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You do know that Coinbase has a $50k a day withdrawal limit? A lot of doomsday scenarios leave out this important detail when talking about a hypothetical bank
by ojr 5y ago
You do know that Coinbase has a $50k a day withdrawal limit? A lot of doomsday scenarios leave out this important detail when talking about a hypothetical bank run.
- JackFr 5y ago> You do know that Coinbase has a $50k a day withdrawal limit? On the day you might think that limit matters, it's not really gonna matter.
- loceng 5y agoIt still would slow down a bank run, and Coinbase conveniently/suspiciously going down when bank runs seem to start would further cut off impulse selling - and arguably long enough for manipulation to happen elsewhere to turn price into upward trend again to quell impulse selling by potentially artificially making the price look like it's rebounding.
- simonh 5y agoWhat's to stop me opening 10x accounts of $50k each and pulling them all out at the same time?
- 988747 5y agoI guess the fact that they follow KYC requirements and not allow anonymous accounts? You would have to create 10 fake identities for yourself first.
- simonh 5y agoHuh, looks like they're better organised than I expected, thanks.
- randomopining 5y agoYou need to provide KYC info to open an account right?
- boardwaalk 5y agoIt doesn’t take many people for that to multiply into many millions of dollars…
- andrewmutz 5y agoWithdrawal limit or sell limit? Presumably, people can sell all their holdings and withdraw over time.
- DebtDeflation 5y ago>Coinbase has a $50k a day withdrawal limit Given the price volatility of crypto, that sounds absolutely insane to me. Also, I don't think this prevents a run, on the contrary, when everyone hits the sell button and cannot actually exit then panic will ensue.
- loceng 5y agoTrue but it still makes a single day hit via Coinbase users predictable - which gives them data they'd need to pull different levers including when they use reserve funds they're controlling for buy orders from large institutions; likewise they'll know when the bank run is trending too fast and they'd need to hit the breaks by making Coinbase inaccessible.
- j3th9n 5y agoA withdrawal limit has nothing to do with being able to exit a trade from BTC to dollars.
- DebtDeflation 5y agoThe exchanges handle that part of the "problem" by simply having an outage. The withdrawal limit solves the rest of the problem by limiting how much USDT can be converted to USD.
- dragontamer 5y agoThat's a USD limit. Since Coinbase is FDIC insured, I expect they have the cash-reserves to actually survive a run denominated in dollars. Even if Coinbase itself goes under, FDIC will make your dollar value whole (up to $250,000 per banking institution) You know, the whole benefit of being in the USD. The made up rules of society that provide stability in times of crisis.
- beckler 5y agoCoinbase and FDIC insurance seems tricky at best... I think it only covers deposits made via cash from federally recognized institutions, and will only be covered if you leave it as cash. If you are transferring tokens in and/or converting tokens to cash, I don't believe those transactions would meet the criteria to be covered by FDIC at that point. I might be wrong on that assumption, but FDIC is only deposit insurance, not withdraw insurance, and its under very specific terms.
- dragontamer 5y agoIf an FDIC insured account says "$100,000" in it, and then Coinbase goes under... you get $100,000 from it. Maybe in a few months after bankruptcy court figures out the details. But... yeah, the FDIC insurance definitely covers the stated balance.
- beckler 5y agoIf you have $99,990 in BTC, and $10 in cash, only the $10 is covered. Coinbase could shut down converting crypto to cash at any time. There is no promise or guarantee that they have to allow cash exchanges or deposits, since they're basically buying and selling crypto on your behalf.
- dragontamer 5y ago> If you have $99,990 in BTC, and $10 in cash, only the $10 is covered. By the FDIC. Of course, FDIC only covers dollar-denominated balances (savings accounts, checking accounts, etc. etc.). Even money-market accounts (very cash-like) are NOT covered by FDIC, which is why money-markets get a wee bit of a bump in %yield. Coinbase claims they have the BTC insured through some other means. I don't know how to look into those details or how trustworthy it'd be (ex: AIG "insured" a bunch of mortgages through Credit Default Swaps, which ended up being worthless). But overall, the idea of losing a security through various means (ex: Credit Default Swap "insurance" turns out to be a sham and the mortgage debt is all worthless) is kind of "normal" in terms of financial markets. Similarly, if all the BTC disappeared it'd be terrible for BTC-holders, but I think people generally understand that those risks exist. ---------- Look, I think Cryptocoins are stupid at this point (even proof of stake, but that's another thing). And Coinbase's service going in-and-out over the past day or so is clearly a threat (if BTC moves while Coinbase is down, you lose your opportunity to buy-and/or-sell at the prices you want). But I don't think there's anything shady going on at Coinbase specifically. ------ Now if you want to talk about shady business, we can talk Binance, Bitfinex, and Tethers. Plenty of shady things going around in the cryptoworld.