09-13-2020, 07:02 AM
The legality of unregistered, unlicensed lending? Legality of stablecoins?
<!-- SC_OFF --><div class="md"><p>With all this defi hype, I don't see very many people questioning the legality of some of these functions. In most countries, lending is allowed because two willing participants agree to a written contract. A contract is essentially a group of people privatizing a set of laws that take precedent over public law. "Smart contracts" are not legal contracts. A legal contract must have actual print and a signature of all participants acknowledging the terms of the agreement. Just because you have software executing a code, that doesn't make it a legal contract.</p> <p>There's a real fundamental problem with stablecoins: any system that effectively allows decentralized peer-to-peer transmission of money is going to fail one or more anti-money-laundering laws. Stablecoins are fundamentally illegal operations under US law. With bitcoin, you can squish around legal definitions to call it a commodity instead of money because of it's volatile nature. But stable coins are being marketed as 1:1 equivalent to USD, which is money.</p> </div><!-- SC_ON --> Kind Regards R
<!-- SC_OFF --><div class="md"><p>With all this defi hype, I don't see very many people questioning the legality of some of these functions. In most countries, lending is allowed because two willing participants agree to a written contract. A contract is essentially a group of people privatizing a set of laws that take precedent over public law. "Smart contracts" are not legal contracts. A legal contract must have actual print and a signature of all participants acknowledging the terms of the agreement. Just because you have software executing a code, that doesn't make it a legal contract.</p> <p>There's a real fundamental problem with stablecoins: any system that effectively allows decentralized peer-to-peer transmission of money is going to fail one or more anti-money-laundering laws. Stablecoins are fundamentally illegal operations under US law. With bitcoin, you can squish around legal definitions to call it a commodity instead of money because of it's volatile nature. But stable coins are being marketed as 1:1 equivalent to USD, which is money.</p> </div><!-- SC_ON --> Kind Regards R