These NYT words wont age well

As if…as if Wall Street’s future is not exactly the same as crypto’s review mirror.

Andrew Ross Sorkin email column, hopefully this snippet is within fair use.

How Wall Street’s biggest banks sidestepped the crypto meltdown
As Bitcoin prices have plunged and cryptocurrency start-ups have failed, Wall Street’s biggest banks and their wealthiest clients have barely taken a hit. Some have even managed to turn a profit on the collapse. In the great cryptocurrency blood bath of 2022, writes The Times’s Emily Flitter, Wall Street is winning.

Unlike in the 2008 crisis, the fortunes of Wall Street and Main Street have diverged. Plunging digital asset prices have left some retail investors with large losses. Lured by the promise of quick returns and astronomical wealth, many individuals bought new digital currencies or stakes in funds that held these assets. That’s not the case for most banks, which generally don’t own crypto or run funds that invest in it. Nor have they lent much into the emerging market for new money. That’s not to say the big banks are without problems: Rising interest rates and falling stock prices have limited the number of companies that want to do deals, leaving bankers idle. But when it comes to crypto, few see a risk of contagion — the chance of losses from digital money markets undermining the banks.

Wall Street banks did want to get into crypto, but international regulators wouldn’t let them. Last year, the Basel Committee on Banking Supervision, which helps set capital requirements for big banks around the world, proposed giving Bitcoin and other cryptocurrencies the highest possible risk weighting. If banks wanted to put those assets on their balance sheets, they had to offset the risk with at least the equivalent value in cash.

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As if…as if Wall Street’s future is not exactly the same as crypto’s review mirror.

I dunno, I’d say the cryptospace is learning about modern finance at warp speed. A traditional bank makes money by paying deposits a low rate of interest and then loaning the money out at a higher rate. Celsius business model was to pay depositors 17% and make loans at 1%. If that sounds too good to be true, why yes, yes it is. They couldn’t make it more obvious it was a scam if they changed the name to “Ponzi Network.” It worked great until they ran out of marks.

The article had a quote from one of Celsius Network’s victims wondering how the scam was legal. Well, the whole idea behind crypto is it operates outside the traditional banking system and its stifling regulations. Turns out, the regulations are there for a reason. They not only protect the consumers but help maintain trust in the banking industry by weeding out the worst of the actors.

https://www.nytimes.com/2022/07/05/business/dealbook/bitcoin…

Similarly, in the NFT space, the scam is to run a series of wash sales to make it appear the NFT price is increasing and mark buys it on the belief the price will go up. Wash sales for stocks are of course illegal for that reason, but you can do what ever you want in the cryptospace. Like I say, the cryptospace is learning about modern finance at warp speed. Also learning the hard way.

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Syke,

you are discussing a lot of different things. I am just saying Wall Street’s immediate future is going to look like Crypto’s today.

Yes there are plenty of wrongful things happening in the crypto world. I want nothing to do with those things.

There are plenty of wrongful things happening in the equities world. I do not invest in tobacco companies. Just saying they are profitable does not mean millions of people are not killed by the product.

Drinking sugar water might be worse.

It’s not only regulation that protected the banks. Few existing hedge funds suffered significant losses either. There was just no appetite to take on substantial short positions. There was a lot of market-making and venture capital activity though. The latter being completely unconscionable.

AD,

I am not a “player” or investor in the crypto world.

I am in the midst of setting up a company with partners in the NFT space.

The better corporate citizens in the space want the want regulations. It stops money ending up in nonsense. It will help build honest businesses.