I don t think we can do without custodians. Online converters need custodians that maintain the peg in the first place otherwise there is not reference or basis that justifies 1NBT=1USD. Or the system becomes 100% reserve-backed (online converter becomes a central bank that redeems) which is contrary to the Nu premisses. Am I missing something?
Yes you are missing something. Exchanges belong to the old way of thinking. NuBits does not require to be present on exchanges. Sure we can have custodians doing their job on the exchanges but it doesnāt really matter whether they buy/sell on exchanges or at specialized converting services. The whole āreserve backedā discussion is a nonsense. It depends how you look at it.
"Exchanges belong to the old way of thinking. "
Exchanges match buyers and sellers and comply with KYC/AML because they interact with fiat. Thatās how fiat moves into crypto, besides cash to crypto transactions via e.g. Localbitcoins. In Europe there are also escrow markets for bank-transactions, which are capped at circa 500-1000$.
Without fiat there is no USD to peg against. (thought experiment: what about pegging against gold?) As soon as one wants to transmit fiat over the wire one has to comply with fiat rules. Anything that goes anywhere close to āmoney launderingā will be shutdown quickly. Definition of ML depends on the scale (otherwise any cash transaction would be ML). Sending 500$ from peer to peer will not be a problem for regulators. Any wire transfer of more than say 100k$ or 1M$ will raise major red flags. Banks need to report large and suspicious transactions, of course also depending on the jurisdictions they are operating in.
One has to be extremely careful in ones definitions and attitudes. For example Bitshares is very lax in its approach, assuming a private company can issue stocks and money. Ethereum spend ca. 500k$ in legal fees to do a legal crowd-funder out of Switzerland (very complex process involving big law firms). Iāve spoken to several lawyers, regulators, etc. and that expertise is needed to understand what the rules are. On the flip side, if one waits for legal certainty on any new innovation, Bitcoin would not be where it is today. For many things there is not even a legal definition. Switzerland was the first to recognize a concept like crypto-equity a few months ago, via a SRO and interactions with the regulators.
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They have a company registered in HKā¦I guess they use that entity within the HK regulations to justify their ability to create their own currency. However in the US, I am not aware on how they are able to comply with the regulationsā¦
The thing is bitshares is a DAC but they are not anonymous per se, which makes them more vulnerable than Nu for example.
Nu in a way creates its own stocks and currencyā¦It is a highly sensitive topic since it is not legal in the US to create another currency different from the dollar.
At the same time, bitcoin is a form of currency but as it is decentralized you need to enact new laws in order to make it legal or illegal because it is difficult to control something decentralized. That is why it is still in the grey zone.
NuBit peg is maintained by custodians who are anonymous for the most part and who operate on different exchanges. Therefore we can argue that NuBitās peg is produced in a decentralized way. As bitcoin, it is difficult to regulate it within existing laws.
How do you see the legal status of Nu, NuBit and NuShare? For example, must NuBit be regulated by the same rules as bitcoin or the fact that it is pegged to the USD would need additional regulations?
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In my description of a NuBits related business idea for the Japanese market, I mention the fact that having NBT/JPY would be very convenient for Japanese users if they wanna buy NuBits easily.
Japan is a neutral country regarding cryptos in general and seems to be offer a better and easier environment for traders that want to deposit cash to buy cryptos.
Which makes me think about the possibility of using other FIAT money than USD to maintain the peg on NBT/USD.
Would enabling NuBot deal with NBT/JPY by feeding it a data feed on USD/JPY contribute to NBT/USDās peg?
And if the answer is yes, would it be an easy operation, implementation wise?
It is possible that most of the buy liquidity would come from a FIAT different from USD; in other words, we can imagine a scenario in which most of the exchanges that accept FIAT deposit do not deal with USD but rather with EUR, CNY, JPY, Indonesian Rupiah etcā¦and most of those exchanges accept NBT and would want a NBT/FIAT pair enabled.
Does it make sense?
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This is an interesting idea - that seems feasible.