5 ms·
Those assets are not Binance's to "lose".
by codehalo 4y ago
Those assets are not Binance's to "lose".
- mouse_ 4y agoEvery central bank, incl. Wells Fargo, Bank of America, Citigroup etc. utilizes fractional reserve.
- webkike 4y agoThose are banks, not crypto exchanges. Fundamentally different. Additionally, fractional reserve banks are FDIC insured up to $250,000 of an account.
- dantheman 4y agoAnd fractional reserve banking is just legalized fraud. Demand deposits should not be loaned out.
- babypuncher 4y agoI could maybe understand the argument that fractional reserve banking is fraud, if it weren't for the fact that deposits are legally required to be insured by the bank.
- mouse_ 4y agoIn 1974, FDIC insurance backed up to $100,000, or almost three median new houses sold that year. Now, it is $250,000, or just a little over half the median price of a new home. https://fred.stlouisfed.org/series/MSPNHSUS https://fred.stlouisfed.org/series/MSPNHSUS The value of that insurance has gone down significantly over time because of inflation.
- webkike 4y agoThat does not actually indicate anything about the insurance limit not matching inflation because housing prices are not necessarily flat. In fact they are not. However, the fdic insurance limit is indeed worth less now, but most people don’t even have $5,000 in the bank. The mean bank account balance is $40,000 according to a quick Google search.
- babypuncher 4y agoThis is all true, however I don't think very many people keep $100,000, let alone $250,000 in their bank account. There are far more lucrative places to park your money.
- xiphias2 4y agoThe main difference is that they haven't (yet) secured a banking license. But they were not far from it, FTX bought a U.S. bank that it probably wanted to use for legal fractional reserve.
- irjustin 4y agoit's "Assets Under Management" and every bank has this number as a KPI, which directly affects their top+bottom line. So it is to "lose" but it's not the same.