bitcoin. The growth of crypto didn't necessarily abide with the fundamental ideas of Bitcoin. The mere fact that crypto has produced a coin that represents fiat isn't what Bitcoin is all about.

If there is any contradiction, it is that the very people who claim to be pure and solid Bitcoin supporters are also using stablecoins like USDT and USDC that are centralized and actively censor their users.

[Abiky]

This banned or stablecoins being frozen are common in some hacking incidents. Like in any centralized entities or even DeFi entities we have now in the cryptocurrency market.
It's just sad because the essence of cryptocurrency is being disregarded here, let's say for example if you are just normal person and your funds just got frozen without any doings, then it means you really don't own your cryptocurrency.

Having a centralized stablecoin that's prone to censorship, certainly does not go well with crypto/Blockchain tech's core ethos. I can't imagine how disastrous it would be to combine such a stablecoin with "De-Fi". It's like bringing banks to the Blockchain. This introduction of a middleman or third-party, greatly brings us the single point of failure from centralized systems. Most people don't care about this because they only want to make money fast.

As I always say, convenience goes on top of everything else. I hope we get more decentralized alternatives to help make "De-Fi" truly censorship-resistant. Otherwise, crypto will be doomed to failure. The future is widely unpredictable, so we can only hope for the best. Just my opinion

[Xal0lex]

Stablecoin censorship? These issuers seem to have missed the idea of cryptocurrency. This behavior by Bitfinex and Circle is incomprehensible. What do they offer if they mimic bank restrictions? Dont you see the obvious contradiction?

Question the narrative being promoted. Why are investors buying stablecoins that seem to betray decentralization? Wheres the autonomy if every transaction and move is monitored? Its like receiving a golden cage. Though dazzling and tempting, its still a cage. Rise up, crypto community, and demand more from issuers. Otherwise, why bother?

There is no contradiction. These companies offer the services for which there is a demand. Crypto users have a great demand to link cryptocurrencies and fiat. Fiat with cryptocurrency will never have a decentralized union, it's nonsense. The crypto community itself is to blame for the industry moving towards centralization. Because for most crypto users, the main idea of using cryptocurrencies is to exchange cryptocurrency for fiat as profitably as possible.

I agree. There is no contradiction. To remove censorship is a Bitcoin idea. But crypto has since grown in all directions, with a wider scope. Bitcoin is crypto, but crypto isn't Bitcoin. The growth of crypto didn't necessarily abide with the fundamental ideas of Bitcoin. The mere fact that crypto has produced a coin that represents fiat isn't what Bitcoin is all about.

If there is any contradiction, it is that the very people who claim to be pure and solid Bitcoin supporters are also using stablecoins like USDT and USDC that are centralized and actively censor their users.

Bitcoin is also trying to be censored. This is manifested in various AML checks, which are used by various services to fight, allegedly, against fraud. In the framework of P2P transactions it does not change anything, but we want bitcoin to be able to pay not only between users, but also to buy various goods and services in stores and on websites. In this respect, censoring bitcoin is possible because there is also a third party in this financial relationship, in the form of payment processors that have their own regulators and rules.

[Fundamentals Of]

Stablecoin censorship? These issuers seem to have missed the idea of cryptocurrency. This behavior by Bitfinex and Circle is incomprehensible. What do they offer if they mimic bank restrictions? Dont you see the obvious contradiction?

Question the narrative being promoted. Why are investors buying stablecoins that seem to betray decentralization? Wheres the autonomy if every transaction and move is monitored? Its like receiving a golden cage. Though dazzling and tempting, its still a cage. Rise up, crypto community, and demand more from issuers. Otherwise, why bother?

There is no contradiction. These companies offer the services for which there is a demand. Crypto users have a great demand to link cryptocurrencies and fiat. Fiat with cryptocurrency will never have a decentralized union, it's nonsense. The crypto community itself is to blame for the industry moving towards centralization. Because for most crypto users, the main idea of using cryptocurrencies is to exchange cryptocurrency for fiat as profitably as possible.

I agree. There is no contradiction. To remove censorship is a Bitcoin idea. But crypto has since grown in all directions, with a wider scope. Bitcoin is crypto, but crypto isn't Bitcoin. The growth of crypto didn't necessarily abide with the fundamental ideas of Bitcoin. The mere fact that crypto has produced a coin that represents fiat isn't what Bitcoin is all about.

If there is any contradiction, it is that the very people who claim to be pure and solid Bitcoin supporters are also using stablecoins like USDT and USDC that are centralized and actively censor their users.

Bitcoin is also trying to be censored. This is manifested in various AML checks, which are used by various services to fight, allegedly, against fraud. In the framework of P2P transactions it does not change anything, but we want bitcoin to be able to pay not only between users, but also to buy various goods and services in stores and on websites. In this respect, censoring bitcoin is possible because there is also a third party in this financial relationship, in the form of payment processors that have their own regulators and rules.

It's not Bitcoin that's trying to be censored, it's the governments that are trying to censor it. But yes I get your point.

But it's simply impossible regardless of all these AML checks, KYC, strict regulations, etc. If Bitcoin is not accepted at McDonald's for example because the government orders it, it's not Bitcoin that's censored but McDonald's. If a McDonald's branch resists and accepts Bitcoin, then Bitcoin can be used. It's because Bitcoin can't be censored.

This isn't the case with USDT and USDC. Their users can't use their tokens even if they want to because they're censored. Nothing like this can happen with Bitcoin.

[DapanasFruit]

If these entities do the exact same thing banks do, why are stablecoins rising in popularity? Investors could lose it all in an instant without even knowing it (unless they check the blockchain, of course).

Stable coins are centralized and the issuers basically control everything about it, they can print as much as they want (even if it is backed by nothing), or they can freeze it in their customers' wallets if they have a reason to. Stable coins are growing in popularity because some people are ignorant of the risks that are associated with it, whilst others use it because they have to (especially traders). The thing is, irrespective of your reason for using stable coins; you should not hodl it for the long term, use it for whatever purpose you want and sell it for Bitcoins immediately after.

There are risks involved with stable coins but since they have become a very important player in the cryptocurrency market they could not just be dismissed outright. I am using stable coin too and I find them to be convenient and can protect my gains while trading some digital assets. However, we know that stable coins are issued by centralized platforms and because of this fact alone they can easily do whatever they want...whether we agree or disagree with them. Now, am just wondering...is it not possible to have decentralized stable coin? Sorry if this can be just another naive question.

[anhxin1874]

The market cannot exist without stablecoins, but the risk is that they are not backed by real assets. We can't be sure they are entirely transparent, but when investing in the cryptocurrency market, we should accept all the risks that the market may pose to us.

[Vickysagar]

The market cannot exist without stablecoins, but the risk is that they are not backed by real assets. We can't be sure they are entirely transparent, but when investing in the cryptocurrency market, we should accept all the risks that the market may pose to us.

Why is that the market can't exist without stablecoins? Could you explain that more? The first stablecoins were issued only in 2014.

[Silberman]

This is a real can of worms you've opened. Stablecoins were meant to offer a more reliable alternative to traditional fiat, but it seems we're trading one set of problems for another. The whole idea of crypto is supposed to be about decentralization and freedom, but if Tether and USDC start behaving like banks, what's the point, right? It's a stark reminder that we're still in the wild west of finance, and it's risky out here.

Stable coins perform their function relatively well, before they were created many of those that wanted to deal with cryptocurrencies found themselves in a difficult position once they wanted to sell their coins and send their profits back to their bank accounts, and it was not rare to hear stories of people getting their bank accounts blocked due to the transactions they received, so stable coins were a good way to avoid that scenario, but if governments begin to take legal action against them then their reason to exist will disappear and people will find themselves facing those problems again.

[Abiky]

It's not Bitcoin that's trying to be censored, it's the governments that are trying to censor it. But yes I get your point.

But it's simply impossible regardless of all these AML checks, KYC, strict regulations, etc. If Bitcoin is not accepted at McDonald's for example because the government orders it, it's not Bitcoin that's censored but McDonald's. If a McDonald's branch resists and accepts Bitcoin, then Bitcoin can be used. It's because Bitcoin can't be censored.

This isn't the case with USDT and USDC. Their users can't use their tokens even if they want to because they're censored. Nothing like this can happen with Bitcoin.

Exactly. Bitcoin can be used regardless of government censorship because of the way it was designed (decentralization). Stablecoins like USDC and USDT are more like credit/debit cards which can be censored at will. They're starting to look like CBDCs. I don't like the fact that these centralized stablecoins are used by "De-Fi" protocols. It greatly defeats the entire purpose of crypto/Blockchain tech. We should change the name from "De-Fi" to "CeDe-Fi" (Centralized/Decentralized Finance). Truly-decentralized finance would only use censorship-resistant alternatives to help eliminate the middleman from the system.

Despite the downsides of using centralized stablecoins, don't expect them to go anywhere soon. They will become bigger and stronger than ever, as long as "Wall Street" keeps supporting them. Who knows if they will become the new CBDCs everyone was talking about?

[Xal0lex]

Bitcoin is also trying to be censored. This is manifested in various AML checks, which are used by various services to fight, allegedly, against fraud. In the framework of P2P transactions it does not change anything, but we want bitcoin to be able to pay not only between users, but also to buy various goods and services in stores and on websites. In this respect, censoring bitcoin is possible because there is also a third party in this financial relationship, in the form of payment processors that have their own regulators and rules.

It's not Bitcoin that's trying to be censored, it's the governments that are trying to censor it. But yes I get your point.

That's right, governments have been trying to censor bitcoin for a very long time. It is important for governments to control all financial flows and have leverage.

But it's simply impossible regardless of all these AML checks, KYC, strict regulations, etc. If Bitcoin is not accepted at McDonald's for example because the government orders it, it's not Bitcoin that's censored but McDonald's. If a McDonald's branch resists and accepts Bitcoin, then Bitcoin can be used. It's because Bitcoin can't be censored.

This isn't the case with USDT and USDC. Their users can't use their tokens even if they want to because they're censored. Nothing like this can happen with Bitcoin.

It's very possible. If you use bitcoin for P2P transfers, you don't need any censorship and AML checks, but as soon as you try to use bitcoin as a means of payment in traditional finance, your bitcoins can easily be censored. Mass Adoption will not happen without the global integration of bitcoin into traditional finance, i.e. banks, stores, services, etc. Bitcoins may well be censored when interacting with these entities.

[Abiky]

It's very possible. If you use bitcoin for P2P transfers, you don't need any censorship and AML checks, but as soon as you try to use bitcoin as a means of payment in traditional finance, your bitcoins can easily be censored. Mass Adoption will not happen without the global integration of bitcoin into traditional finance, i.e. banks, stores, services, etc. Bitcoins may well be censored when interacting with these entities.

That's the main selling point of Bitcoin. You can use it freely without background checks, or credit checks of any kind. No one can confiscate or freeze your funds at will, because of the way BTC was designed. With stablecoins, it is different. An issuing company (middleman) takes control of the distribution and supply of the coin itself. Smart contracts are coded in a way where the creator can simply add addresses to a "blacklist" if transactions are deemed suspicious. This feature makes stablecoins centralized and prone to censorship. It's like entrusting your money to banks. You don't see that coming with decentralized stablecoins such as DAI and USDJ. Developers can change the code to "comply with regulations" if they want to, but there's nothing stopping the community from creating a fork that puts enphasis on decentralization and censorship-resistance.

Despite the inherent flaws of centralized stablecoins, don't expect them to disappear anytime soon. They will continue to gather widespread support from banks and governments worldwide until they become "a force to reckon with". It's in "Wall Street's" best interests to keep stablecoins alive for a long time. As long as we have one decentralized cryptocurrency (Bitcoin), nothing else matters. Just my thoughts

[fzkto]

It's very possible. If you use bitcoin for P2P transfers, you don't need any censorship and AML checks, but as soon as you try to use bitcoin as a means of payment in traditional finance, your bitcoins can easily be censored. Mass Adoption will not happen without the global integration of bitcoin into traditional finance, i.e. banks, stores, services, etc. Bitcoins may well be censored when interacting with these entities.

That's the main selling point of Bitcoin. You can use it freely without background checks, or credit checks of any kind. No one can confiscate or freeze your funds at will, because of the way BTC was designed. With stablecoins, it is different. An issuing company (middleman) takes control of the distribution and supply of the coin itself. Smart contracts are coded in a way where the creator can simply add addresses to a "blacklist" if transactions are deemed suspicious. This feature makes stablecoins centralized and prone to censorship. It's like entrusting your money to banks. You don't see that coming with decentralized stablecoins such as DAI and USDJ. Developers can change the code to "comply with regulations" if they want to, but there's nothing stopping the community from creating a fork that puts enphasis on decentralization and censorship-resistance.

Despite the inherent flaws of centralized stablecoins, don't expect them to disappear anytime soon. They will continue to gather widespread support from banks and governments worldwide until they become "a force to reckon with". It's in "Wall Street's" best interests to keep stablecoins alive for a long time. As long as we have one decentralized cryptocurrency (Bitcoin), nothing else matters. Just my thoughts

Probably the censorship of Tether or Circle is not great so far and they froze not many addresses. By the way, I haven't seen any freezing of accounts with small amounts. But probably as soon as CBDC appears, Tether and other stablecoins will have a serious reason to introduce serious censorship.

[Xal0lex]

It's very possible. If you use bitcoin for P2P transfers, you don't need any censorship and AML checks, but as soon as you try to use bitcoin as a means of payment in traditional finance, your bitcoins can easily be censored. Mass Adoption will not happen without the global integration of bitcoin into traditional finance, i.e. banks, stores, services, etc. Bitcoins may well be censored when interacting with these entities.

That's the main selling point of Bitcoin. You can use it freely without background checks, or credit checks of any kind. No one can confiscate or freeze your funds at will, because of the way BTC was designed. With stablecoins, it is different. An issuing company (middleman) takes control of the distribution and supply of the coin itself. Smart contracts are coded in a way where the creator can simply add addresses to a "blacklist" if transactions are deemed suspicious. This feature makes stablecoins centralized and prone to censorship. It's like entrusting your money to banks. You don't see that coming with decentralized stablecoins such as DAI and USDJ. Developers can change the code to "comply with regulations" if they want to, but there's nothing stopping the community from creating a fork that puts enphasis on decentralization and censorship-resistance.

Despite the inherent flaws of centralized stablecoins, don't expect them to disappear anytime soon. They will continue to gather widespread support from banks and governments worldwide until they become "a force to reckon with". It's in "Wall Street's" best interests to keep stablecoins alive for a long time. As long as we have one decentralized cryptocurrency (Bitcoin), nothing else matters. Just my thoughts

Centralization will not disappear, rather the opposite. With each new cycle, cryptocurrency will be embraced more and more fiercely by corporations, banks and regulators. Cryptocurrencies are no longer just a geek's toy, they are a huge trillion dollar market with growth potential. No one will allow such funds to move freely and uncontrolled around the world. Regulators have long been integrating their products and services to control the crypto industry, and we all obediently accept it. Look at the Worldcoin phenomenon, it's a cryptocurrency that people voluntarily carry their personal data into. These people don't even realize that cryptocurrency was created for privacy, not de-anonymization.