**Mistakes in Evaluating New Concepts with Old Frameworks: A Discussion with @Rocky_Bitcoin about $CRCL** I deeply appreciate hearing diverse perspectives on $CRCL, which are not only valuable but also much needed. While I’ve benefited from many insights, some points require further discussion and clarification. In the views shared by Rocky, such as the idea that the banking system could be "drained," it's true that this scenario could objectively occur if stablecoins reached a scale of one trillion or even ten trillion dollars. However, the subsequent reasoning and logic behind some conclusions are flawed. This is because the assumption underlying the argument appears to be incorrect: that the primary function of the U.S. monetary system is for banks to attract deposits and profit from interest spreads. This was true in the past, but no longer is, and certainly will not be the case moving forward. For the U.S., the priority is not "bank profits first" but rather ensuring the smooth absorption of U.S. Treasuries globally, maintaining the dollar's status as the dominant global pricing and settlement currency, and safeguarding domestic financial stability. Understanding the foundational premises of the U.S. national strategy is crucial. Returning to the details, let’s consider the following aspects: --- ### **1. Circle's Likely Entry into the Banking Clearing System** It is highly probable that Circle will eventually integrate directly into the banking clearing system. Assuming that previous application failures indicate future failures overlooks changes in the external environment. Based on my research, Circle could receive approval as early as 2026. However, the approval is unlikely to resemble traditional banking licenses of the past. Instead, it would align with the parameters set by a stablecoin-specific regulatory framework, granting Circle a clear pathway into the central clearing system. Essentially, Circle will likely function as a "controlled on-chain dollar front-end," and this trajectory is already quite apparent. --- ### **2. The Misunderstanding of 'Money Dying' within Stablecoins** The claim that "money dies" when $100 enters USDC and is used to buy U.S. Treasuries is incorrect. Previously, banks were the intermediaries that took deposits and issued loans. Now, that role is increasingly filled by the U.S. Treasury. The flow of money hasn’t stopped—it has merely shifted from private institutions (banks) to public ones (Treasury). Whether banks profit from interest spreads or not is insignificant for the U.S., the dollar, or Treasuries. Should banks fail to adapt, their collapse would not destabilize the broader system. --- ### **3. The Myth of Stablecoins Collapsing the Money Multiplier** The argument that stablecoin adoption would "drain deposits → collapse the money multiplier → disrupt central bank controls" is flawed. Funds within stablecoins aren’t "dead"; rather, they are directly allocated into reserve assets like Treasury bills (T-bills) or reverse repurchase agreements (RRP) on the "official asset side." This means that the funds remain within the dollar system; they've just moved from commercial banks' balance sheets to the Federal Reserve/Treasury's ledger. Since 2008, the U.S. monetary policy framework has shifted from the textbook model of "fixed reserve ratios × multiplier" to one based on "excess reserves + interest on excess reserves (IOER) + RRP within a corridor framework." The money multiplier is no longer the single or stable lever of control it once was. The Federal Reserve can still influence short-term dollar asset yields using tools like short-term interest rates, RRP rates, and regulatory measures. --- ### **4. The Argument That Stablecoins Will Threaten Banks and Prompt Suppression** It's true that banks are unhappy—stablecoins siphon off deposits and reduce fee revenue. But the arrival of new paradigms has never catered to the grievances of old systems. When e-commerce emerged, brick-and-mortar stores couldn't protect their interests through resistance. They were forced to either embrace change or disappear. Similarly, Circle's development of bank-grade, compliant, and privacy-preserving stablecoins like USDCX is paving the way for adaptable banks. At the national level, the U.S. has never prioritized "protecting outdated industry models." Instead, its focus remains on "maintaining the dollar's dominance & ensuring Treasury financing capabilities." Banks may leverage regulatory negotiations to seek compensation, but the chances of outright suppression of stablecoins to preserve traditional banking models are slim. --- ### **5. The Misconception That USDC Threatens Modern Dollar System Control** This view is entirely inconsistent with reality at the strategic level. As outlined above, the regulatory landscape is evolving. Moreover, even from a common-sense perspective, unless U.S. policymakers are utterly incompetent, there’s no way they would pursue stablecoin legislation only to undermine their existing financial systems. The fact that banking heavyweights like BlackRock have signed multi-year exclusive agreements with Circle instead of outright eliminating it speaks volumes. In essence, compliant stablecoins like USDC represent a "second curve" for the dollar and Treasuries—an innovative tool within the empire’s financial arsenal, not an external threat. --- ### **6. Policy Risks and Growth Limitations: Should We Be Cautious?** The original argument assumes that if USDC scales to 5–10% of M2, it would trigger regulatory crackdowns. This concern has been addressed above. Taking a pessimistic view, even the worst-case scenario suggests that 10% of M2 equals $2 trillion. Currently, USDC stands at $78 billion—far from approaching such a threshold. --- For $CRCL as an investment, my view is straightforward: as long as it outperforms Bitcoin over the next few years without significantly increasing risk, it remains a solid choice. Once its market cap grows to several multiples of its current size, my decision would shift from whether to continue holding to how long to hold until stablecoins reach a scale of 3–5 trillion dollars. At that point, the question would no longer warrant serious contemplation. I want to thank @Rocky_Bitcoin for sharing his in-depth insights. My opinions may not necessarily be correct—they are shared purely for discussion!