The idea behind USDC is to collateralize it 1:1 like a money market fund provided the underlying bonds hold. Tether is doing fractional reserve banking but has no central bank to act as a lender of last resort. Even then, banks pay into the FDIC which retains reserves itself like any other insurance.
Tether works as long as the money flowing in >= money flowing out.
A severe run on Tether would dry up liquidity very quickly.
Not getting what you're saying here: Only banks should have that privilege?
Yes, in exchange for the privilege of money creation you need tight regulations and public disclosures.
Banking left unregulated turns into this mess time and time again. You'd think people would be more disciplined about betting private money creators. But they aren't. They never are. Particularly not when their neighbor is showing orders of magnitudes of paper gains. This was true in antiquity. It was true in our era of free banking. It's proven true, again, in crypto.
And yet, regulated banking also turns into a mess time and time again.
Regulation is proven to work in the financial system. You just need to make sure you have enough of it which often the US hasn't. But in recent years that has been fixed up.
Also it's a false comparison. There is one Tether and tens of thousands of banks.
Could you summarize how much money depositors across the entire United States lost to bank busts over the past, say 40 years?
And how does it stand up, compared to the crypto-of-the-month scams, losses, and exchange busts?
Nominal or actual? Just the Federal Savings and Loan crisis + the TARP bailouts were billions from the dilution of dollars.
And that's just the US.
The crypto space is repeating all the same bullet points, except with more outright fraud, with less accounting, and without any convictions.
I'm guessing you did not live through it: Like 2008, there were many causes. See eg the wiki: https://en.wikipedia.org/wiki/Savings_and_loan_crisis#Causes
But you also missed the heart of the matter: Money that was lost in the US, despite it having a regulated banking system.
This is a straw man. Nobody claimed nobody in a regulated system ever loses money.
Only if you read the above questions literally and miss his meaning:
> Into a mess for who? Depositors?
> Could you summarize how much money depositors across the entire United States lost to bank busts over the past, say 40 years?
Instead, we have stablecoins backed by all sorts of things like commercial paper in cryptocurrency exchanges.
Blows my mind because stablecoins could be so easy-- hold some cash and hold some US treasuries. Pocket the interest. Become rich.