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> Crypto is promising a financial system that has so far appeared to be much more resilient than the traditional system I strongly disagree with this. When SVB
by unregistereddev 3y ago
> Crypto is promising a financial system that has so far appeared to be much more resilient than the traditional system
I strongly disagree with this. When SVB failed, there was a system in place to insure some of the depositors' funds. The government chose to augment that by insuring all the depositors' funds. That was an unusual move, and then the banking system returned to normal when a better capitalized bank took over SVB's assets and liabilities. The bank failure cost those who invested in the bank. It cost the bank management. It did not cost the depositors.
When a crypto exchange fails, depositor funds are unrecoverable. There is no system to protect the depositors, no system to recover funds from the failed exchange.
While financial authoritarianism is imperfect, its rules are designed to reduce fraud and to reduce the impact of fraud on innocent bystanders.
- roenxi 3y ago> When a crypto exchange fails, depositor funds are unrecoverable. There is no system to protect the depositors, no system to recover funds from the failed exchange. That is why I'm anticipating that crypto will be a stronger ecosystem than the traditional financial sector. If we punish people for bad decisions, then by Darwinian logic the crypto ecosystem will not funnel capital towards the sort of idiot depositors who give Joseph Gentile their money. If they cared to check what their money was funding they could have seen this coming. The traditional finance system is protecting those people. That weakens it. Which has always been the strongest argument against governments handing out money to failed banks. They've been doing that for at least a decade and it means the financial system is shaky enough that it falls over when hit it with 5% interest rates!