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Funny how the replies are full of people explaining how bank deposits work. An exchange is not a bank. They're a custodian that holds something on the customer'
by cheriot 4y ago
Funny how the replies are full of people explaining how bank deposits work. An exchange is not a bank. They're a custodian that holds something on the customer's behalf and facilitates trades. That crypto "exchanges" act like banks, but without any of the banking regulation we spent the last 100 years learning the hard way is why they keep failing.
My stock broker and the NYSE can't secretly sell my shares and loan out the proceeds. They just hold the stock.
That Crypto "exchanges" think of deposits as assets makes it clear they're more like a hedge fund than a bank or exchange.
- dragonwriter 4y ago> An exchange is not a bank. The hard distinctions between different types of financial institutions and their services, and most particularly the thing that makes every thing that holds money or other valuables on your behalf not effectively, like a (very sketchy) bank, are mostly a product of regulation.
- cheriot 4y agoYes, otherwise customers are just handing assets to someone and hoping for the best. That lack of assurance sets the stage for bank runs...
- mrep 4y ago> My stock broker and the NYSE can't secretly sell my shares and loan out the proceeds. They just hold the stock. Not in the business so I could be wrong but I believe they can loan shares to short sellers to sell and pocket the interest but they are also regulated which turns out is important.
- cheriot 4y agoThey need consent, but to your point it might be buried in some document. Some will provide compensation for it: https://www.interactivebrokers.com/en/pricing/stock-yield-enhancement-program.php https://www.interactivebrokers.com/en/pricing/stock-yield-en...