4 ms·

Monzo and Starling are startup UK banks and I think both spent under $10M to get to the "minimum viable bank" state. With that said, money is not the problem h

Monzo and Starling are startup UK banks and I think both spent under $10M to get to the "minimum viable bank" state. With that said, money is not the problem here. If Bitfinex had wanted to start a 'narrow bank' just to hold Tether, they would have failed: 1. Because they would not have been given a license 2. Because existing financial institutions would have refused to deal with them, as happened to Noble. 3. Because you cannot actually just park billions of dollars in the national reserve bank and collect interest on it. So although such a business is probably viable in theory, it isn't possible in practice.

H8crilA 7y ago
> 3. Because you cannot actually just park billions of dollars in the national reserve bank and collect interest on it. Actually you can, it's called Interest On Excess Reserves (IOER) in the US, which has been the only short term rate enforcement mechanism of the FED since the crisis days. Till that whole repo thing happened, just recently. https://en.wikipedia.org/wiki/Excess_reserves https://en.wikipedia.org/wiki/Excess_reserves The rest is true though.
- YawningAngel 7y ago
  The Fed is not obligated to allow you to open an account, and in such a case it very likely would not allow such a thing: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fed-versus-the-narrow-bank https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...
  - H8crilA 7y ago
    I meant it does allow banks to do it. And from what I've read banks can arrange a FED deposit for a non-bank, charging a few bps of profit for the service. Also you can always just buy short term treasuries. There's even an ETF for that ($BIL) which charges 14 bps. But yeah no chance that a big "fuck compliance" scheme like Tether could easily pull it off.
onlyrealcuzzo 7y ago
What BitFinex is doing is literally illegal. No bank on the planet (even Deutsche Bank) will have any direct/legitimate ties with BitFinex. No legitimate corporation will hold $4Bn in cash (if BitFinex even had it -- which they don't). Any illegitimate person you hand $4Bn to would just run off with it (which is what BitFinex did by now with any "real" cash given to them). The founders of BitFinex have a long and lengthy history of fraud, posting online about how they plan to use their exchange illegally (for wash-trading), ripping off their customers, and also just being general scumbags. People can take whatever opinion they want on Bitcoin. But Tether is 100% certifiably bullshit. It's worth noting that shorting Crypto is pretty dangerous, so long as Tether is around. BitFinex can in theory (and almost certainly has in reality) minted billions of Tethers to inflate the value of Crypto assets. Ironically, the founder of BitFinex posted about the need for some reserve-bank (which Nakomoto famously harped about in the Bitcoin Genesis block).
tomp 7y ago
> Monzo and Starling are startup UK banks and I think both spent under $10M to get to the "minimum viable bank" state. Not sure about that... Looking at Monzo's Wikipedia page, > In February 2017, Monzo raised £19.5M [...] > in April 2017 their UK banking licence restrictions were lifted, enabling them to offer a current account So they only became a "real" bank after having raised substantial capital.

H8crilA 7y ago

> 3. Because you cannot actually just park billions of dollars in the national reserve bank and collect interest on it. Actually you can, it's called Interest On Excess Reserves (IOER) in the US, which has been the only short term rate enforcement mechanism of the FED since the crisis days. Till that whole repo thing happened, just recently. https://en.wikipedia.org/wiki/Excess_reserves https://en.wikipedia.org/wiki/Excess_reserves The rest is true though.

YawningAngel 7y ago
The Fed is not obligated to allow you to open an account, and in such a case it very likely would not allow such a thing: https://www.bloomberg.com/opinion/articles/2019-03-08/the-fed-versus-the-narrow-bank https://www.bloomberg.com/opinion/articles/2019-03-08/the-fe...
- H8crilA 7y ago
  I meant it does allow banks to do it. And from what I've read banks can arrange a FED deposit for a non-bank, charging a few bps of profit for the service. Also you can always just buy short term treasuries. There's even an ETF for that ($BIL) which charges 14 bps. But yeah no chance that a big "fuck compliance" scheme like Tether could easily pull it off.

onlyrealcuzzo 7y ago

What BitFinex is doing is literally illegal. No bank on the planet (even Deutsche Bank) will have any direct/legitimate ties with BitFinex. No legitimate corporation will hold $4Bn in cash (if BitFinex even had it -- which they don't). Any illegitimate person you hand $4Bn to would just run off with it (which is what BitFinex did by now with any "real" cash given to them). The founders of BitFinex have a long and lengthy history of fraud, posting online about how they plan to use their exchange illegally (for wash-trading), ripping off their customers, and also just being general scumbags. People can take whatever opinion they want on Bitcoin. But Tether is 100% certifiably bullshit. It's worth noting that shorting Crypto is pretty dangerous, so long as Tether is around. BitFinex can in theory (and almost certainly has in reality) minted billions of Tethers to inflate the value of Crypto assets. Ironically, the founder of BitFinex posted about the need for some reserve-bank (which Nakomoto famously harped about in the Bitcoin Genesis block).

tomp 7y ago

> Monzo and Starling are startup UK banks and I think both spent under $10M to get to the "minimum viable bank" state. Not sure about that... Looking at Monzo's Wikipedia page, > In February 2017, Monzo raised £19.5M [...] > in April 2017 their UK banking licence restrictions were lifted, enabling them to offer a current account So they only became a "real" bank after having raised substantial capital.