Crypto/defi/etc is high risk and requires you to DYOR. If that makes you uncomfortable, this space may not be a good fit for you.
Because you've promised "investors," or at least made lots of strong statements that led them to believe, that you're letting cash sit in an account?
When I invest in a fund, and it says that it does X, but then secretly does Y because they believe it's obviously better, that's something between totally untrustworthy and outright fraud.
Investing in high quality short term commercial paper or treasuries is essentially the same or less risk vs. letting $XX billion sit in some bank account.
In accounting, these instruments are actually regarded the same as cash and called “cash equivalents”.
If they take the money and invest it in ‘good’ companies, that is too much risk to the underlying assets.
Though I’m American and could see foreigners not thinking US bonds were safe enough.
Part of Coinbase's implicit strategy is to become the "too big to fail" of the crypto space. And if its collapse would threaten to destabilize the broader financial system, the US gov absolutely would bail it out.
We've not reached that point yet (and hopefully never will), but it's important to understand the play here.
Unfortunately, a significant part of this risk free, high quality commercial paper was issued by Lehman. And that risk free, high quality commercial paper turned out to be worthless, causing the oldest money market fund to fail and forcing it to liquidate, at well below $1.
How do you do this when the parties involved are not transparent about their holdings and have a history of misleading investors? Go off of rumours? Given their history, why would I believe that USDC is actually holding short term commercial paper and not higher risk, higher return equities?
It is tricky situation. Consumers want assurances, protection but the crypto true believers abhor regulation and disclosure. Trust is difficult in this space and right now many people are speculators consumed by FOMO vs. rational individuals/institutions. No one knows how this will all play out.
We don’t say that because new spacecraft have a high risk of failure vs a 747 that there is a “major problem” with space exploration.