Japan Opens The Door For HBD

in #hive-1679222 years ago

We knew the wagons were circling. Regulators all over the world are taking a hard look at cryptocurrency. Due to the recent events with Terra, stablecoins are now at the top of the list.

This is no surprise. It was something that was coming regardless of how things played out. Nevertheless, the UST situation only accelerated things.

Japan becomes the first major country to roll out cryptocurrency regulation. It is likely this provides a framework that other countries will mirror to some degree. If this is the case, things just got a lot more difficult.

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Japan's Regulation

Investor protection is always the reason for these types of regulation. In reality, the only thing protected is the power of the existing system. Here is where we see the need for continued development to take place.

Not surprisingly, the issuers of stablecoins are going to be treated akin to banks. This is where the government can assert its authority. This, too, is something we can expect to spread across the developed world.

To start, the bill discusses redemption.

Under the new law, entities offering stablecoins in Japan must ensure that their tokens are linked either to the yen or another legal tender currency and that their stablecoins are always redeemable for fiat at their face value. Additionally, the new legal definition of stablecoins dictates they can now only be issued by licensed banks, registered money transfer agents and trust companies.

Obviously this puts a dent in the idea of algorithmic stablecoins. When this bill is fully enacted, exchanges in Japan will not be able to list them.

The new legislation does not address existing asset-backed stablecoins from overseas issuers, such as Tether’s USDT, as Japanese crypto exchanges do not currently list them for trade. However, if companies like Tether want to enter the Japanese market in the future, they will need to ensure their stablecoins comply with the new regulations.

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Even a stablecoin such as Tether is going to have issues. Since it admitted it is not fully backed by USD, it falls outside the scope of this law.

Decentralization Is The Answer

This is opening the door for a coin like the Hive Backed Dollar (HBD). It is also showing us the importance of being truly decentralized.

HBD is a base layer coin. This means the amount of decentralization depends upon the blockchain itself. With Hive eliminating the ninja-mined stake, the ability to control the network is severely reduced. Hence, the block producers, which number more than 100, do not operate with an overwhelming individual stake (on a percentage basis).

At the same time, we are seeing even more reason to establish deep liquidity pools. Since more exchanges are going to come under the regulation, we will shift towards alternatives.

Here we see how the idea of used centralized entities is diminished. It might get to the point where exchanges are the on/off ramp for fiat currency. Outside that, people will simply operate within the Decentralized Finance world, omitting exchanges altogether.

HBD is basically out of reach from regulators. The coin is not listed on many exchanges and, now, likely never will be. Instead, the access is going to have to come from liquidity pools.

The key is to keep building more layers. Over time, we can keep spreading the options associated with DeFi, sending the regulators into a game of whack-a-mole. We know the development pace can far outpace anything the governments can do.

Operating Out Of Reach

Repeatedly we discussed how the foundation of cryptocurrency is starting to resemble the Eurodollar (Wholesale Banking) system. This started in the 1950s and was constructed completely outside the reach of any government or central bank. Essentially we are looking at a reserve-less system run by the international banking conglomerate.

Now we see a lot of backlash against cryptocurrency by the banking establishment. This is no surprise since cryptocurrency is a direct threat to the banking system. Stablecoins are going to be a big part of this.

HBD can basically operate unencumbered by regulatory and governmental forces. It is truly dictated by the market. Just like the products created by the Eurodollar system are untouchable by regulation, the same holds true for HBD.

Of course, it is vital that what we are dealing with is truly decentralized. If there is a point of vulnerability, it will be exploited.

In the meantime, cryptocurrency should eye the major shortcoming of the present system: a lack of USD and collateral. Since the Great Financial Crisis, the financial system was starved. We must keep in mind this is the major source of global funding and by a wide margin.

Cryptocurrency can solve this problem. Stablecoins can be the mechanism used for the funding and investing purposes.

Over time, expansion in these areas will make regulation a non-issue. Politicians and bureaucrats have the need to expand their power base. Decentralization undermines that by simply removing itself from their grasp.

HBD is already operating out of their reach. The Japanese bill means nothing in these regard.


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Well, I feel even if HBD isn't listed on too many exchanges, it might with the passage of time, so I still feel that it's within this regulations, plus, I'm looking at the liquidity pools as well. I hope these countries would do their research thoroughly rather than blindly regulate.

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This struck as some sought of control mechanism as Japan gets to have control be pegging to fiat.
The method Japan seems to work on defies everything decentralization stands for. The narrative for HBD to keep on building stronger forward.

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egs are tough. Without market activity (arbitrage) it is easy for pegs to break. This is something that cannot be put in place by some government.

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Not at all but they don't know as they think they've got the socalled experts watching over all market activities.

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HBD has great failure points mechanics and it shows price stability on the market. Liquidity Pools for sure will ensure the depth for exchanging at a low spread and maybe also the internal market will get a makeover in the future. As things grow, probably also will the HBD and HIVE use cases.

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The key is going to be getting into the use cases. We need to mirror the USD in the application of HBD. If we can do this, we will see the resiliency increase.

A big part of that is going to be derivatives along with funding capabilities. Those are the game changers.

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Is it possible for the centralized parties to sneak in the witness, and manipulate the Hive like they did with the LUNA? I mean there must be bad actors out there in centralization camp looking at hive. Isn't it? How can hive protect itself from such loss of Peg if this happens?

That is a great point about the importance of LP's moving forward. It's pretty funny that in trying to regulate it they are going to push people further and further away from the institutions that they are trying to protect!

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I was glad that I could now buy a camera directly from Japan for Hive dollars, but as I see these doors are not too wide open yet, there is a potential opportunity for them to open)

pumped for HBD :)

The problem isn't crypto the schemes come from people what happened to Luna was caused by massive selling of the stablecoins. That's a problem because if someone wants to buy $1 worth it should be $1 worth. The best system for stablecoins is defi as for like traditional banking works. We need people to save and we need people to loan. We can have the same system just give more yield then a traditional bank.

HBD is basically out of reach from regulators. The coin is not listed on many exchanges and, now, likely never will be.— So will it spell doom for the Hbd if it is listed on many exchanges?

The bill regulating crypto in Japan provides the necessary clarity for crypto investors ,and could catalyze stablecoin regulation in other countries.

Doors maybe open, but I'm not sure there is any signage on them.

In other words HBD is basically still a secret and we just aren't that good at getting the word out, outside of our tight circle!

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At this point, you dont want the word out. People do not realize how powerful the forces are against them.

HBD needs a lot more building. There is not the resiliency in place to withstand an onslaught from the major players in the world.

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if we take our sweet time with it, someone else might steal our lunch ;)

This is where we have to keep strengthening our defenses, have use case all over the show and then I will care about publicity, for now lets remain under the radar am in no rush.

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Japan's regulation proves the confidence of developed countries in the global mainstreaming of cryptocurrencies.

In my opinion, developed country systems will be one step bolder in the legal enforcement of cryptocurrencies to protect those involved through regulation.

Everything is based on trust, of course. Without trust, they will never dare to protect.

What part of regulation instills trust in you?

Werent there regulations in place yet we got Bernie Madoff, the Great Financial Crisis, and the collapse of LTCM to just name a few?

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So far they have only collected taxes.
Trust is simply in acknowledging they accept and can apply it. But when something happened they couldn't do anything. Where to complain when they can't do anything about it?

the mechanisms to prevent failure are great, but the total value is still quite low. and to be honest, I still not understanding from where the 20% rewards is coming and how sustainable it is?

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I don't really know if it's a good or bad thing but this means that they will have full control over the financial system with these regulations. I wonder if this is the push they need to push CBDC to the public. The best we can do is build around it.

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Now, some stablecoins have to go back to the drawing board to check their fundamentals. It would be much harder for companies to abide by the regulations without taking a hit in their finances. Government regulators have made the door wide open for DeFis to flourish!

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Ouch with the regulations, but has some good push in a way that it encourages more work to be done on stablecoins. We do need more use cases and liquidity for HBD.

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Hmm... I hadn't heard about this. But I pulled out of the Japanese exchanges a while ago and mainly use US exchanges, then normal bank transfers to get the money to my Japanese accounts. (Not an ideal system, but it works well for me for those purchases that demand direct payment from my Japanese bank account—which happens far more than you would think it should)

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I think it is not the right thing to do, simply all stablecoins must have a well-defined support to avoid some similar problems with TerraUST

And you think regulation gives that?

There were regulations regarding mortgage backed securities and look at how that blew up the global economy.

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Regulation will always be needed. The question is, in what form will it take? Not all regulation needs to come from a political form of government. It can originate from the ground up as various players and groups organize and agree on standards. This way decentralization can be maintained.

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Investor protection is surely one of the reason why countries will try to step it.
During this time HBD has proven be a new decentralised stable coin but I think we are lacking in the area of exchange listing. Do you think if HBD gets listed in more exchanges then it will get more attraction ?

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It is amusing to see how governments try to put control over something that is inherently subjective like the value people place on cryptocurrencies. They are seeing the beginning of the end of their governance over the fruits of the labor of the people who make up the world and they know it.

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If it is not decentralized it is going to suffer a central point of attack and regulated all over the place, we are beginning to see an extent to which decentralization can be regulated, being able to operate outside the reach of governments is a win for us and a nightmare for them.

All I care for is to keep decentralizing further.

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I agree most stables are in for a rough ride due to regulation. This should be seen as a good thing though if it helps mass adoption and not with the aim of holding crypto back. I just don't trust regulation as they always seem to have an alternative agenda and we know what that is all about. Crypto is it's own worst enemy having projects like Terra around and being so well supported.

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I'm starting to warm up with HBD again but still I rather have Hive over it at least for right now with prices the way they are. Come the next bull run however I could see myself piling up in HBD for sure. Nice thing about HBD is how decentralized it is compared to other options.

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The key is to keep building more layers. Over time, we can keep spreading the options associated with DeFi, sending the regulators into a game of whack-a-mole.

So be one (or more) step(s) ahead of the regulators. Maybe one day we will not need to play a whack-a-mole game with them. We just need a technical solution. One, which is way ahead of DeFi (or cryptocurrency in general), and currently do not even exist. This is one the beauties of technology. It is constantly improving. There will be things, which currently we do not even think about, because they do not even exist yet. Probably no one (or at least not many people) thought about the concept of cryptocurrency before 2008. Future can bring anything. Even a completely new technology. Maybe this is a wild thought (at least nowadays), but probably there will be better technologies, even than cryptocurrency.

Privacy is going to radically alter things. That is where it gets very interesting. Cryptocurrency is nothing more than data. The challenge is to separate financial data from say, medical records. Obviously, the latter requires privacy.

If it exists for one, it will be for both.

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