"Circumvent government interference" sounds like a euphemism for "we're illegal but we make law enforcement hard".

(As someone who spent most of his life in a country with capital controls (South Africa which calls it exchange control), I like this product)

I'm about to start making good money and have started to think about how to properly set up myself for a hopefully non-DeepImpact future and as much as I liked the original idea of the Bitcoin and the Blockchain, what it resulted in - so it appears to me - is mostly a bunch of schemes amplifying the damaging effects of financial institutions that we have not been able to integrate solutions for yet.

How so? Isn't the risk rather that central banks would lose the ability to fight deflation if something like bitcoin were to replace fiat currencies?

In this particular case we're talking about stablecoins though, which are a wholly different beast. I think the potential problems (and benefits) for countries where the local currency is replaced by a dollar linked stablecoin are exactly the same as the problems caused by other forms of dollarisation.

https://www.elibrary.imf.org/display/book/9781589061767/ch03...

And I don't think I would characterize this as a high-risk currency; it's essentially a digital receipt for a dollar, backed by US treasuries (https://www.circle.com/transparency).

if you trust your banking system to be a better custodian of your money than Circle, you're one of the lucky ones. billions of people in the world don't have that kind of luxury (see: https://www.bbc.com/news/world-asia-68778636), hence a part of the reason why stablecoins have grown to a little under a quarter trillion

(Plus a whole bunch of pretty words to make it sound like they're saving the world.)

User A sends local currency to User B's fiat account.

User B sends stablecoins (earned via salary, trading, mining, etc.) to User A's digital wallet (that we've created for them).

What, other than money laundering, would motivate a person who had a supply of such stablecoins to want to supply them to into a market with currency controls? Is the concept there “I make my expat wages in dollars, I want to turn them back into $CURRENCY at the black market rate”?

Do you check the laws for this in each country you are available in?

Do you notify user B of this fact and the potential legal risks?

Do you verify if they have the license?

It's MUCH more complicated than that in several countries, particularly the US.

Because if you are involved in washing illegally earned money in many places that's a criminal act.

Definitely a few places that we'd probably avoid. But also plenty of others (e.g., Kenya, LatAm, Turkey, etc.) that have been quite friendly and would be fine to visit.

It's so funny to read Americans who constantly downplay the problems that people in developing countries have

And then trigger an Interpol Red Notice for the founders.

(even if you can set up dollar-denominated accounts at a domestic bank, that doesn't mean your claim will be honored. stablecoins aren't dollars but they might be more stable than your average dollar-denominated bank account in some countries)

Plus what the post says about restrictions on foreign currencies for a lot of people in developing nations.

Even I as an American has known so many people from countries like Argentina where just maintaining your bank balance is basically impossible due to inflation and currency controls.

Believing that this is easy or solved is a very Americentric viewpoint.

Unfortunately with money there will always be good and bad guys with it. We all need it. Have to do the best we can with not assuming everyone is a criminal re money laundering.

1. a means of bypassing US sanctions

2. a means of bypassing the US dollar / Western order during international trade

3. a means of transacting without Visa, Mastercard, Chase; cutting out banks and fintechs and their margins.

Stablecoins are pitched to investors as #3, but are more frequently used as #1 and #2.

If stablecoins catch on and can build a large network, it poses a real threat to American hegemony. You wouldn't need the dollar for international trade or settlement. You could trade, move large balances, etc. in stablecoins and never need to hold dollar reserves.

It's wild to see the US funding and developing this tech.

These stablecoin issuers are enormous buyers of US treasuries: "Tether Holdings owned $97.6 billion worth of US Treasuries in June 2024, a new high. Hence, Tether now owns more US Treasuries than the governments of Germany, the United Arab Emirates (UAE), and Australia. Hence, Tether is now the 18th largest holder of US Treasury bonds" (https://medium.com/coinmonks/tether-usdt-is-the-third-larges...)

Dollars are also more dominant as a reserve currency in stablecoins (~97%) than they are in real-world trade (https://digitalchamber.org/stablecoinreport/).

I.e., we see stablecoins as extending dollar dominance, not reducing it.

If you think 1% is a reasonable number, that’s 1BN per year at current market cap. Tethers been around for 10 years. Dead funds also compound.

Let’s say Tether was grossly insolvent (ie only had 50% of reserves) for the first 10BN in market cap (in other words, for the first 5 years of their existence). In addition to the 6BN+ of interest income they earn every year, there’s 1BN of reserves that will never get redeemed added every year

If Tether was insolvent before, they just need time to change that

This is very roughly similar to banking. It’s an unregulated bank, but it’s not inevitable that they’ll implode.

They have a shady past but quickly realized they had lucked into a WILDLY profitable business. That first 10% of their existence is debated constantly and is what you see referenced constantly online when Tether is labelled as shady.

They make a disgusting amount of money and it keeps snowballing. This annoys people who want them to implode for earlier crimes.

For context they are more profitable than Blackrock.

or similar. They have $100bn dollars and their only job is not to lose any of it.

And this company is US-based

And you use it to avoid US-sanctions

I'm really not sure that it works like that

The biggest usage of stablecoins would be as a hedge on crypto itself. Don’t like where the current market, park it without needing to off-ramp and then on-ramp again when the conditions change.

And now that you’re in crypto-land 24/7, no need to skip weekend movements because offices are closed or accounts don’t get updated until Monday morning.

In some sense Bitcoin may be safer although it has volatility risk and is essentially a negative sum game requiring the "tithe" that is mining to keep being paid. So pick your poison.

If Karsa can provide effective a deposit guarantee that would be good. You may be able to sell that risk to the markets. It would be a great way for the Tether folks to extract value from developing economies and VCs!

Why not just... be a bank for them?

Hope you pivot or fail. If you stick and succeed then a lot of working class wealth will be at dire risk.

An essay by Ben Kuhn [0], ex-CTO of Wave, raises the most salient objection here. Of the four problems Wave needs to solve, the hardest is providing "an easy way for users to exchange their balance for cash and vice versa." But "Cryptocurrency actually makes this harder."

Say your uncle in Pakistan buys some USDC. What can he do with it? Just hold on until he needs to cash out for a house or whatever? Will any stores accept it as currency? Are you imagining a Venmo/Zelle-like application on top where users can then exchange them among themselves?

There are already plenty of ways to buy stablecoins. Adoption as a means of exchange is the hard problem. Do you envision this coming about organically? If so, how?

[0] https://www.wave.com/en/blog/crypto/index.html

> Of the four problems Wave needs to solve, the hardest is providing "an easy way for users to exchange their balance for cash and vice versa."

Just using PayPal would mean missing out all the benefits of crypto. I do it because defi yields are much higher than a bank. People in their target audience may do it because international transfers cost less than a fraction of a penny.

I mean, if currencyBob is pinned to the USd, what advantage is there to buying currencyBob, and not just USD

The problem is, because its crypto, its fairly easy to trace who owns what and who trades with whom. so if you're trying to avoid local or international laws, this isnt for you. You're far better off buying assets that are reasonably easy to liquidate.

[1] pegged currencies require 1:1 reserves for it to be "safe". At some point its impossible to protect against runs, if you don't have enough reserve to buy back the coin

The reality in many places is that getting your hands on USD happens through grey-market street dealers who charge exorbitant conversion rates, and the only way of holding them is under your mattress because the local banking system can’t be trusted. As in, if you’re able to get a USD bank account (this is a big if), you likely won’t be able to actually withdraw your USD in any substantial amounts when the need arises.

Swap it for another pretend token however and no tax liability since the gain isn't crystallised. Swap back to another coin when you want and rinse and repeat.

It’s like asking why don’t you just buy 2CB from the store instead of online on the dark web.

And the additional problem is that once you leave that location everyone knows you’re carrying around proper bills of whatever currency. Asking for trouble, mate.

It is quite neat... But since you don't handle the cash, how will you deal with fraud? Or even normal bad luck? Bank transfers do get lost and require chasing banks, and you will be out of the loop here.

Also, I guess bank transfers between poorly banked countries are probably a constraint? If I live in a country with hyperinflation, am I definitely able to send fiat to a seller?

AML would seem basically impossible, but I guess that's no different to Binance...

And what then, is stopping governments from simply demanding you hand over a list of your customers? They will seek to enforce those currency controls you are subverting.

Your entire sales pitch here is based on a lack of transparency to "evil oppressive governments", whereas the US government (at least, once it gets it's shit together again in a few years), will just delete your company for helping the North Koreans evade sanctions if you don't have quite robust AML.

Currently, we have restrictions, as there’s a limit of 50 USD on USD transactions per week for each bank. There is a constant growing interest in USDT and crypto here, especially since the middle class is quite aware of it due to the limited availability of USD in the country! It would be nice to explore this further, but it's a bit disappointing that it's not an option right now :/

Kudos for getting this out, serves a real need for a huge amount of people.

We use privy, one of the best-in-class wallet providers that basically creates a self-custody wallet, but uses email/phone/social auth (and encrypts/shards the actual keys). So you wouldn't be at risk of losing them like you would with a vanilla wallet (you can of course export the keys if you're more crypto-savvy)

We're doing a pretty slow and steady rollout to catch where users are running into issues, but it's a pretty controlled environment re: messing up. You could accidentally send money to the wrong address if you wanted to transfer to another wallet, but that's not a core functionality (located on a side page) and certainly not one that the average person is using. Outside of that, there isn't really anything else you could severely mess up.

However, few points to consider:

- Emerging market regulations can turn from funny to ugly to utterly ridiculous pretty fast. Problem is that most emerging markets see FIAT to stablecoin as a flight to capital and currency depreciation. Think about India, Brazil, SA, Pakistan or any other emerging market with dense population, you might see the same regulator mindset

- In any market, if this kind of pegging becomes freely available, than I am pretty sure that one currency to other in physical or digital way would also be very free flow. for example, in UAE, AEd to USD is super easy and takes 10 seconds on any banking app. So unless your goal is to trade, there is no reason to use stable coins instead of just putting in the dollar amount agianst your local currency

- Lastly, exchanges have a very large KYCed audience, and they have a very hardcore focus on the P2P markets where they can. If regulators & local volume permit, they will be the first to jump in with heavy marketing budgets.

I would be closely following this, and wish you success

If you need any help or advice, drop me an email a.rafay@disrupt.com. Best of luck!

Congrats on the launch. I wanted to note that I'm using mobile safari on an iPhone Pro 15 and the header text collides with the tagline to the point that it's illegible.

https://www.nsave.com/

(no affiliation, no crypto)

It make sense for buyers as they want to move to stabe currency. But how about sellers?. What are they gonna do with the high inflation currency ?.

One motivation could be of very high margin due to high risk involved.

At this point I'm pretty sure that stable coins really shouldn't exist. I mean, I'm not sure any crypto should exist but I think stablecoins like DAI are just a bad idea.

That said, I still think they're probably a bad idea.

I know Stellar used to/is quite active in this space, though probably without a lot of the abstractions still. Are you implementing an entirely new smart contract or protocol for the order matching or relying on existing systems in this space?

Frankly, the order matching will be pretty simple at the beginning: Match buyer/seller payment methods, make sure buyer order ≥ seller's available amount, then pick lowest price option. We just have to query the escrow contract on chain to make sure the seller amount is available.

They actually do, though. As an example, a Paki rupee in 2018 was trading at 130 to 1 USD. It's now down to 85 to 1 USD. Meanwhile, USDT was trading at 1:1USD in 2018 and is currently trading at 1:1.

They offer no protection from inflation in the underlying fiat. $ is the underlying fiat, not rupee.

In other words, if you bought USDT in 2018 and sold it today, you actually lost over 20%.

dunno how this shit is legal.

genuinely, how do y'all protect the consumer from your smart contracts having a bug or security vulnerability? will you ever freeze funds in the event of a crypto bank run?

A lot of commenters on HN are deeply biased against anything to do with blockchain, so best to ignore the noise here and keep shipping.

So obviously yes.

And that Roman Urdu is not correct either.

عالمی ڈالر اکاؤنٹ۔

اپنی رقم ڈالر میں محفوظ کریں۔ تیز، محفوظ اور بغیر سرحدوں کی حد بندی۔

I would seriously reconsider this part of your value add.

i.e. people can jack your phone/sms line for around $23, or access any email server on US soil for free.

https://www.youtube.com/watch?v=wVyu7NB7W6Y

This is why 2FA is actually more dangerous in some situations.

i.e. people may feel safe in the complexity, but are open to the same shenanigans of any unregulated exchange.

Children in Japan figured out magazine faces worked on cigarette machines too.

Have a nice day =)

The alternative is just trusting someone in the space. With that you have stuff like FTX, MtGox, and even ones that haven’t failed where there are plenty of stories of KYC trouble on Reddit.

> people who may not have access to reliable devices

A very good point but that’s where education comes in. I’m glad Karsa seems to be teaching people to fish rather than just giving people fish.

https://en.wikipedia.org/wiki/Scrip

Precious metals like gold are also a terrible investment, but do offer liquidity when currencies fail. For a single person, no more than 1.7% of your portfolio should contain such leaky holdings.

In terms of investment, wait till the market crashes and buy freehold residential real-estate in larger growth cities with cash. This is the safest investment for amateurs. =3

Both gold and silver have appreciated more in value than the S&P 500 since the start of this millennium.

Personally not bullish on bullion, but good luck =3

I would lol... but some people lost everything, and that's never funny =3

Keep in mind I heavily invested in ubiquiti at $12/share after their early legal trouble, so am probably not the type of investor you'd want to study. lol =)

And yet, billions of people do this everyday with (non-crypto) wallets holding banknotes in their pants pockets. And for the most part, it's fine. A crypto wallet on your phone in your other pants pockets is similar. It's actually superior because at least you can make a backup to protect from loss/destruction.

Self-custody wallets are fine.

- Users in these countries already use exchanges like Binance almost like a dollar checking account — this, as you probably know, is far more risky (past AML violations, entirely centralized point of failure, etc.). There's no better or safer alternative at the moment, and these people aren't typically huge fans of the current banks they're using, nor the regulation that they have to deal with.

- We don't have any intention to hide how the product works, or claim that it's a real bank.'Abstraction' in this case means minimizing wallet, key, and asset management during the user flow.

- The stablecoins we're offering (USDC & USDT) are more widely used and known in these countries than in the US. I actually don't even have to explain it to half the folks because they already understand the value prop and are comfortable with them (FWIW, USDC is a fully audited and soon-to-be-public US company).

It is very much illegal though, I'll give you that one.

But yeah USDC is as good as it gets.

The new SEC management should enable treasury bonds to be tradable and issuable across chains. When that happens, this sector is likely to thrive.

And if you lose money for those people you want to help, it will hurt them really badly.

I can totally understand being interested in crypto in 2010. It was a genuinely novel use of technology, which seemingly had a lot of potential. But it's 2025 now, and the primary use has turned out to be crime. I mined some Bitcoin back then, and even sold it on Mt. Gox. But these days? Wouldn't touch it with a ten foot pole.

Think of it this way - 500 years from now, will societies still be using paper/polymer notes along with silver/tin/brass alloys for coins, or will they be 100% by then? If digital, would you want sovereign control over your assets via open source solutions, or would you be happy that the government with its closed source systems, made by backchannel private no-contest contracts, controls your ability to pay and get paid?

In this case, YC is probably getting scammed and possibly the founders of this startup. But I’m sure if you dig deeper there is plenty of other shady crap too.

My question is that how will you deal with future government regulations. In developing world, the government does not like crypto and may impose laws like upfront taxation to discourage people from investing.

While we want to have constructive conversations with some of these governments (I actually believe it's possible), ultimately we can't stop hostility / regulations against crypto. What we can do is offer our service and be transparent about what it is — and then users in those countries can make decisions for themselves about whether they can/should engage.

I'm hopeful, however, seeing countries like Turkey and a couple in LatAm that have significant crypto adoption without overt government hostility — when adoption reaches a critical mass, I expect to see more governments relax restrictions.

--- There are banking laws all over the world that need to be considered and followed, the US in particular has a set of banking laws that differ in each state unless you are an actual bank that follows federal regulations.

Ignoring or being purposefully ignorant of the laws is a bad path.

Now, when it comes to facilitating money transfers, or facilitating forex. Yeah, this they’d need to look into. But the idea seems to be that they’re a P2P marketplace bringing individual sellers and buyers together, but not really touching any of that money themselves.

Sort of like, is Uber a taxi firm? Different jurisdictions see this differently.

If you are facilitating the movement of money you are still governed by financial regulations.

Regulators aren't stupid. Trying to be clever will not get you anywhere.

In a very simplified example, accountants have to follow the same tax laws for their clients. Some firms cost _significantly_ more than others because they have an army of lawyers who find legal loopholes that can reduce the tax bill.

Karsa will likely use their YC cash to fund these lawyers in different countries when issues arise. They might decide to stop fighting and close business in that country.

I suppose it fits the zeitgeist.

That sort of nonchalant attitude will serve you well in the future I am sure.

If the government makes it illegal for the financial system let people store their wealth in dollars, how would they - a part of the financial system - be able to let people store their wealth in dollars?

Team America, world police, crypto version.

Or is the business plan to make it easier to do crimes?

Because I fail to see how countries e.g. Venezuela are going to allow some US startup to undermine their currency and distort their financial system.

It's amazing to me that people think they can disrupt a government without them retaliating.

How is it undermining a currency and distorting a financial system to allow people to exchange their OWN hard-earned money for another currency?

None of which is to say that capital controls are a good thing, but you can understand how a government might want them, and might view circumventions as 'distortions'

In practice, it's because the government of that country says that it is.

https://catalogue.nla.gov.au/catalog/3070732 - The Malaysian currency crisis : how and why it happened / Mahathir Mohamad

edit: Sorry that first link is for a book

This might be better https://www.investopedia.com/articles/economics/08/currency-...

second edit - I'll add the relevant paragraph

> Anatomy of a Currency Crisis

> Investors often attempt to withdraw their money en masse if there is an overall erosion in confidence in an economy's stability. This is referred to as capital flight. Once investors sell their domestic currency-denominated investments, they convert those investments into foreign currency.

> This causes the exchange rate to get even worse, resulting in a run on the currency, which can then make it nearly impossible for the country to finance its capital spending.

In venezuela right now, there's a YC startup (2023), "Kontigo" [1], who's part of it, they went all in with this "stablecoin" bullsh*t and manage to get a license to operate in US (stripe) and with Venezuelans users with absolutely NO KYC, fully connected and "licensed" by the venezuelan "National Superintendence of Cryptoassets and Related Activities" a.k.a SUNACRIP

Take note that this SUNACRIP had closed operations since 2020 when a huge corruption scandal hit the govt, they used crypto to run corruption operations and money laundering [2][3][4] and somehow SUNACRIP, an organization that is not even working or functioning, this january licensed "Kontigo" to operated in the country, the founders themselves made a bragging video on instagram about "noone expecting it", wich is hillarious, you can find the video at https://www.instagram.com/p/DFd8ouoNKuI/

Anyways, the corrupted govt, approved a YC startup to exchange instantly USDC to VEF using venezuelans banks APIs and USA banking system (plaid, stripe, etc), without any KYC, without any sanctions screening, nothing, the reason for this approval is pretty simple, they doing the money laundering process super easy for them lol, they helping venezuelan corrupts officials bypass sanctions and easy money laundering.

I'm absolutely baffled at the situation and wondering how the fuck this happened, I myself know lower/mid size venezuelan corrupt officials using Kontigo to instantly wash money into USDC, and all of this is backed by YC itself.

And inbefore any user comes here telling me that "venezuela is sanctioned" and whatever other random thing, this company absolutely doesnt help venezuelans, it only helps corruption and launder money from corruption and drugs

[1] https://www.ycombinator.com/companies/kontigo [2] https://es.wikipedia.org/wiki/Caso_PDVSA-Cripto [3] https://news.bitcoin.com/how-crypto-ended-up-at-the-center-o... [4] https://www.criptonoticias.com/judicial/fiscal-venezuela-con...

[1] https://en.wikipedia.org/wiki/List_of_countries_by_inflation...

[2] https://worldpopulationreview.com/country-rankings/poverty-r...