You think it's fishy and you have no way to know if something is going on behind the curtain at coinbase but you don't want regulation? Regulation is what lets you peek behind the curtain and know that Coinbase is or isn't doing something fishy.
1. Technology people are presented with a social/cultural/government situation that seems inelegant, irrational and overly complex.
2. They decide to "solve" that problem using technology.
3. Even with the new technology, it somehow appears everything is not miraculously better.
4. Technology people propose layering a few small social fixes on top of their technology to address the "minor issues" left by their brilliant technology.
5. They fail to realize all of their kludgy human-level patches on top of the technology are merely less-mature forms of the social structure they claimed to have replaced in step 2. Now we have an even less elegant, more irrational, more complex social institution, mixed with non-helpful technology.
6. Now the problem is not fun to work on any more (too much squishy inelegant human stuff), so they wander off to "solve" some other cultural malady.
No, there are many reasons why I do want regulation. I just try not to get too religious about any of my opinions, and that lets me still see some reasons why regulation can be a bad thing.
Let the market work this out. Coinbase exists to legitimize the industry. If they turn, someone will step in to take their place. Blockchain and crypto aren't going anywhere.
>If they turn, someone will step in to take their place.
There's a lot of stuff going on in that 'someone will step in' though. How many people lose their money when CoinBase turns? Do quick movers get out with all their BTC intact and slow movers go bitcoin-bankrupt? 'Someone will step in' may be an assurance to the long-term future of crypto but it says nothing to the fates of many of the individual investors who currently hold that crypto.
Now, in the world of large-scale personal finance and institutional investment, not many are going to risk redecorating the insides of their pants every few days. They're sticking with McDonalds, which may still cause some level of bowel décollage now and again, but in much safer, more predictable ways. I'm not saying that makes crypto a "fail", only that the next few months will really determine if it's going to be a future behemoth or a niche asset class that risk-tolerant portfolios occasionally take a piece of.
There are still edge cases, but capital ratio requirements and accounting standards, compared to none? Huge difference.
If <exchange> gets hacked, tough luck.
Update: By "everything" I mean not all kinds of financial instruments are insured by the FDIC. They do not cover mutual funds, annuities, bonds, etc. They cover pretty much just cash and cash equivalents.
None of this applies to securities. Presumably you could insure them. It's not obvious to me from first principles that the cost of insurance would wipe out any incremental appreciation value, but I've never heard of anyone doing this so probably it does.
Not as clear cut as you think it is. If the government insured bitcoin 'for free' you would also see a major surge in confidence.
Cryptocurrencies certainly have their problems but the last 10 years have been a case study in how horrible fiat currencies and the current global financial system really is. Japan's central bank has printed so much money they own something like 65% of all the ETF's on the Nikkei.
China, EU, U.S. and Japan have printed something like $16 trillion dollars since the crash. If banks leverage that at a conservative 12X that's $192 trillion. The world is awash in fantasy money.
I agree, however, that our legal system lacks an adequate punishment for companies that allow such poor governance practices. I don't feel it is necessary to throw people in jail for it, though.
In my opinion, we ought to be able to convict a company of "governance failure" which would carry the concomitant punishment of mandatorily ejecting all officers and directors without severance and without the ability to exercise options.
https://www.propublica.org/article/us-attorney-asks-court-to...
The crash was the result of speculation and improper risk assessment, followed by the inevitable correction.
to say that 2008 happened as proof that these regulations don't work is kind of erroneous, as many of the regulations were revised or implemented as a result of that crash, to avoid it happening again.
And in return, each bank account cost of regulatory compliance is pretty large.
Im not saying all bank regulations are bad, but its not like bank regulation is an example of policy success.