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This is normal. Regular banks do this.
by metalforever 5y ago
This is normal. Regular banks do this.
- ceejayoz 5y agoRegular banks undergo real audits and have specific regulations around how much real cash reserves they have to have on hand. My bank can't go overvalue a bunch of junk bonds to meet their capital requirements.
- ketzo 5y agoYeah, but banks don’t create a market for themselves in a notoriously unstable ecosystem by explicitly promising that their deposits are backed by 100% cash. That is what USDC did. And it turns out not to be true. Which is… concerning.
- NelsonMinar 5y agoWhat's not normal is misleading your customers about it. I confess I'm mostly thinking about Tether here, since it's the largest example of a coin that pretended to be backed by dollars and actually isn't. But this case doesn't seem much different. Also banks are highly regulated about requirements for backing assets. Triply so since the 2008 collapse.