27 ms·
What if you have 3 billions to deposit, like Circle ? Open 1200 accounts in 1200 different banks ?
by popol12 4y ago
What if you have 3 billions to deposit, like Circle ? Open 1200 accounts in 1200 different banks ?
- Ekaros 4y agoIf you have 3 billion deposits, why not have let's say 3 different accounts with billion each? They don't cost that much money. And then even if one bank has system failure preventing transactions, you could have two others working. Or even some reasonable amount like one with each top 10 in users. With some amount of money in each allowing customers even better interaction.
- muzz 4y agoIs your goal to eliminate risk, or to mitigate it? If they had deposited that 3B in, say two banks rather than one, they'd have 1.5B in that other bank
- ZachPruckowski 4y agoThey actually had like $12B split across 5 or 6 banks. But yeah, they definitely could've split it better. "No more than $1B per bank" seems like an easy rule, and even maxing at $500M could be doable.
- deleted 4y ago[deleted]
- downvotetruth 4y agoYou want to play at a risky bank, you get to pay for risky insurance.
- isignal 4y agoJust buy us treasuries. There is no rule that you have to have cash at a bank.
- dlubarov 4y agoThey did have ~77% of collateral in T-bills. I do wonder why that wasn't even higher though.
- aaomidi 4y agoOpen 4 banks and you’ll lose at most 25%? Use treasures bills if you’re that concerned.
- oarabbus_ 4y agoLet's not act like Circle's options were either to put 3 billion in one bank, or open 1200 accounts at 1200 banks. -Purchase high-limit cash insurance from a Reinsurer like Lloyds of London or Berkshire Hathaway up to their underwriting limit, perhaps $100M. Do this across 4-5 different banks with 4-5 different reinsurers. -Put the remaining $2-2.5B into mixed US Treasuries of varying maturities
- dlubarov 4y agoThey did already have 77% of the collateral in short-term T-bills, and the 23% in cash was spread out across multiple banks. They held $3.3bn at SVB, but that's out of $42bn total.
- oarabbus_ 4y agoSo then it sounds like they probably had 10-15 banks (entirely reasonable for them to be expected to open this many accounts at unique banks, given their business model) which is a far cry from the 1200 OP complained about. If your entire business model revolves around moving multiple billions of dollars via an asset-backed stablecoin model, it's reasonable to expect you to have dozens of bank accounts, in at least 3 time zones, and likely more. I don't know why people (not saying you specifically) seem to have this expectation any entity should be able to deposit billions of dollars risk-free at a single institution. Ironically it's often the same people who can intuitively grasp why to hold your crypto across multiple wallets, who cannot fathom that infinite $ cannot be deposited at a single bank, without risk. If you're leaving 7 to 9+ figures in a single account, then either buy custom insurance, or only do business with banks which offer excess insurance.
- CyanBird 4y agoYou can buy specific insurance in case of bank defaults. That's what large businesses do on the regular, it is not a new or strange thing People here simply decided to not inform themselves or seek appropriate assistance and therefore got bitten
- subsistence234 4y agotwo accounts at two different banks already decreases the expected loss by 45% or so. (not 50%, because of contagion)