3 years ago ETH was $100, today it's $1300, maybe we should all just wait and see before writing the obituary
The number of banks willing to do business with the crypto industry is shrinking
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Re: The number of banks willing to do business with the crypto industry is shrinking
#32Earlier quoted context omitted.
I vouched. This is a very valid concern, that was even recently mentioned in a paper from the Fed. Large crypto "banks", with large holdings in fiat banks, can cause huge outflows from those banks, upsetting their reserves balance. Essentially a crypto bank run can cause a fiat bank run. This couldn't be more true when you see examples like where FTX bought a small community bank. People pretending crypto only effect…
A bank run isn't a systemic risk to the banking system because we have the FDIC.
How does FDIC behave in a high-inflation environment?
Re: The number of banks willing to do business with the crypto industry is shrinking
#33If I were a bank, I'd stay far away from any non-bitcoin cryptos that I'm not an issuer of. Why would I want to own a coin that someone else is able to freely devalue, in addition to conventional currencies? On the other hand, if I were a bank, bitcoin presents a compelling argument. The supply is finite. Disclaimer: I don't own any crypto or bitcoin.
How being the supply finite is relevant? This idea that being scarce implies value makes no sense.
You realize we can go on github and setup a bitcoin network too, we call it BitcoinYC, our coins have the same properties of bitcoins, why would that have a value?
Please repeat with me:
- currencies (wheter fiat or crypto) have no value. You can't do anything with them, maybe watch dead national heroes printed or them. They hold no assets and don't generate value.
- Currencies have a price though, in other currencies, assets or services. E.g. Both usd and bitcoin are worthless but both have prices set by demand vs supply
- scarcicity does not mean value. Intrinsic value means value. E.g. water has tremendous value but low price. Gold has tremendous value and price. A car has some value, a business has a value. But currencies only have a price.
Re: The number of banks willing to do business with the crypto industry is shrinking
#34If I were a bank, I'd stay far away from any non-bitcoin cryptos that I'm not an issuer of. Why would I want to own a coin that someone else is able to freely devalue, in addition to conventional currencies? On the other hand, if I were a bank, bitcoin presents a compelling argument. The supply is finite. Disclaimer: I don't own any crypto or bitcoin.
> if I were a bank, bitcoin presents a compelling argument. The supply is finite.
I've worked at a number of banks now and what keeps them up at night isn't how much money they could make or what competitive technologies like Bitcoin are doing.
It's their ability to consistently operate with the increasingly tight regulatory guard-rails imposed by the government. And Bitcoin's incompatibility with KYC and AML regulations render it unpalatable for most financial organisations.
Re: The number of banks willing to do business with the crypto industry is shrinking
#35Earlier quoted context omitted.
Certain people take issue with financial privacy, and not being able to regulate other people’s wallets.
I don't tend to associate privacy with an asset whose transactions are recorded in a public ledger for all to see.
Do you support forcing KYC laws onto exchanges? Or the cryptocurrency transaction tracking laws in the EU? I’m looking for a yes or no answer.
Re: The number of banks willing to do business with the crypto industry is shrinking
#36Anecdotal evidence: Friends of mine tried to open up a corporate bank account in Singapore for their crypto-business. Doesn't go too well.
I don't know about Singapore specifically, but it has always been notoriously difficult for crypto businesses to open bank accounts.
Re: The number of banks willing to do business with the crypto industry is shrinking
#37Earlier quoted context omitted.
A bank run isn't a systemic risk to the banking system because we have the FDIC.
How does FDIC behave in a high-inflation environment?
FDIC was introduced in 1933.
And the inflation rate today is nothing compared to previous years [1]. So my guess is just fine.
[1] https://www.macrotrends.net/2497/historical-inflation-rate-b...
Re: The number of banks willing to do business with the crypto industry is shrinking
#38I don’t think this one example they provided is indicative. Didn’t the BIS just give their okay for banks to hold 2% of reserves in Bitcoin? Also, didn’t FASB just change their accounting rules to make businesses holding crypto easier on the balance sheet?
Presumably demand is going in the opposite direction that this blurb would indicate.
Re: The number of banks willing to do business with the crypto industry is shrinking
#39Earlier quoted context omitted.
I vouched. This is a very valid concern, that was even recently mentioned in a paper from the Fed. Large crypto "banks", with large holdings in fiat banks, can cause huge outflows from those banks, upsetting their reserves balance. Essentially a crypto bank run can cause a fiat bank run. This couldn't be more true when you see examples like where FTX bought a small community bank. People pretending crypto only effect…
The number of fiat banks to crypto banks is in the realm of 10,000 to 1. So yes a crypto bank could maybe cause a single fiat bank to fail but it would be isolated. And likely a very small bank. The entire crypto industry could collapse tomorrow and there would be likely no systemic risk to the global financial system.
Indeed, not currently. The problem is where crypto will go after the next winter. Maybe FTX will have scared off the next batch of newcomers, but then again 2017 and people still were lured back again.
Re: The number of banks willing to do business with the crypto industry is shrinking
#40My fear is that eventually people will star loosing holding over cryptos and banks will star to buy them very cheap, so they will control the supply and not people. once again banks having the full grip.