Stable coins known already to be completely centralized

[Oshosondy]

Is it possible that you are innocent and one day comes that your stable coin is frozen?

Those money laundering, terrorism financing and money stolen by hackers from platforms like exchanges exploits are seized, but I think stable coins issuers might go deeper as regulatory organizations and government are telling them to freeze more coins.

Read the news from https://decrypt.co/360087/fatf-flags-peer-to-peer-stablecoin-transfers-as-top-money-laundering-risk

FATF want stable coin issuers to implement technical measures to be able to block, freeze and withdraw stablecoins at any time if there are (intended) transactions to or from non-allow-listed or deny-listed wallets.

The Financial Action Task Force (FATF) is an independent, intergovernmental body established in 1989 (initiated by the G7) to develop policies that combat money laundering, terrorist financing, and proliferation financing. It sets international standards and assesses whether countries are taking effective action against these threats.

Without them saying these, you can see hundreds of billions of dollars that stable coins issuers have frozen.

Hope innocent people will not be targeted?

[MusaMohamed]

Is it possible that you are innocent and one day comes that your stable coin is frozen?

FATF want stable coin issuers to implement technical measures to be able to block, freeze and withdraw stablecoins at any time if there are (intended) transactions to or from non-allow-listed or deny-listed wallets.

It's not new and in years, stablecoins can be frozen in your wallets, and it's dangerous as even in your non custodial wallets. With most stablecoins, this risk exists but people either don't know about it or they ignore this risk.

PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets.
Stablecoins and blacklists.
Stablecoin Blacklists: How They Work and Who Controls Them.

[SatoP]

Even with all the available information about Tether seizing coins, I doubt many people know that their coins can be frozen at any time. Tether has full control and decides who is innocent and who’s not. That’s the disadvantage of using centralized stable coins, it’s the same thing as leaving your coins on centralized exchanges.

[Porfirii]

That's what happens when you rely on coins that are not based on "permissionless" systems. As long as there is a centralised authority in these networks that can decide to approve or not transactions from or to certain addresses, your coins could be frozen at any time.

It is good that you posted this here in the B&H board because one of the most frequent mistakes those who start in crypto make is not understand the basic differences between coins, as if they were all the same thing that only varied in price.

Great links, btw, MusaMohamed, these are must-reads. Thanks for sharing.

[apogio]

The point of the thread can be generalized with any coin, even with Bitcoin, if it's not used as it's intended (P2P on self-hosted apps).

If you send coins to an exchange, it's effectively their money, so they can be frozen.
If you send coins to a mixer, it's their money, so they can be frozen.

In general, as long as your coins leave your self-custody, they belong (hopefully for a little time) to another entity, so... they own them.

Obviously stablecoins are notorious in this regard, but unfortunately -or fortunately-, the purpose is to trust nobody.

If you do need to trust someone, it can cause serious ramifications.

[promise444c5]

Again, governments don’t like what they can’t control and since it signals them an uncontrollable vibe, they are actively creating and adding ways to make it controllable. Tether and likes of other stable coins goes beyond just CEX.. It can be frozen from anywhere and serves as perfect vessels.

It has some advantages too but it defeat the whole purpose of decentralization, not sure a lot of people cares about that anyways.

Hope innocent people will not be targeted?

If the government decides to crack down on the crypto space starting with stablecoins that can be frozen, it won’t respect innocence in the slightest sense.

[Akbarkoe]

Again, governments don’t like what they can’t control and since it signals them an uncontrollable vibe, they are actively creating and adding ways to make it controllable. Tether and likes of other stable coins goes beyond just CEX.. It can be frozen from anywhere and serves as perfect vessels.

It has some advantages too but it defeat the whole purpose of decentralization, not sure a lot of people cares about that anyways.

Hope innocent people will not be targeted?

If the government decides to crack down on the crypto space starting with stablecoins that can be frozen, it won’t respect innocence in the slightest sense.

It's true that the government will never allow anything to be free from their control. Under the pretext of public and national security, they act to eradicate people's freedoms, especially their own.

Decentralization will only be an illusion that will never be achieved because what they fear is public freedom, so they continue to promote centralization to limit such thoughts.

Anything that smacks of decentralization will be driven to negative perceptions, characterized as less secure, rife with fraud, and so on. This is their way of stifling our desire.

I hope that in the future there will still be places to store money, but we will never be afraid of being misdirected by those who impersonate the government. Perhaps Bitcoin will indeed be the final choice, and stablecoins will only be used as a means of transaction.

[Odusko]

Stable coins are government tools to control asset's on the block chain without any interference from the owner of those coins, the thing is that government want total control and take it what their have lost to Bitcoin like self custody freedom in Bitcoin is what government don't want to happen with stable coins, since they want to be able to frozen your USDT any where at anytime the so wish, unlike Bitcoin that gives the freedom to control your assets until you transfer it to Centralised exchange then you lose control of you Bitcoin, so the difference is there and is left for us to choose wisely and approach them both with cautions.

[TastyChillySauce00]

We should acknowledge that stablecoin is a business, they're here issuing stablecoin maintaining their reserve to profit from it and for that to happen they need to follow the regulation.

If we want completely decentralization we should continue holding bitcoin or even ethereum. I honestly think the decision as to why MakerDAO decided to rebrand their DAI to USDS while also implementing built blacklist function is because they want to avoid future lawsuit regarding anti money laundering thus why most stablecoins are centralized.
Even without FATF telling the stablecoin issuer to have built in blacklist mechanism, most issuer already doing it.

[Iamgoat]

Stable coins are government tools to control asset's on the block chain without any interference from the owner of those coins, the thing is that government want total control and take it what their have lost to Bitcoin like self custody freedom in Bitcoin is what government don't want to happen with stable coins, since they want to be able to frozen your USDT any where at anytime the so wish, unlike Bitcoin that gives the freedom to control your assets until you transfer it to Centralised exchange then you lose control of you Bitcoin, so the difference is there and is left for us to choose wisely and approach them both with cautions.

You are very correct about stable coins being a tool used by government to control digital assets since they have tried to influence the bitcoin and have seen no form of success in it. Now they came up with these stablecoins like USDT Tether which is pegged to traditional fiat currencies like the U.S Dollars and are used to primarily facilitate easier trading within the crypto ecosystem especially as a bridge between the digital assets and the traditional finance and as you pointed out, this is what makes them a centralized assets under the management of the government or organizations within the government making it easier for the government to control over transactions. They can not be able to carry out such actions with bitcoin.

[FinneysTrueVision]

The first implementation of DAI, which was the most decentralized version, failed as an experiment and that has made the two major centralized stablecoins even stronger. Truly decentralized stablecoins still exist, but they are nowhere near the adoption rate of USDT and USDC.

The developers behind DAI promised to revive the original version as PureDai, but I doubt it will get much traction. The developers haven’t given it much priority and are instead putting almost all their effort into USDS, which is a token that can be frozen.

[Felicity_Tide]

Is it possible that you are innocent and one day comes that your stable coin is frozen?

~snip

Hope innocent people will not be targeted?

I feel nothing can be fully guaranteed as long it's heavily tied to centralization. Well, we can easily say that those who're innocent are likely not to fall victims, but in a case of global/political tension and pressure that often leads to banning, we can't really say the same. I think In order to to fall in such category, whether innocent or not, it is best avoid leaving your entire assets these currencies at all time.

The truth is, centralized items like this that are widely recognized and accepted are always subjected to too many controls. So, I think it's not going to be about trying to prove innocence in the future because it is way easier to avoid that, than to put yourself in such situations. Centralization doesn't change it's course for anyone. It's the same everywhere.

[Ishicryptic]

Without them saying these, you can see hundreds of billions of dollars that stable coins issuers have frozen.

Hope innocent people will not be targeted?

I understand your concern and I also have the same concern that stablecoins are centralized meaning that our coins are in the custody of the issuers or owners and they can decide to freeze any account with whatever excuse that they please. But I don't think that it should be a cause of worry for legitimate stablecoins accounts except that the perticular stablecoins is renowned for unjustly freezing innocent accounts. I'm holding USDT although very small amount I haven't had any issues neither have I heard any account problems with a few people that I know who have huge USDT. This is not to say that I'm vouching for USDT but if they are indiscriminately targeting innocent accounts I believe that many people and institutions would have swapped their USDT, same goes with a few trusted stablecoins.

[RibbonRaptor]

For me this may be possible.

Most stable coins are run by companies, and those companies can freeze wallets. If your address gets flagged by mistake, or you receive coins that came from a bad source, your funds can get stuck even if you did nothing wrong. Thats the trade-off, stable coins are convenienm but they are not fully free like bitcoin.

A simple way to stay safer is to use stable coins mainly for short-term stuff like trading or transfers, be careful with random P2P deals, and keep proof of where your funds came from in case you ever need to explain it.

[Johnlomape]

All stable coins are Centralized and there is a reason for that so that they government can convinently frozen any wallet the coins are located. This is another way the government is trying to control money so that when they suspect a transaction, they can quickly freeze the fund making the token useless for the owner.

Investing in Bitcoin will give us everything including the privacy we are looking to get without the government having the power to freeze our funds. Anyone that is thinking about accumulating stable coins should have a think before buying large holdings to hold.

[asriloni]

Is it possible that you are innocent and one day comes that your stable coin is frozen?

It's possible, but the chance is so tiny. The only wallet that has ever linked to the criminal address that may be potentially banned or blacklisted by the stable coin issuer. As long as you're innocent people that never involved in the criminal activities. I guess your address won't be banned.

There's no reason to ban you when you did nothing. However, i'd suggest you to never get in touch with p2p caused by the risk to be blacklisted is there. I've seen people who used p2p gets blacklisted not only by stable coin issuer, but even my regulators too.

Hope innocent people will not be targeted?

It won't. I don't think the FATF issued such intruction to ban innocent people. lol they're doing it to combat money laundering. As long as we're never involving in any of bad things. We're fine.

[o48o]

But why would you store large amounts in stablecoins anyway if you are worried about that? By using them you are accepting same rules as you are with any banks, and even currency is same even if it's a pegged token.

If you really have chosen an idealistic life that's not connected to fiat money, then good luck with that, but eventually everything you buy with your bitcoins can be frozen. And it's not like governments wouldn't have ton of confiscated bitcoins already from criminals. Just because something is decentralized, doesn't mean a government that jailed you won't have an access to it. Especially if complying with officials and giving your details reduce your jail time significantly.

[Abiky]

Is it possible that you are innocent and one day comes that your stable coin is frozen?

Those money laundering, terrorism financing and money stolen by hackers from platforms like exchanges exploits are seized, but I think stable coins issuers might go deeper as regulatory organizations and government are telling them to freeze more coins.

Read the news from https://decrypt.co/360087/fatf-flags-peer-to-peer-stablecoin-transfers-as-top-money-laundering-risk

FATF want stable coin issuers to implement technical measures to be able to block, freeze and withdraw stablecoins at any time if there are (intended) transactions to or from non-allow-listed or deny-listed wallets.

The Financial Action Task Force (FATF) is an independent, intergovernmental body established in 1989 (initiated by the G7) to develop policies that combat money laundering, terrorist financing, and proliferation financing. It sets international standards and assesses whether countries are taking effective action against these threats.

Without them saying these, you can see hundreds of billions of dollars that stable coins issuers have frozen.

Hope innocent people will not be targeted?

Yes it's possible "innocent people" will be targeted by stablecoin issuers as they become victims of account freezing. I mean, stablecoin companies already act like banks. They're required to report any suspicious activities to the government. You can easily get flagged by the stablecoin issuer if you continuously transfer large amounts of stablecoins across the Blockchain. Especially when everything is visible on public blockchain ledgers. Perhaps, they will "freeze" your address and ask for verification documents in return (KYC)?

I've read somewhere that there are EIP standards meant to make stablecoins more "regulatory-compliant". You face all of this when using a centralized stablecoin. But a decentralized stablecoin such as DAI? That's another story. Governments can't mess this one up. It's all in the stablecoin's code. If there's a built-in "freeze" function, I'd suggest you "run away" and find another alternative. Just my two sats.

[TastyChillySauce00]

But why would you store large amounts in stablecoins anyway if you are worried about that? By using them you are accepting same rules as you are with any banks, and even currency is same even if it's a pegged token.

If you really have chosen an idealistic life that's not connected to fiat money, then good luck with that, but eventually everything you buy with your bitcoins can be frozen. And it's not like governments wouldn't have ton of confiscated bitcoins already from criminals. Just because something is decentralized, doesn't mean a government that jailed you won't have an access to it. Especially if complying with officials and giving your details reduce your jail time significantly.

Yep, that's the thing. Government already got ahold of all the centralized chokehold in crypto space, stablecoin is no different and even exchange can freeze money without any proper reason.
I personally never concerned about my stablecoin being frozen, never heard anyone I know that got their stablecoin frozen at all for locking it in aave for more than 2+ years or even moving it between blockchain for yields.

[Yamane_Keto]

I don't think they'll have the resources to examine and close every single transaction, but they will certainly actively freeze any large-scale fraud or those perpetrated by governments. Freezing individual addresses for small amounts is possible, but rare.