Meh. If you’re investing in crypto then you’re accepting the risks.
Comment on President Biden vetoes crypto custody bill
SteefLem@lemmy.world 5 months ago
“…approach to banks and crypto.
Specifically, the resolution targeted the SEC’s Staff Accounting Bulletin 121, which presents guidance around how banks can handle customers’ crypto assets — in effect, they must treat those assets as liabilities. Banking groups have criticized this approach as making it prohibitively expensive for them to handle crypto, while regulators argue it’s necessary to protect investors, particularly after the collapse of high-profile crypto companies like FTX.”
timbuck2themoon@sh.itjust.works 5 months ago
lefaucet@slrpnk.net 5 months ago
If I underatand correctly, you’re saying banks should be allowed to accept the risk of crypto market fluctuations and scams.
Unfortunately when banks lose bets, they effectivel hold the economy hostage until taxpayers bail them out.
Much better to tell them if they want to offer crypto holdings, they need to be able to cover total loss of it.
If that means banks can’t hold crypto, I won’t shed a tear.
timbuck2themoon@sh.itjust.works 5 months ago
No. I was referring to end users. But yes, I’d rather banks be barred from doing anything with it too if it means we’re never responsible for bailing them out.
We’re agreeing. I think i just worded it poorly.
workerONE@lemmy.world 5 months ago
A checking account is a liability to a bank because it must be prepared to pay out the balance if the account holder decides to withdraw. Forcing banks to treat crypto holdings as liabilities makes the bank evaluate their risk differently by holding more in reserves in order to be more prepared for a bank run
Tachikoma741@lemmy.today 5 months ago
This sounds good. To my understanding, banks in the US do not actually have to hold and money in reserve for it’s customers as of… 2020?
Hey I found the government posting! www.federalreserve.gov/…/reservereq.htm
workerONE@lemmy.world 5 months ago
Yeah that’s correct. It’s pretty wild that things work this way. Most people think that we still have fractional reserve banking, which is where the bank has $1 in reserve and they lend it out as a deposit into many borrower accounts or to other banks simultaneously. With no reserve requirement they can essentially loan money to borrowers that doesn’t exist. As long as banks have borrowers with good credit banks can loan any amount, crediting borrowers accounts with deposits which the borrowers can then withdraw as physical money. Banks want to avoid succumbing to a bank run where too many clients make withdrawals at the same time. But essentially they operate like a retail business that determines how many products to keep on hand in order to meet demand on any given day. Bank loans create both a credit (to the borrowers account) and a debit in the bank’s main ledger, the debit is a liability as we discussed, the bank must be prepared to pay.