How much had crypto endangered our banking system? I think a lot. T

[Samrob]

[lindysalsagal]

1. I never saw an upside to it, but then again, I'm not a criminal. Some made a quick profit

if they got the timing right. I don't like such risks. It should have been stopped, but still, it goes on. Allowing a 2nd currency is something a banana republic does. Of course it undermines your established currency.

[Blues Heron]

3. bitcoin is global

[lindysalsagal]

4. But we allow it to be traded here in gas stations.

[Blues Heron]

6. Anybody with a computer can trade it anywhere they want

[Blues Heron]

2. the big safe bank failed but bitcoin actually went up - which would you rather have had?

[canuckledragger]

5. The one that isn't a criminal scam.

Bitcoin is and always has been scam.

[lindysalsagal]

7. +1

[Blues Heron]

8. you would have lost your money then - the bank failed

[canuckledragger]

9. We would have lost our money in the criminal bitcoin scam eventually as well.

The big bank failed BECAUSE of investing in scams like bitcoin.

Bitcoin is a ponzi scheme.

[Blues Heron]

10. When is bitcoin going to fail then - its been 15 years already

imminently?

[canuckledragger]

11. You've been seeing quite a few exchanges fail in the past year alone.

And if you don't see the scam, then you're the mark, or...

[Blues Heron]

12. Bitcoin is just strong crypto, the internet, and free speech

people are free to decide what has value to them according to their risk tolerance.

The banks just took a huge credibility hit with this failure and bitcoin definitely came out on top. I think that is not lost on a lot of people.

[canuckledragger]

13. You're trying too hard and making too many excuses for the bitcoin scam.

I think we know why.

[Blues Heron]

18. I think with SVB vs BTC its

Bitcoin FTW

Has there ever been a Ponzi scheme with such intense scrutiny? It just keeps on going...

[womanofthehills]

16. If I had $3000 in bitcoin last month -

Today I would have $3900. Unfortunately, I only had $500 = $667. It goes down but always seems to go back up.

[womanofthehills]

14. Just wanted to buy a small amt of crypto last yr to possibly get into NFT's

Got Bitcoin & ETH

My original $500 has gone up & down but today it’s $667.

[Trenzalore]

15. There is a basic finance explanation

Treasuries are the most secure form of assets and banks are required to hold them as reserves.

3 years ago, T-bills were around 1%-2% interest rate. Today they are in the 4-5%. If you sell a T-bill from 3 years ago, you have to sell it at a discount (less than what you paid) to make up that a buyer could buy the same T-bill today with a higher interest rate.

This will show up on your financial statement as a loss if you sell or are required to sell before maturity which is what caused the run on Silicon Valley Bank

[tinrobot]

19. Exactly. Add in the herd mentality of Silicon Valley and you get a run on the bank.

SVB was stuck with those types of assets and couldn't sell quickly enough to stop the run.

No crypto involved.

[Trenzalore]

20. They are all loaded with them

If they get into a position where they need to liquidate these t-bills, they will report huge losses.

The Fed Chairman isn't managing banking risk very well, and a first-year finance student could foresee this risk.

[tinrobot]

17. But no explaination as to why?

I'm not a fan of crypto, but I'm also not seeing the connection between it and the recent bank failures.

Details would be welcome.

[FakeNoose]

21. Posted this story last night

https://www.democraticunderground.com/100217741129

David Cay Johnston (DC Report) goes into a few details on this story.

[mathematic]

22. The banking SYSTEM? Not much (yet). Individual banks? Yeah, a few.

One thing that people keep conflating is the failure of a few banks with the failure of the banking system. The banking system has not failed. Deposits are safe. The bank assets taking the big hit are creditworthy government bonds. They will be paid back. Bank shareholders will "suffer" lower profits at the banks that poorly managed the interest rate environment.

Silvergate (which hasn't failed but is winding down) and Signature are two crypto-heavy banks that suffered due to their crypto exposure. Neither of these banks are leading to contagion. Democrat Barney Frank, of Dodd-Frank, served on the board of Signature and thought that its shutdown was premature. I disagree, but the point is that the two biggest crypto banks have shut down their crypto operations and there has been no banking system fallout.

Crypto, if it allowed to grow, especially unregulated, could imperil the banking system. I think crypto "stable coins" (which act more or less like unregulated retail banks) need to be hit with a regulatory sledgehammer. Bitcoin itself is less a threat to the banking system but it needs to be regulated more because it's primary purpose is to evade the law and facilitate illegal transactions.