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I think the author is just vastly over-reaching by claiming the regulations around the crypto backed asset is "robust" vs the other being "haphazard". Financial

I think the author is just vastly over-reaching by claiming the regulations around the crypto backed asset is "robust" vs the other being "haphazard". Financial regulations are largely created in response to situations rather than tabula rasa. The context is that crypto assets are a scam and people constantly got scammed with them, so NYDFS has stepped in and basically said "You know all those practical considerations we've made surrounding reasonable approaches to holding people's money? You get the benefit of none of them". It's much more economically efficient to allow institutions like Paypal do something a little bit smarter than just sit on the money, but there has to be a consideration of risk vs efficiency. What's happened with NYDFS is crypto companies have been so bad that they've basically lost all privileges that make the operation efficient. Paypal is not a bank. Customers who use it as a bank risk losing some or all of their money. That's absolutely true. But Paypal is pretty clear that money exists in it's system as part of a way of transfering it, not as the equivalent of sitting in a bank. All the major risks of money being in paypayl is that you get scammed sending the money to the wrong person etc.

darkerside 3y ago
I don't see the overreach. Paypal, as a party that primarily transfers money, is not being held to the same standards as a bank, but is effectively operating the same way in terms of the types of risk it is taking on with the money it holds. Calling that haphazard seems reasonable to me. No, they probably aren't holding as much of most any individual person's money as a traditional bank, but that doesn't mean the regulations aren't haphazard, it just means the downside risk to each individual is reduced. We now have stablecoins that are being forced to operate as a stablecoin should. When someone buys crypto that claim to be pegged to the dollar, there should be essentially zero risk of price movement. It's not the digital equivalent of a savings account, it's the digital equivalent of cash. I didn't expect to feel sanguine about this development when I opened the article, but as it turns out, I do.
throw9away6 3y ago
Somehow PayPal is not a bank while actually being a bank. I hate our shitty regulatory system

darkerside 3y ago

I don't see the overreach. Paypal, as a party that primarily transfers money, is not being held to the same standards as a bank, but is effectively operating the same way in terms of the types of risk it is taking on with the money it holds. Calling that haphazard seems reasonable to me. No, they probably aren't holding as much of most any individual person's money as a traditional bank, but that doesn't mean the regulations aren't haphazard, it just means the downside risk to each individual is reduced. We now have stablecoins that are being forced to operate as a stablecoin should. When someone buys crypto that claim to be pegged to the dollar, there should be essentially zero risk of price movement. It's not the digital equivalent of a savings account, it's the digital equivalent of cash. I didn't expect to feel sanguine about this development when I opened the article, but as it turns out, I do.

throw9away6 3y ago

Somehow PayPal is not a bank while actually being a bank. I hate our shitty regulatory system