“Diving” into the terms of use and service policies of cryptocurrency products should become common practice. Doing so often brings surprises, especially given the often exaggerated rights that companies assume for themselves to the detriment of the well-being of their customers. Recently, a digital asset analyst named
I hope you have read the RLUSD terms of use! Hint: They are extensive! And it is essential to know the rules beforehand, as Ripple can freeze RLUSD. But it also shows why stablecoins won’t replace cryptocurrencies.
@X__Anderson, digital asset analyst.
He user refers to the legal terms of services according to which Ripple, the company behind the issuance of the RLUSD stablecoin, may suspend or deny any user access to the currency. Textually, the company communicates that “Ripple may, directly or indirectly, suspend or otherwise deny a user’s access to RLUSD or its support, as applicable, without incurring any resulting obligation or liability.”
The company can carry out this suspension under two conditions: one, if a regulatory or judicial entity requests it; and two, if, at its “sole discretion,” Ripple “believes” that a user has been or is “engaged in any fraudulent, deceptive or illegal activity related to or in connection with RLUSD.”
The analyst specifically points out those clauses that prohibit certain businesses and business lines from trading with the RLUSD stablecoin. The terms of service prohibit businesses related to the sale of cannabis and tobacco from using the stablecoin. Also “medical prescription services or online pharmaceutical services; weapons and ammunition; gunpowder and other explosives; fireworks and related products; toxic, flammable and radioactive materials.”
These prohibitions, which seem reasonable, are expressed without detailing the legality or illegality of these types of business. Adult entertainment businesses, casino gambling and gaming, and businesses perceived as high risk may also be banned from using the RLUSD stablecoin.
Any business or person that incurs expenses not supported by Ripple, You may see your ability to redeem stablecoins for US dollars disabledaccording to the user terms.
The specific mechanism for disabling the use of RLUSD is unclear, however. With exchanges as intermediaries that custody their users’ cryptocurrencies, forcing these interceptions and detentions of funds is not an impossible task for Ripple, especially if there is a state interest involved that requires them both.
However, the use of RLUSD through private self-custody wallets is difficult to hinder. other than with direct intervention in the smart contracts of the token, or through limitations of use within the XRP Ledger native networkwhich today operates in a decentralized manner, with about 160 validators and 787 nodes at the time of writing.
Cryptocurrencies and stablecoins are not the same
Anders, the digital cryptoasset analyst, assures Given the way stablecoins work, it is necessary to appreciate the benefits of decentralized cryptoassets such as XRP, bitcoin (BTC) or ether (ETH).
I’m making this tweet for people who think that Ripple (and other market participants) will only move everything in RLUSD and only use XRP as a “gas token” by showing that there are certain benefits to cryptocurrencies that are not obtained by using coins stable. So I’m actually trying to show why XRP and cryptocurrency are needed. I have no idea why people would think I’m saying stablecoins would replace cryptocurrencies?
@X__Anderson, digital asset analyst.
Decentralized cryptocurrencies such as the aforementioned bitcoin and ether are not controlled by a central entity, but rather they have distributed governance systems and use consensus mechanisms such as proof of work (PoW) or proof of stake (PoS)the latter in the case of the cryptocurrency of the Ethereum network. This was reported by CriptoNoticias.
By not depending on a central entity, these cryptoassets are more resistant to censorship and single points of failure, which makes them unsuitable for external control by a few entities.
On the other hand, centralized stablecoins, such as Tether (USDT) and USD Coin (USDC) or Ripple’s own RLUSD, are issued and managed by a central entity. This entity has the exclusive power to issue and redeem stablecoins, and its value is backed by asset reserves, such as US dollars. This implies that the market value of a stablecoin depends entirely on the health of the custody processes of a single company: the one that issues and preserves the currency.