10 ms·
Regulators Close New York’s Signature Bank
- TurkishPoptart 4y agoHow to profit off of this?
- dzink 4y agoThis is the third USDC partner bank to close this week, they only have 4 others left. High interest rates have weakened regular bank liquidity and the swings of stablecoin runs are toppling them like dominoes. It is clear as day now that Crypto/stablecoins cannot bank in regular US banks and needs its own bank. Crypto is essentially a DDOS attack on a regular bank due to bank liquidity rules in the US. Normal banks are designed to hold a large spread of small accounts and thus keep a limited % of liquidity to cover withdrawal needs which are relatively low % for that type of customer. The rest of the cash is invested and produces a return. Crypto has huge liquidity demands on small timeframes, especially when there are runs on exchanges. If normal banks are designed to move slowly and carefully to remain good stuarts of their depositors, crypto essentially trips that infrastructure with big swings.
- georgyo 4y agoSignature Bank seems like it was a crypto bank... If they used bigger banks, this would less likely be a problem... Or a much bigger problem. These banks have less than 250 billion, while Chase has 3.5 trillion.
- Gys 4y agoSo these 'crypto banks' would not be able to make any profits from the assets they are holding? Which would mean they have to charge some fees instead?
- thrill 4y agoNo "stablecoin" is ever going to actually be stable and fully liquid when there's multiple middlemen with their own agendas between the coin and the eponymous backing.
- wmf 4y agoAnd why would we want those middlemen anyway? Let's just have Fedcoin and be done with it.
- Canada 4y agoThe Fed will never release Fedcoin.
- kshacker 4y agoFedCoin is known as US Dollar. Why does it need to be called coin or be mined?
- Canada 4y agoTo me, "FedCoin" implies or suggests an electronic bearer instrument that is issued by the Federal Reserve. It wouldn't be mined, it would be minted and burned (aka created and destroyed). The USD is not currently offered in this format and I don't believe the Fed has any intention of doing so.
- basch 4y agoUSD is offered in this format. Taxation is the burn. They print/mint money through lending and remove/burn it from circulation by taxation. Which is why MM theory is all about all government spending coming from the creation side, and that taxation never leads to spending.
- junofan 4y agoThat’s just not factual. Even if it were, the Fed’s mandate is to manage the money supply independently from the political process.
- johngladtj 4y ago
- ipv6ipv4 4y agoSo a bank collapses because of zero risk management, and over exposure to speculative bubbles with market runs, and your conclusion is that good steward regulations are the problem?
- monero-xmr 4y agoSVB collapse had zero to do with crypto. You must not have read any of the news - it was a classic bank run.
- etc-hosts 4y agoI am not convinced this is true.
- aardvarkr 4y agoCite your sources or go away with your FUD
- arcanemachiner 4y agoPeople are allowed to have opinions.
- geuis 4y agoThe state of your conviction has little to do with the widely reported truth of the actual state of matters.
- monero-xmr 4y agoCircle was 1% of SVB’s assets. First there was a run on the (traditional, regulated) SVB because VCs caught a whiff of desperation and told all their portfolio companies to exit. Next came the run on USDC because $3 billion was locked inside SVB. Contagion spreading to non-mega banks because the federal government told them to buy “risk free” treasuries and mortgage backed securities. Rates go up and suddenly if they need cash the bonds must be sold at a loss. To blame a problem caused by central banking on crypto is absurdity to the highest level.
- afavour 4y ago> Thursday, 9 AM: in one chat with 200+ tech founders (most in the Bay Area), questions about SVB start to show up. > 10 AM: some suggest getting the money out of SVB for safety. Only upside. No downside. https://twitter.com/torrenegra/status/1634573234187407369 https://twitter.com/torrenegra/status/1634573234187407369 Anecdote to be sure but it's fascinating to read the account of people organising a bank run.
- phinnaeus 4y ago> good stuarts good stewards?
- babyshake 4y agoIt seems that the solution might be stablecoins like USDC implementing a policy that you are guaranteed one USD for every USDC you redeem within a maximum of a few business days, and under normal conditions it will realistically be much, much faster. If you want to expedite the redemption you can do so for a lower redemption rate. The idea would be that this discourages panic runs. A half baked concept as I've described it, but something roughly along these lines should work, I'd think.
- mike_d 4y ago> It seems that the solution might be stablecoins like USDC implementing a policy that you are guaranteed one USD for every USDC you redeem within a maximum of a few business days That is how USDC works. You can redeem USDC for USD 1:1 from any CENTRE Consortium member (Currently Circle and Coinbase).
- deepsun 4y ago> Crypto is essentially a DDOS attack on a regular ban. A "regular" bank moves more money a day than the whole cryptocurrencies market is worth. It'sa too tiny blip on their radar to DDOS them.
- noah_buddy 4y agoBanks move a trillion a day? Granted you could be right in about a month.
- T-A 4y agoTurnover in global foreign exchange (FX) averaged more than $7.5 trillion per day in April 2022 https://www.bis.org/publ/qtrpdf/r_qt2212f.htm https://www.bis.org/publ/qtrpdf/r_qt2212f.htm
- Agingcoder 4y agoDoes this take netting into account? Bank a owes 100 usd to bank b, bank b owes 100 usd to bank a, net bank flow is zero.
- mike_d 4y agoCrypto has roughly $70 billion a day in total transaction volume. Visa's credit/debit processing network by comparison does about $34 billion a day. (The Visa number is from 2020, I couldn't quickly find a more recent number)
- deleted 4y ago[deleted]
- rocket_surgeron 4y agoTraders trading amongst themselves isn't really a transaction. It's a bunch of bros moaning "arbitraaaaaaaage" while trying to rip each other off. The amount of crypto used for actual goods and services probably amounts to about $3.50 per day. $3.50 is much less than $34 billion
- paulpauper 4y agowow...imagine being a shareholder of Signature Bank or SVB and surviving 2007-2009 , surviving Covid , only to fail in 2022 because of inflation?
- karlzt 4y ago>> fail in 2022 2023
- ksherlock 4y agoOn the other hand, over the past 2 years with ZIRP and the money printer working overtime, money was pumped into stonks, startups, and crypto. SVB went from $50 billion in deposits to $200 billion. Signature went from $40 billion to $85 billion. Long COVID did kill them.
- hgdubcc 4y agoIt’s almost as if you’re an obscure bank built on crypto deposits you shouldn’t be a bank at all.
- snshn 4y agoThe title should be "CBDC is out of alpha, undergoing beta testing". Strap yourselves in, boys and girls.
- jhanschoo 4y agoIf you have a witty or snarky point to make, please also elaborate in a later sentence to make explicit the assumptions that make your witty point witty, for those that are out of the loop.
- astrange 4y agoThey have a crazy person conspiracy theory, so it only works if they don't explain it.
- rippercushions 4y agoContext: One week ago, there were precisely two US banks serving crypto companies, Silvergate and Signature. As of today there are zero.
- EGreg 4y agoThey always attack Chinese "ghost cities" and Chinese "real estate bubble / Evergrand" and Chinese "central planning" ... But in fact, USDT and Binance are kicking while USDC and US Banks are starting to wobble. And it has to do with the irresponsibility of the central planners HERE in the USA (the Fed raising interest rates from 0.38% to 5% in a year!) https://www.investing.com/news/cryptocurrency-news/binance-ceo-mocks-critics-as-two-us-banks-crumble-within-a-week-3028065 https://www.investing.com/news/cryptocurrency-news/binance-c... Seriously, my theory is (different from the Austrians) that the Fed creates the problems and depressions mostly by raising interest rates. Instead, keep them at zero and let the market figure things out. I am fine with printing money as long as you raise taxes to remove it from the system. Raising interest rates is far worse and a depression is far worse than any inflation. https://www.bostonglobe.com/2022/09/21/opinion/fed-wants-you-lose-your-job/ https://www.bostonglobe.com/2022/09/21/opinion/fed-wants-you... Well, I guess somehow the reputation of USA of being an "economically free" country versus China lets them get away with central planning and soon the CBDCs and the national IDs for everyone. Not that I like that in China either!
- FpUser 4y ago>"far worse than any inflation." In 1923 the exchange rate has reached 1 trillion DM for 1USD. We all know how it had ended.
- EGreg 4y agoNearly every hyperinflation example (there are very few, in fact) has something additional to that stuff. In the case of Weimar Germany, there was the little matter of THE VERSAILLES TREATY that required them to endlessly pay war reparations and punitive payments in gold. Britain told France to cut it out, but France was mad enough at the Germans that they continued. This led to the rise of the Nazis and WW2. https://www.history.com/news/treaty-of-versailles-world-war-ii-german-guilt-effects https://www.history.com/news/treaty-of-versailles-world-war-... You should read more economic viewpoints, such as Walter Mosler on hyperinflations: https://moslereconomics.com/wp-content/uploads/2020/11/Weimar-Republic-Hyperinflation-through-a-Modern-Monetary-Theory-Lens.pdf https://moslereconomics.com/wp-content/uploads/2020/11/Weima... Oh, and meanwhile there was a "free money miracle" going on in nearby Austria, and clearly did not lead to hyperinflation, quite the opposite: everyone paid off their taxes due to the demurrage of the free money... keep in mind this was while all around them there was a growing depression... even Mises institute grudgingly agrees! https://mises.org/library/free-money-miracle https://mises.org/library/free-money-miracle
- cpncrunch 4y agoAnother consequence of political lobbying against Dodd-Frank, ironically by Frank himself (who was on the board of Signature bank)? https://slate.com/news-and-politics/2018/05/barney-frank-was-getting-paid-by-signature-bank-when-he-said-it-was-ok-to-deregulate-banks.html https://slate.com/news-and-politics/2018/05/barney-frank-was...
- otterley 4y agoDodd-Frank has nothing to do with why these banks have failed.
- cpncrunch 4y agoThere seems to be a difference in opinion on this point. https://news.ycombinator.com/item?id=35116402 https://news.ycombinator.com/item?id=35116402
- otterley 4y agoYour link does not substantiate your claim; there's nothing in there that draws a causal link between the passage of Dodd-Frank and the failure of SVB. If you can point to a cogent argument from a reputable financial or legal analyst in a newspaper, magazine, or trusted source other than some chat board, that would be helpful.
- cpncrunch 4y agoCheck my comment. I never made any claim. I asked a question. I cant find any sources, but it is a very simple technical question and im surprised that it seems so difficult to answer.
- novolunt 4y ago[dead]
- nullc 4y agoThe JPM report that claims SIVB's position was unique also includes Signature bank in their figure on page 2. By their loss adjusted capital ratio chart signature was better off than all but 5 of the 20 listed banks.
- mtlmtlmtlmtl 4y agoAs someone who's not an expert in finance, it's impossible for me to tell how seriously to take various predictions in these threads, because almost none of them disclose their exposure, and so there's no way to distinguish between wishful thinking and sound analysis. So for all these non-disclosing multi-paragraph posts, they might as well just say "it'll be fine, trust me bro" from my point of view.