5 ms·

I'm kind of with you, but I read that sentence a little differently based on the rest of the article. First, the agreement: I personally would move a lot of mo

by fitzn 5y ago

I'm kind of with you, but I read that sentence a little differently based on the rest of the article. First, the agreement: I personally would move a lot of money for a better rate, but it would have to be non-trivially better. I'm thinking if I'm getting 0.75% now, it'd have to be 2% or maybe 1.5%. Not positive. Maybe you'd have a lower threshold. The other point to me, though, was that Wang is arguing that the banks won't feel the need to increase their rates because they are already attracting so much money in deposits as it is. Whereas before they would have to pass on the higher interest rate to their customers in order to attract the deposits, they now are flush with cash themselves that they don't need to attract more deposits. And maybe ALL banks are feeling that way (again, in Wang's opinion, I think). So, the overall competition for deposits is low, which means higher rates are just increased profits for the banks. Not arguing correct or not on that, just sharing how I understood it.

PKop 5y ago
You can get 10 to 12% on a "CD-like" 3-month deposit account in USDC at Crypto.com. Even the flexible account (no lockup) is 8% right now. And they have a Visa debit card that you can spend USDC directly from your account.
- oarabbus_ 5y ago
  As a nitpick: you cannot actually spend/top-up the debit card using USDC with Crypto.com. However you can do so using DAI or certain other stablecoins. You can also do so using Ethereum and a select few cryptocurrencies.
  - PKop 5y ago
    Do you mean to say that when you top up with USDC, it converts to USD? It's 1 to 1 and instant so in practical purposes you are using your USDC directly. I have no issues doing so on my card.
    - oarabbus_ 5y ago
      Crypto.com actually tops up 98.5 cents per stablecoin dollar, which is a bit frustrating, but other than that slippage, yes it converts to USD on the (prepaid debit) card.
      - PKop 5y ago
        You keep mentioning things that I'm not seeing or experiencing. I literally just topped up my card yesterday. 1000 USDC from my cypto wallet to the card, which now has $1000 of USD spending power. 1 to 1. Maybe this is a jurisdictional difference if you're not in the US or something, not sure.
        oarabbus_ 5y ago
        I just checked and USDC is indeed available now for card top-up. How long have you been using the card? USDC top up wasn't available quite recently for USA users. I verified I wasn't imagining and checked to find several reddit threads from US-based users wondering why you cannot use USDC to top up. Here's a fairly one: https://www.reddit.com/r/Crypto_com/comments/oll7n4/is_the_option_to_use_usdc_to_topup_your_cryptocom/ https://www.reddit.com/r/Crypto_com/comments/oll7n4/is_the_o... The ability to top up with USDC was only recently added. That being said, I tested it and 1USDC does indeed convert to 1USD. But go ahead and try to top up with DAI - you'll see at this moment in time, 100.98 DAI is required to top up $100 USD. As mentioned previously DAI was the only dollar stablecoin available to USA users, so it was a bit of a raw deal.
- belltaco 5y ago
  What are they doing with that money to be able to give such high rates? Are they FDIC insured?
  - oarabbus_ 5y ago
    They are certainly not FDIC insured, but to their "credit" when you attempt to stake any money with them they are quite upfront about this fact. In other words, if you are hacked, or they are hacked, or the underlying (USDC/Tether/DAI/etc) goes bust, you have no recourse. It's certainly not without risk, but the level of risk of a default/loss event is in the eye of the beholder. Caveat emptor. The way they are able to offer such high rates is they partner with large institutions who wish to take on extreme leverage/margin in order to short cryptocurrencies or leverage-long play them. These institutions and high-net-worth individuals have no problems paying 30%+ APR on a crypto loan (coming from many such individual users' staking vaults) because they tend to hold their positions over days or weeks, not years. To add to why they might do this, their potential for profit (arbitrary e.g. shorting BTC at $62k and closing at $59k; or 5x leverage-buying BTC at $50k and closing the position at $53k) is tremendously high considering how volatility cryptocurrency markets are; far higher than the interest they pay to Crypto.com/Coinbase/Gemini/Kraken/any of these other services which offer 8-12% APY yields to retail users.
    - human 5y ago
      It really makes you wonder how scalable those rates are if that is true. In the sense that if the pool of depositors grow, it will become increasingly hard to find borrowers with this profile. There is simply a limit on the number of such speculators.
      - oarabbus_ 5y ago
        Agreed - this is an "ending soon" sale so to speak. A year, or maybe five from now, the number of depositors will have increased significantly compared to the pool of borrowers, and I'd expect end-user interest rates to drop.
aidenn0 5y ago
That kind of makes sense; the argument is that the supply of deposits so far outstrips demand that depositors lack any leverage to increase prices. This would also raise the question: If the current low costs of retail deposits allow banks to print money, then why aren't we seeing more banks open up to print money?
- mcny 5y ago
  » why aren't we seeing more banks open up to print money? I don't know the details but the folks behind Simple tried, really tried to do the complete stack themselves. They gave up and first had a "real" bank handle it and eventually folded. There is a lot of red tape around creating a bank and as far as I understand, small local banks exist by being small and local. Like they couldn't operate nationally if they wanted to...
  - riffraff 5y ago
    In Europe it seems we have them? There are quite a few app-only or direct-banking things that opened up in the last decade (off the top of my head: N26, Monzo, Revolut, Starling, Illimity all have banking licenses). It's true they often rely on some established bank but they haven't folded yet.
  - nitrogen 5y ago
    I've heard similar things from other sources. AIUI it's really hard to get a new banking license, both in terms of what you have to do to prove you are following regulations, and what you have to do to get the license.
    - olau 5y ago
      In EU, I think one of the requirements is a minimal capital requirement. I can't remember the exact number, but something like 5 million EUR. I don't think most of the small local banks could have started in the current environment, as I gather many of them were founded on a small community pooling their money to help each other and earn some money in return.
- 5y ago

by fitzn 5y ago

PKop 5y ago

You can get 10 to 12% on a "CD-like" 3-month deposit account in USDC at Crypto.com. Even the flexible account (no lockup) is 8% right now. And they have a Visa debit card that you can spend USDC directly from your account.

oarabbus_ 5y ago
As a nitpick: you cannot actually spend/top-up the debit card using USDC with Crypto.com. However you can do so using DAI or certain other stablecoins. You can also do so using Ethereum and a select few cryptocurrencies.
- PKop 5y ago
  Do you mean to say that when you top up with USDC, it converts to USD? It's 1 to 1 and instant so in practical purposes you are using your USDC directly. I have no issues doing so on my card.
  - oarabbus_ 5y ago
    Crypto.com actually tops up 98.5 cents per stablecoin dollar, which is a bit frustrating, but other than that slippage, yes it converts to USD on the (prepaid debit) card.
    - PKop 5y ago
      You keep mentioning things that I'm not seeing or experiencing. I literally just topped up my card yesterday. 1000 USDC from my cypto wallet to the card, which now has $1000 of USD spending power. 1 to 1. Maybe this is a jurisdictional difference if you're not in the US or something, not sure.
      - oarabbus_ 5y ago
        I just checked and USDC is indeed available now for card top-up. How long have you been using the card? USDC top up wasn't available quite recently for USA users. I verified I wasn't imagining and checked to find several reddit threads from US-based users wondering why you cannot use USDC to top up. Here's a fairly one: https://www.reddit.com/r/Crypto_com/comments/oll7n4/is_the_option_to_use_usdc_to_topup_your_cryptocom/ https://www.reddit.com/r/Crypto_com/comments/oll7n4/is_the_o... The ability to top up with USDC was only recently added. That being said, I tested it and 1USDC does indeed convert to 1USD. But go ahead and try to top up with DAI - you'll see at this moment in time, 100.98 DAI is required to top up $100 USD. As mentioned previously DAI was the only dollar stablecoin available to USA users, so it was a bit of a raw deal.
belltaco 5y ago
What are they doing with that money to be able to give such high rates? Are they FDIC insured?
- oarabbus_ 5y ago
  They are certainly not FDIC insured, but to their "credit" when you attempt to stake any money with them they are quite upfront about this fact. In other words, if you are hacked, or they are hacked, or the underlying (USDC/Tether/DAI/etc) goes bust, you have no recourse. It's certainly not without risk, but the level of risk of a default/loss event is in the eye of the beholder. Caveat emptor. The way they are able to offer such high rates is they partner with large institutions who wish to take on extreme leverage/margin in order to short cryptocurrencies or leverage-long play them. These institutions and high-net-worth individuals have no problems paying 30%+ APR on a crypto loan (coming from many such individual users' staking vaults) because they tend to hold their positions over days or weeks, not years. To add to why they might do this, their potential for profit (arbitrary e.g. shorting BTC at $62k and closing at $59k; or 5x leverage-buying BTC at $50k and closing the position at $53k) is tremendously high considering how volatility cryptocurrency markets are; far higher than the interest they pay to Crypto.com/Coinbase/Gemini/Kraken/any of these other services which offer 8-12% APY yields to retail users.
  - human 5y ago
    It really makes you wonder how scalable those rates are if that is true. In the sense that if the pool of depositors grow, it will become increasingly hard to find borrowers with this profile. There is simply a limit on the number of such speculators.
    - oarabbus_ 5y ago
      Agreed - this is an "ending soon" sale so to speak. A year, or maybe five from now, the number of depositors will have increased significantly compared to the pool of borrowers, and I'd expect end-user interest rates to drop.

aidenn0 5y ago

That kind of makes sense; the argument is that the supply of deposits so far outstrips demand that depositors lack any leverage to increase prices. This would also raise the question: If the current low costs of retail deposits allow banks to print money, then why aren't we seeing more banks open up to print money?

mcny 5y ago
» why aren't we seeing more banks open up to print money? I don't know the details but the folks behind Simple tried, really tried to do the complete stack themselves. They gave up and first had a "real" bank handle it and eventually folded. There is a lot of red tape around creating a bank and as far as I understand, small local banks exist by being small and local. Like they couldn't operate nationally if they wanted to...
- riffraff 5y ago
  In Europe it seems we have them? There are quite a few app-only or direct-banking things that opened up in the last decade (off the top of my head: N26, Monzo, Revolut, Starling, Illimity all have banking licenses). It's true they often rely on some established bank but they haven't folded yet.
- nitrogen 5y ago
  I've heard similar things from other sources. AIUI it's really hard to get a new banking license, both in terms of what you have to do to prove you are following regulations, and what you have to do to get the license.
  - olau 5y ago
    In EU, I think one of the requirements is a minimal capital requirement. I can't remember the exact number, but something like 5 million EUR. I don't think most of the small local banks could have started in the current environment, as I gather many of them were founded on a small community pooling their money to help each other and earn some money in return.
5y ago