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Matt Leving from Money Stuff discussed it today (!). If exchanges provide leverage products to customers, they become banks (providing leverage, through funding
by guepe 4y ago
Matt Leving from Money Stuff discussed it today (!). If exchanges provide leverage products to customers, they become banks (providing leverage, through funding typically by other customer's deposit).
So bank runs are possible.
- arcticbull 4y agoAh will take a listen! Thanks!
- JumpCrisscross 4y ago> exchanges provide leverage products to customers Levine spoke about brokerages. When brokerages extend credit, they can be subject to run dynamics. Not exchanges.
- lordnacho 4y agoWhat happens if an exchange extends credit? There's a reason the perp exchanges have a fund, it's the capital that protects them from losing money on overleveraged customers. Or rather it's the rainy day fund that they lose out of when the delev happens. Not sure this is related though, mechanics of today are not clear to me from what I've been able to find.
- MrMan 4y agocrypto "exchanges" are almost all structurally identical to brokerages