Stablecoins appear to be the new ICO. USDC follows on the heels of the Gemini Dollar, and a raft of other stablecoins offered by fully-regulated bank-like entities.
Oddly, there's nothing about regulatory compliance (AML/KYC) or fungibility in the announcement.
Based purely on the article, one might get the idea that USDC can be traded between individuals without any third party oversight and in a censorship-resistant way.
It's highly unlikely this will be the case, given the potential for money laundering.
So... USDC users get a form of digital dollar that's more difficult to use than PayPal and the numerous alternatives because unlike those systems, the user must secure cryptographic material. Alternatively, the user will simply deposit USDC onto an exchange and gain absolutely nothing over PayPal and friends.
Even worse, should the user decide to make an on-chain USDC transaction, a permanent public record will be logged on the Ethereum block chain, which can be used in various ways with any information lost by Circle/Coinbase due to the inevitable data breaches (legal and illegal) to come.
I'm all for innovation in this space, but caveat emptor couldn't be more relevant.
I understand its an ERC20 token. Do you understand how Coinbase and Circle will remain within regulatory compliance (AML/KYC) regarding USDC and the obvious potential for money laundering?
Money laundering is a problem they must have faced earlier when allowing BTC trades, so presumably they'll operate under the same AML/KYC regulatory compliance umbrella required to offer their current (and growing) set of digital currencies[1][2].
This is purely speculation but: since it's on the Ethereum chain anyone can see the history of tokens on any account, and as long as the tokens only move between accounts that are known then that should be good enough. They could very well make it so that if you transfer tokens outside of accounts controlled by or known to the exchanges then those tokens will become tainted and no longer redeemable.
I believe USDC has a blacklist of "forbidden addresses" - this is in contrast with some other compliant ERC20s that have whitelists instead. To redeem USD from USDC (meaning withdrawing said USDC from circulation), the withdrawer goes through the same AML/KYC process with Coinbase or Circle before receiving USD in a bank account.
Oddly, there's nothing about regulatory compliance (AML/KYC) or fungibility in the announcement.
Based purely on the article, one might get the idea that USDC can be traded between individuals without any third party oversight and in a censorship-resistant way.
It's highly unlikely this will be the case, given the potential for money laundering.
So... USDC users get a form of digital dollar that's more difficult to use than PayPal and the numerous alternatives because unlike those systems, the user must secure cryptographic material. Alternatively, the user will simply deposit USDC onto an exchange and gain absolutely nothing over PayPal and friends.
Even worse, should the user decide to make an on-chain USDC transaction, a permanent public record will be logged on the Ethereum block chain, which can be used in various ways with any information lost by Circle/Coinbase due to the inevitable data breaches (legal and illegal) to come.
I'm all for innovation in this space, but caveat emptor couldn't be more relevant.