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I think these Bitcoin exchanges need to be regulated the same way banks are, or we are going to see a repeat of the early days of banking where banks would disa

I think these Bitcoin exchanges need to be regulated the same way banks are, or we are going to see a repeat of the early days of banking where banks would disappear overnight along with people's life savings.

notRobot 4y ago
We could even call it something else! Like, uh, cash!
- _the_inflator 4y ago
  This is part of the fraud: Convert fiat into something virtual, steal the virtual stuff, convert it back into money. Rinse and repeat. So everybody can say: Hey, it was crypto, not money.
- kodah 4y ago
  Having something cash-like that's digital I think would be good. Bitcoin ain't it though.
  - deleted 4y ago
    [deleted]
  - twblalock 4y ago
    We already mostly have that. Most of the US dollars that exist are already digital -- numbers in a bank account, only some of which is backed by actual dollar bills. It is trivially easy to use them to pay for things or transfer them to other accounts, and they can easily be converted to/from paper money in reasonable amounts. What we have now is fine. I don't see any benefit to making our existing currencies more "digital" than they are.
    - mypastself 4y ago
      The commenter you’re responding to was specifically talking about digital cash, not digital currency. Properties of cash are distinct from other forms of money in specific ways. “Ease” of conversion from one to the other doesn’t make them identical.
      - twblalock 4y ago
        I haven't yet seen anyone demonstrate a meaningful distinction between "digital currency" and "digital cash" that actually matters for how people use money.
        mypastself 4y ago
        Anonymity (or pseudonimity) is a key appeal of cash as opposed to other forms of money. Combined with the ease of use of digital payments, I can completely understand the attraction that the original comment was referring to.
        Xelynega 4y ago
        Except that the lack of anonymity in payments is one of the main features of blockchains. Which is it? Is digital cash a public ledger or an anonymous payment system?
        RinTohsaka 4y ago
        Monero bridges the two of these things together nicely.
        mypastself 4y ago
        The ledger is public, but the users’ identity needn’t be. And as the other commenter noted, different blockchains use different approaches, some of which do offer full anonymity. You’ll also notice that I said “anonymity (or pseudonymity)”. But that’s immaterial to the discussion. The original question was whether or not the idea of digital cash (regardless of implementation) has any value.
  - Aaronstotle 4y ago
    Monero does the job fairly well, the only issue is that the floating exchange rate can make it difficult. A stable-coin with Monero's properties would do well I think.
    - tsimionescu 4y ago
      A stable coin requires proof of who owns the actual coins, so that the clubs can be redeemed for real dollars. That would defeat the whole point of Monero. There is no way to make an anonymous stable coin, as long as owning and transferring dollars requires KYC and AML.
      - Kranar 4y ago
        Doesn't require it no. DAI is a stable coin that has held its peg to USD for something like 5 years now and there's no proof of ownership involved. https://coinmarketcap.com/currencies/multi-collateral-dai/ https://coinmarketcap.com/currencies/multi-collateral-dai/
        deleted 4y ago
        [deleted]
        tsimionescu 4y ago
        We'll see how well it maintains its peg if/when ETH and BTC go down to nothing. Either way, as far as I understand it, the protocol keeping DAI stable requires participants to be able to tell how much money has been deposited by a particular wallet (so that the agreed upon collateral requirements can be enforced). If that understanding is correct, then DAI requires pseudonimity instead of anonimity, and so can't have any of Monero's strict privacy guarantees.
danaris 4y ago
Correct me if I'm wrong, but haven't we already seen a bunch of cryptocurrency companies of various types do exactly that? (It's possible none of them have been exchanges; I admit I only pay peripheral attention to that sphere.)
- artursapek 4y ago
  It literally just happened with FTX, which was off-shore exchange that wouldn't have been under the jurisdiction of American regulators. Ironically, a lot of Americans were using VPNs to trade there and lost their savings. Why? Because FTX.US is regulated so heavily that it isn't as attractive of a product.
- dragonwriter 4y ago
  > It's possible none of them have been exchanges There have been exchanges, as far back as MtGox, and as recently as FTX and FTX.US.
dragonwriter 4y ago
> I think these Bitcoin exchanges need to be regulated the same way banks are, or we are going to see a repeat of the early days of banking where banks would disappear overnight along with people's life savings. What is the gift of predicting events that have already occurred called?
- worik 4y ago
  > What is the gift of predicting events that have already occurred called? Learning from your mistakes.
- AnimalMuppet 4y ago
  > What is the gift of predicting events that have already occurred called? Retroactive precognition?
  - EamonnMR 4y ago
    Recognition
LatteLazy 4y ago
The fact the SEC simultaneously insists it has the right to regulate crypto AND refuses to do the basic, vanilla, widely supported stuff like require brokers to segregate funds is pretty damning.
- TedDoesntTalk 4y ago
  How can they do that when these exchanges are based outside the US (except for Coinbase)
  - joenathanone 4y ago
    Correct me if I am wrong, but as I understand it as long as they do business in the US then they are accountable to US laws/regulations.
    - AlexandrB 4y ago
      Using the example of FTX, only FTX.us officially operated in the US (and was supposedly run more like a real bank), but there was always a "wink, wink, nudge, nudge" hint that if you want the good stuff you should go around the geoblocking and deal with FTX proper. The other interesting element is that the most vocal crypto backers, often for ideological reasons, want to deal with this completely unregulated system that crypto has created. If the SEC had intervened before FTX collapsed, I'm sure you would hear cries of "authoritarianism" and "fiat banks are scared" from the usual suspects. Perhaps we should let these people have what they want - consequences and all - and just limit the ability to buy Super Bowl commercials in regulated markets for unregulated products.
KrakenEng 4y ago
Exchanges aren't banks and shouldn't act like banks. Banks are allowed to take deposits and lend then out, ie they don't need 100% reserves. Exchanges should be required to hold at least 100% reserves. FTX collapsed, in part, because they weren't maintaining reserves. Instead they gambled with customer money.
- jacquesm 4y ago
  FTX collapsed, in part, because they were acting like banks by lending out the funds they were entrusted with and leveraging them.
  - JumpCrisscross 4y ago
    > FTX collapsed, in part, because they were acting like banks by lending out the funds they were entrusted with and leveraging them This had basically nothing to do with how FTX collapsed. It collapsed because they stole the money. They may have papered up the theft as a loan to Alameda. But that wasn't done consistently, and was ad hoc rationalization of plain-vanilla theft.
    - jacquesm 4y ago
      That's fair, the loans were a figleaf for theft. But in their minds they may have thought that they'd pay it all back and nobody would notice. People that steal are pretty weird when it comes to rationalizing what they are doing. I've had a bunch of people steal 100's of thousands from a gas station I owned. They would take it to the casino, bet heavily, lose everything and then do it again all in the hope that they would win, pocket the winnings and then put back the original amount. Still bugs me 16 years later.
- Xelynega 4y ago
  All crypto exchanges are banks, and shouldn't be called exchanges Exchanges should be required to hold 100% reserves in the deposit currencies of their users if they want to be called exchanges, but that would require regulations to be enforced that don't even exist yetm
jacquesm 4y ago
Why use the future tense when you can use the past and the present?
mianos 4y ago
There are fully regulated and big five audited crypto exchanges that operate fully within the appropriate laws. They don't trade with client funds. They are not popular as they require annoying banking level KYC and are very limited by regulation as to who they can deal with. In many places, only audited high net worth individuals. These are not the places crypto-bros trade on as the fees are not subsidised by house trading or self issued coins.
- mvkel 4y ago
  There are? Last I heard, none of the big five will touch crypto
  - mianos 4y ago
    I know first hand PWC does. :) I am not sure why an auditor would not touch crypto. It should be the opposite. Any normal company that operates in financial markets should have normal company accounting and normal auditing. The issues at the moment pretty much stems from people thinking 'crypto' should be different.

notRobot 4y ago

We could even call it something else! Like, uh, cash!

_the_inflator 4y ago
This is part of the fraud: Convert fiat into something virtual, steal the virtual stuff, convert it back into money. Rinse and repeat. So everybody can say: Hey, it was crypto, not money.
kodah 4y ago
Having something cash-like that's digital I think would be good. Bitcoin ain't it though.
- deleted 4y ago
  [deleted]
- twblalock 4y ago
  We already mostly have that. Most of the US dollars that exist are already digital -- numbers in a bank account, only some of which is backed by actual dollar bills. It is trivially easy to use them to pay for things or transfer them to other accounts, and they can easily be converted to/from paper money in reasonable amounts. What we have now is fine. I don't see any benefit to making our existing currencies more "digital" than they are.
  - mypastself 4y ago
    The commenter you’re responding to was specifically talking about digital cash, not digital currency. Properties of cash are distinct from other forms of money in specific ways. “Ease” of conversion from one to the other doesn’t make them identical.
    - twblalock 4y ago
      I haven't yet seen anyone demonstrate a meaningful distinction between "digital currency" and "digital cash" that actually matters for how people use money.
      - mypastself 4y ago
        Anonymity (or pseudonimity) is a key appeal of cash as opposed to other forms of money. Combined with the ease of use of digital payments, I can completely understand the attraction that the original comment was referring to.
        Xelynega 4y ago
        Except that the lack of anonymity in payments is one of the main features of blockchains. Which is it? Is digital cash a public ledger or an anonymous payment system?
        RinTohsaka 4y ago
        Monero bridges the two of these things together nicely.
        mypastself 4y ago
        The ledger is public, but the users’ identity needn’t be. And as the other commenter noted, different blockchains use different approaches, some of which do offer full anonymity. You’ll also notice that I said “anonymity (or pseudonymity)”. But that’s immaterial to the discussion. The original question was whether or not the idea of digital cash (regardless of implementation) has any value.
- Aaronstotle 4y ago
  Monero does the job fairly well, the only issue is that the floating exchange rate can make it difficult. A stable-coin with Monero's properties would do well I think.
  - tsimionescu 4y ago
    A stable coin requires proof of who owns the actual coins, so that the clubs can be redeemed for real dollars. That would defeat the whole point of Monero. There is no way to make an anonymous stable coin, as long as owning and transferring dollars requires KYC and AML.
    - Kranar 4y ago
      Doesn't require it no. DAI is a stable coin that has held its peg to USD for something like 5 years now and there's no proof of ownership involved. https://coinmarketcap.com/currencies/multi-collateral-dai/ https://coinmarketcap.com/currencies/multi-collateral-dai/
      - deleted 4y ago
        [deleted]
      - tsimionescu 4y ago
        We'll see how well it maintains its peg if/when ETH and BTC go down to nothing. Either way, as far as I understand it, the protocol keeping DAI stable requires participants to be able to tell how much money has been deposited by a particular wallet (so that the agreed upon collateral requirements can be enforced). If that understanding is correct, then DAI requires pseudonimity instead of anonimity, and so can't have any of Monero's strict privacy guarantees.

danaris 4y ago

Correct me if I'm wrong, but haven't we already seen a bunch of cryptocurrency companies of various types do exactly that? (It's possible none of them have been exchanges; I admit I only pay peripheral attention to that sphere.)

artursapek 4y ago
It literally just happened with FTX, which was off-shore exchange that wouldn't have been under the jurisdiction of American regulators. Ironically, a lot of Americans were using VPNs to trade there and lost their savings. Why? Because FTX.US is regulated so heavily that it isn't as attractive of a product.
dragonwriter 4y ago
> It's possible none of them have been exchanges There have been exchanges, as far back as MtGox, and as recently as FTX and FTX.US.

dragonwriter 4y ago

> I think these Bitcoin exchanges need to be regulated the same way banks are, or we are going to see a repeat of the early days of banking where banks would disappear overnight along with people's life savings. What is the gift of predicting events that have already occurred called?

worik 4y ago
> What is the gift of predicting events that have already occurred called? Learning from your mistakes.
AnimalMuppet 4y ago
> What is the gift of predicting events that have already occurred called? Retroactive precognition?
- EamonnMR 4y ago
  Recognition

LatteLazy 4y ago

The fact the SEC simultaneously insists it has the right to regulate crypto AND refuses to do the basic, vanilla, widely supported stuff like require brokers to segregate funds is pretty damning.

TedDoesntTalk 4y ago
How can they do that when these exchanges are based outside the US (except for Coinbase)
- joenathanone 4y ago
  Correct me if I am wrong, but as I understand it as long as they do business in the US then they are accountable to US laws/regulations.
  - AlexandrB 4y ago
    Using the example of FTX, only FTX.us officially operated in the US (and was supposedly run more like a real bank), but there was always a "wink, wink, nudge, nudge" hint that if you want the good stuff you should go around the geoblocking and deal with FTX proper. The other interesting element is that the most vocal crypto backers, often for ideological reasons, want to deal with this completely unregulated system that crypto has created. If the SEC had intervened before FTX collapsed, I'm sure you would hear cries of "authoritarianism" and "fiat banks are scared" from the usual suspects. Perhaps we should let these people have what they want - consequences and all - and just limit the ability to buy Super Bowl commercials in regulated markets for unregulated products.

KrakenEng 4y ago

Exchanges aren't banks and shouldn't act like banks. Banks are allowed to take deposits and lend then out, ie they don't need 100% reserves. Exchanges should be required to hold at least 100% reserves. FTX collapsed, in part, because they weren't maintaining reserves. Instead they gambled with customer money.

jacquesm 4y ago
FTX collapsed, in part, because they were acting like banks by lending out the funds they were entrusted with and leveraging them.
- JumpCrisscross 4y ago
  > FTX collapsed, in part, because they were acting like banks by lending out the funds they were entrusted with and leveraging them This had basically nothing to do with how FTX collapsed. It collapsed because they stole the money. They may have papered up the theft as a loan to Alameda. But that wasn't done consistently, and was ad hoc rationalization of plain-vanilla theft.
  - jacquesm 4y ago
    That's fair, the loans were a figleaf for theft. But in their minds they may have thought that they'd pay it all back and nobody would notice. People that steal are pretty weird when it comes to rationalizing what they are doing. I've had a bunch of people steal 100's of thousands from a gas station I owned. They would take it to the casino, bet heavily, lose everything and then do it again all in the hope that they would win, pocket the winnings and then put back the original amount. Still bugs me 16 years later.
Xelynega 4y ago
All crypto exchanges are banks, and shouldn't be called exchanges Exchanges should be required to hold 100% reserves in the deposit currencies of their users if they want to be called exchanges, but that would require regulations to be enforced that don't even exist yetm

jacquesm 4y ago

Why use the future tense when you can use the past and the present?

mianos 4y ago

There are fully regulated and big five audited crypto exchanges that operate fully within the appropriate laws. They don't trade with client funds. They are not popular as they require annoying banking level KYC and are very limited by regulation as to who they can deal with. In many places, only audited high net worth individuals. These are not the places crypto-bros trade on as the fees are not subsidised by house trading or self issued coins.

mvkel 4y ago
There are? Last I heard, none of the big five will touch crypto
- mianos 4y ago
  I know first hand PWC does. :) I am not sure why an auditor would not touch crypto. It should be the opposite. Any normal company that operates in financial markets should have normal company accounting and normal auditing. The issues at the moment pretty much stems from people thinking 'crypto' should be different.