But such a bank, when you show up with your $80bn, in order to protect their ability to reliably offer those kinds of terms, will want to ask you a few questions about where you came by that cash.
And if you can only say ‘I have no idea’, and when they then ask ‘how much of it belongs to sanctioned individuals or is criminal proceeds?’ Your best guess is ‘not none of it’, then the legitimate banks are going to walk away from that conversation.
So then, yes: where are you going to keep that $80bn?
This is not someone you have a direct relationship with. And now those stablecoins ‘belong’ to that new person.
Then that person uses the stablecoins to pay another person for something else, and eventually a completely different person can now come along and go through your KYC process and cash out the coins.
All above board and legitimate.
Except in the middle there’s a part where you might actually be acting as a bank for an international drug cartel or a sanctioned Russian oligarch. You just can’t be sure.
...but isn't the whole point of Tether to stay as far away from the traditional banking system as they can?
This of course includes avoiding - as much as possible - all the KYC/AML legislation that traditional banks are obliged to follow?
The only way I can think of a stablecoin being totally independent of banks is to store their reserves as bank notes, and when someone wants to cash out USDT to USD they have to go pick up the bank notes. This glosses over the obvious challenges of storing billions of dollars in bank notes and distributing those notes during a cash out. The bank notes are also worth less than face value because you have to physically store and secure them.
If one's business is "providing a clean link to the US financial system", why would one choose to avoid financial services regulation?[0]
If one is clean, or at least trying to look clean, why would one choose an accountant based in the Cayman Islands?[1] This bit in particular is beyond parody.
[0] https://www.coindesk.com/policy/2021/01/26/what-tether-means... [1] https://www.coindesk.com/markets/2022/01/26/tethers-new-acco...