I'm no fan of David Frum, but this is yet another example of popularizing an attitude that says a transaction without kyc is a transaction that is criminal.
The real advantage of stablecoins is that they allow asset holders to enter the U.S.-dollar system (99 percent of all stablecoins are U.S. dollar–pegged) while eluding normal U.S.-government rules, such as the “Know your customer” laws that expose bank depositors to intrusive questions about who they are and how they got their money.
It would be laughable if we had to check with some government agency before speaking in public, telling them where we got our ideas and what we plan on saying. Money shouldn't be any different than this. That we have come to a point where there is no presumption of monetary innocence does not bode well.
Estimates of the global pool of dirty or covert assets are about $36 trillion, or 10 percent of total global wealth—an ocean of money in search of a passage to legitimacy. There is something perverse about a plan to boost demand for Treasury debt by making it easier for crooks to circumvent U.S. laws against terrorist financing and money laundering.
Again, it should not be the case that we assume all money is illegal unless it has allowed governments, particularly the US government to bag and tag it. When have governments ever shown that they deserve this sort of wide-reaching insight into our daily lives?
When Frum tries to bring up what he considers to be the other dangers of stablecoins, he wanders into the laughable:
In 2024, a Texas-based pharmaceutical CEO tried to move some stablecoins to another user, but made a single-digit transcribing error—and misdirected his entire holdings, worth about $1 million.
If a single digit transcribing error produces this kind of result, I don't believe anyone would use stablecoins.
archive link in the article is wrong. Here's a working one: https://archive.is/o6xZj
You know where single digit transcribing errors have been a real problem for decades? Wire transfers between regular ass banks.
I hate banks.
I have two checks that I need to deal with. Both of which came from situations that should obviously be using bitcoin instead.
I don't believe this. Since 2016 ETH has had error-correction checksums like Bitcoin. It would be statistically almost impossible to have a single-digit transcription error in either a BTC or ETH addresses and have it accepted by any major wallet....something tells me there is much more to the story.
There's a protos article on the matter, but it only skims the surface.
It definitely sounds like there is more going on here. I, too, thought most addresses had error correction in them.
https://archive.is/31I3i
It looks like the CEO is suing Circle....not sure why USDC would be to blame. If in fact his claim is true - a single transcription error of 8 -> B, then that would indicate that Coinbase's own wallet isn't enforcing EIP-55 (address checksums).
In that case, its reasonable to sue Coinbase as they're not providing reasonable level of protection to customers even though such technology is available and considered standard.
Who knows what the truth is.....
"Had the company tanked.." ... but it didn't. They were able to redeem about 1/8th of their market cap without crashing. How many traditional businesses could do so?
I don't see why this can't be arranged and stablecoins allowed. Issuers are already making money off of fees. Chainlink employees have already been meeting with US regulators, and they also have a proof-of-reserves architecture. I don't think these are impossible hurdles.
EDIT: As a side note, I like Frum's writing style. It's concise and clear. Even though I don't necessarily agree with him.
Yes. It's not surprising that there is a FUD campaign against stablecoins. The traditional banking system has a very nice regulatory moat. They have no reason to let others come in and poach all their fat sheep.
Requiring KYC for every transaction is like requiring you to show ID and explain the purpose before sending an email. We correctly decided that would be insane for speech. Money is just speech about value. Same principle
Wait, doesn't the checksum prevent this from happening?
Yes, we all of us are confused at how this could have happened. Apparently there is a lawsuit. Protos has some coverage here: https://archive.is/31I3i
lol, copy and paste from PDF is dangerous!! but it still smells fishy
i don't know anything about USDC, but on bitcoin a single digit change in the address should result in an invalid address.
"illegal" money or "money laundering" has always struck me as contradiction in terms.
Either it's money or it's not.
It will trigger keeping those “crypto” guys trapped into fiat system, selling them facility while stealing their value in a casino.
Money without permission? The internet needs it.
Everyone’s talking stablecoins like they’re shady. “No KYC? Must be dirty money.” 🙄
But here’s the flip: this is exactly why the next big wave of builders should be watching.
The Spark: Stablecoins let anyone jump into the USD system fast, global, low-friction.
No banker squinting at your passport. No forms asking why you bought a burrito..
Here’s the opportunity no one’s talking about:
1️⃣ Unbanked = untapped market
There are billions who can’t open a U.S. bank account. Stablecoins flip the door open. Builders here could grab massive market share before regulators wake up.
2️⃣ Proof-of-reserves = new trust moat
Tether’s run in 2022? Survived $10B withdrawals in two weeks. Imagine being the company that nails instant-proof-of-reserves so users feel safer than with a traditional bank. That's growth + PR gold.
3️⃣ Regulation-ready = sticky advantage
Act like you’re in 2027 already. Insurance on deposits. Monthly + event-based disclosures. Partner with Chainlink-style auditing. When the GENIUS Act drops, you’re not scrambling you’re already the safe bet.
Archive link: https://archive.fo/o6xZj
Double-check, triple-check... seriously, people are so damn dumb. Sovereignty comes with bigger responsibility, and some people just don't seem to want it!