Quote from: mk4 on November 24, 2019, 06:50:31 AM

Posted on the Beginners & Help section instead of the Trading Discussion section as for this to hopefully be seen by some people who hold stablecoins for longer amounts of time.

EDIT: Alright. Unexpectedly ended up being quite a slightly long write-up. When I first started writing this I thought it was only going to be a few sentences long. Trust me though, this is quite important information.

EDIT #2 (July 9, 2020): Let's just say, I told you so?

Article: https://www.coindesk.com/circle-confirms-freezing-100k-in-usdc-at-law-enforcements-request

I've been wanting to do a quick post here on Bitcointalk a month ago about this, but I lack information on other stablecoins besides Tether(USDT) so I delayed and delayed and delayed the posting further. Thankfully, and coincidentally, someone made a good Medium post about this just days ago, with the chart below.

This might be common knowledge for some, but I'm going to assume that a good number of people still doesn't know this yet. But most stablecoins can be freezed. Yes, even on your wallets. People might think that just because they're holding a certain cryptocurrency stablecoin on their non-custodial wallet, that they're already unseizable.

Well, that's unfortunately really not the case.

Here's a quote from the article:

Quote

Asset freeze
In order to remain compliant with regulators, many stablecoin issuers have introduced blacklists so that they can freeze the stablecoins held at specific addresses. This ability is also particular useful in the case of hacks, but it means that the trust we must place in the issuer to not act maliciously is that much greater.

Link to article

While as far as I know(correct me if I'm wrong) we haven't read anything anywhere about a certain crypto person's stablecoins getting freezed(besides the ones in the linked article), it's really not impossible from happening. It just might be the matter of 'when' we're going to see someone get their stablecoin funds frozen.

Table from the same Medium article

Increased regulations

It really won't be surprising if the government of whatever country(not only in the United States) sometime in the future began to crack down and become A LOT more stricter when it comes to bitcoin and cryptocurrencies in general. Is it possible for the government to ask these centralized entities to freeze the stablecoin funds of certain(or all) holders and demand KYC/AML information? Definitely really really possible(in my opinion at least). In fact, I think that there's a high likelihood of this happening sometime in the future.

Single Collateral DAI(SAI) and Multi-Collateral DAI(DAI)

Besides USDT on the Liquid network(which isn't really THAT accessible right now, hopefully in the future), the DAI/SAI stablecoin, which is both from the MakerDAO project, are the only stablecoins on the list that's unfreezable as you may see. It's definitely a very interesting project and is working fine at the moment; but remember that it's FAR from perfect. In fact, not even close. While historically, in it's almost 2 years of existence, it's value stayed really close to $1, which is good, but there were times that it's price pumped to $1.06 and as low as $0.95, which is definitely something that you wouldn't want in a stablecoin.

Also, not because DAI/SAI are unfreezable right now, it doesn't automatically mean that it will be like this forever. Remember, there's still a single core team working on this project, and they can easily change the code today if they wanted or needed to. Not because they're bad people per se, but they might need to comply to government's requirements sometime in the future.

Source: https://coinmarketcap.com/currencies/single-collateral-dai/

Final thoughts

I'm not saying that you should hold stablecoins, but I think that people just need to be more aware of the risks they're taking when holding completely centralized stablecoins and sort of "semi-decentralized" stablecoins. Remember, while "semi-decentralized" stablecoins might be the right choice, remember that black swan events can really cause it to have it's price either rise or crash. So if possible, it'd probably be a better idea to hold actual non-crypto USD. Use this information for your own benefit, Bitcointalk peeps. In the end, what you hold still completely depends on you. If something happened sometime in the future, don't say I didn't warn ya. Roll Eyes

EDIT: Just to add more information:

Quote from: gentlemand on November 29, 2019, 05:41:46 PM

The most notable refusals for redemptions have been Gemini and Paxos and in both cases it seems it was at least partly to - “maximize their status on CoinMarketCap.”

https://www.coindesk.com/winklevoss-crypto-gemini-gusd-stablecoin-redemption

https://www.ccn.com/paxos-standard-hassling-ethereum-traders-trying-to-redeem-stablecoin-pax-for-dollars/

Would you want your wealth tied up in something worried about how it looks on some piece of shit website?

When you consider how anal they are about conventional banking the anality will go up by an order of magnitude when it's their 'own' money.

so would you say DAI is the best choice of a stablecoin to use it in a bearmarket?