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> What's that? They put their money in a bank? What if the bank owner takes all the money and flees to Venezuela? "You should only use trustworthy banks", you s

> What's that? They put their money in a bank? What if the bank owner takes all the money and flees to Venezuela? "You should only use trustworthy banks", you say? Interesting. Bank failures are indeed a problem of the banking system. That's also why developed countries impose strict regulations and depository insurance on their banks, so average people do not need to perform costly due diligence on their daily-use bank. Cryptocurrency exchanges currently dis-favour government regulation, so I doubt they will be seeking a mandatory deposit insurance regime anytime soon. Nothing prevents an exchange from taking out voluntary insurance from a private insurer, but I imagine that the underwriting fees would be costly.

StavrosK 6y ago
> I doubt they will be seeking a mandatory deposit insurance regime anytime soon Certainly, but they have a big vested interest in telling their customers "your money is safe with us, we even have the insurance to prove it!".
- Majromax 6y ago
  They may, but it again goes back to costs. Do any crypto exchanges in fact carry such insurance in a verifiable manner? (It's cheaper to _say_ they have a Lloyd's of London policy than it is to actually have one, after all). I also didn't get into it in the parent comment, but deposit insurance also may not be suitable for those who are deliberately taking advantage of the pseudonymous nature of cryptocurrency. In the event of an exchange failure, the insurer or trustee would obviously need to know the personal details of the account-holder in order to remit payment. Keeping such contact information up-to-date and verified would replicate many of the same know-your-client rules that exchanges hate to follow.
  - StavrosK 6y ago
    > would replicate many of the same know-your-client rules that exchanges hate to follow. They may hate to, but do you know any that don't? All the ones I've used asked for ID.

StavrosK 6y ago

> I doubt they will be seeking a mandatory deposit insurance regime anytime soon Certainly, but they have a big vested interest in telling their customers "your money is safe with us, we even have the insurance to prove it!".

Majromax 6y ago
They may, but it again goes back to costs. Do any crypto exchanges in fact carry such insurance in a verifiable manner? (It's cheaper to _say_ they have a Lloyd's of London policy than it is to actually have one, after all). I also didn't get into it in the parent comment, but deposit insurance also may not be suitable for those who are deliberately taking advantage of the pseudonymous nature of cryptocurrency. In the event of an exchange failure, the insurer or trustee would obviously need to know the personal details of the account-holder in order to remit payment. Keeping such contact information up-to-date and verified would replicate many of the same know-your-client rules that exchanges hate to follow.
- StavrosK 6y ago
  > would replicate many of the same know-your-client rules that exchanges hate to follow. They may hate to, but do you know any that don't? All the ones I've used asked for ID.