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New thing in here (to me): USDC is largely banked by Signature Bank of NY and that "USDC largely banks with SBNY, and a large fraction of SBNY’s liabilities are
by NelsonMinar 4y ago
New thing in here (to me): USDC is largely banked by Signature Bank of NY and that "USDC largely banks with SBNY, and a large fraction of SBNY’s liabilities are specifically to USDC". Which is a form of systemic risk; can the bank make good on its obligations? This seems like something a banking regulator ought to be examining closely.
- woeirua 4y agoI think the entire point of mentioning SBNY is that they are acting like a traditional bank in lending out their deposits. The question is what kind of loans did they make, and how liquid are they? If they're not very liquid then USDC will eventually have a liquidity crisis.
- ceejayoz 4y agoI think the question being raised is "what if SBNY collapses"?
- NelsonMinar 4y agoOr more specifically "what if a run on USDC causes Standard Bank of New York to collapse?" The bank is part of the legitimate, regulated economy. The regulators should be insulating the real economy from cryptocurrency scams and gambling.
- woah 4y agoIf people wanted to get their money out and SBNY had somehow misplaced it, it would seem like the “scam” was the “legitimate, regulated” SBNY, not “cryptocurrency”
- FabHK 4y agoIn the good old regulated economy, individual depositors of a bank are protected by the FDIC (up to a certain level), and have no reason to engage in a bank run. Now, if all those individual depositors instead give their money to some unregulated entity (USDC), and that unregulated entity gives $50 bn to a bank, and then one day turns around and says to the bank "hey, I'd like my $50 bn back", then the bank might not have that much at hand right now. And since the unregulated entity is not covered by the FDIC, individual investors might have an incentive to engage in a bank run.
- deleted 4y ago[deleted]
- throwaway744678 4y agoIsn't there some kind of regulation to prevent a bank to be that much exposed to a single customer?