Comment by wruza | Hacker News Reader

Comment by wruza | Hacker News Reader

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A worrisome title.

https://www.businesswire.com/news/home/20230109005186/en/

The Company expects minimal financial impact from the exit of this vertical. MCB currently has four active institutional crypto-asset related clients that in the aggregate currently account for approximately 1.5% of total revenues and 6% of total deposits. MCB’s relationships with these clients are limited to providing debit card, payment and account services.

The Company has no loans outstanding to any of these clients, does not hold crypto-assets on its balance sheet and does not market or sell crypto-assets to its customers.

Mark R. DeFazio, President and CEO of MCB. “Crypto-related clients, assets and deposits have never represented a material portion of the Company’s business and have never exposed the Company to material financial risks.

Seems like this experiment never brought anything but account maintenance fees and they simply revised regulatory risks after FTX noise. A “deep liquidity” which was left unused for years.

But “Banks Are Fleeing” makes a better headline indeed.

A few years ago crypto often had large jumps from deals like these, not so much because of the immediate affect but more because it implied much larger growth was on the horizon. That seemed reasonable at the time, and the reverse seems reasonable now.

If large financial institutions don't want to touch crypto, that severly limits the foreseeable upside for the industry.

Interest in crypto comes in cycles, and with each new cycle there are more incumbents that want to get involved. This bear market may have been particularly worrying for the industry, but I'm confident that in 5-10 years from now large financial institutions will again want to incorporate crypto. The networks behind these currencies are too resilient and the upside is too high to avoid.

Why 5-10 years? Hype cycle, or do you think there will be changes in the tech that could make it useful to these institutions at that point?

Because 5-10 years is a long enough period for another generation of youthful greater fools to enter the market who weren't old enough to have been burned by the previous cycle.

Both. There are ongoing developments in Decentralized Finance and Identity Networks on Ethereum that are reinventing more parts of the current financial system, as well as the shift to proof-of-stake that is making Ethereum more scalable and efficient.

I focus on Ethereum just because it's the center of innovation in crypto nowadays. Bitcoin has only incrementally changed its software throughout the years and only gains more use as a store-of-value as demand for it increases (hype cycle). After a bull market run it generally takes 5-10 years to reach its peak again.

> After a bull market run it generally takes 5-10 years to reach its peak again.

Bitcoin has only existed for 14 years—seems a bit early to generalize anything based on the two times it has peaked and crashed so far.

You're right, my generalization is too early. It is based on crypto's correlation with the overall stock market since it is seen as an investment, which has always returned positive over a 15 year period. But this is more speculation than anything else.

There's been more than two peaks and troughs, I would disagree with the numbers presented

Ethereum is not decentralized. Decentralization is the most important thing in a blockchain. The sooner everyone realizes that, the sooner we can start building momentum on the chains that are viable.

Bitcoin is not decentralised, a couple of pools account for the majority of hashpower.

Based on what?

On almost every dimension Ethereum looks like the most decentralized network out there: Most nodes, most validators, most distribution of validators, most clients, most development teams, ease of making your own block.

What is your definition of decentralization? What is it based on?

The title that's inside <title></title> is not so bad.

"Metropolitan Bank Is Fleeing Crypto. Bitcoin Investors Should Be Worried"

As for other banks, what about Silverlake.

Not many banks are offer crypto services. Regulators are stepping up.

https://fortune.com/2023/01/04/crypto-winter-us-regulators-w...

It is likely that countries will launch their own digital currencies.

How is the US dollar not a digital currency as-is? I can put physical money into anything that is a bank in the states and get dollars to spend digitally…

Banking is digital, and thus functionally money in general is digital and has been since the 60s. The dollar itself is physical.

No central banks are proposing the use of a blockchain, as that would be a completely ridiculous and counter-productive thing to do. But some are investigating good old-fashioned centralized ledgers that work, can scale, are cheap to run, have reversibility, have fraud protection, have identification, etc.

Introducing a digital dollar would be a new piece of the financial infrastructure.

Possible reasons to want it might be:

1) Better auditability

2) Quicker for the government to send stimulus payments to boost the economy

3) Possibility of implementing new monetary levers like demurrage

Ultimately, whether it is implemented or not, would not make too much visible difference in our lives. And we would almost certainly carry on with using deposit accounts, because digital dollar accounts probably wouldn't pay interest. Most of it would probably just be held as bank reserves, and individuals would generally want to move it out of there unless the government got into the business of providing deposit accounts as well.

I don't think the US will be rushing to nationalize commercial banking anytime soon.

Improvements like Same-Day ACH and Zelle have been rolling out, and these are much more relevant to consumers.

> The dollar itself is physical.

That's not true in practice. Dollar may exist in physical form but most of them or any currency exist in purely digital world. When Fed announces a trillion dollar stimulus, printing press don't go burrr. They just make some entries in computer an a trillion dollars are created.

The Fed doesn't create new base money, and they cannot really offer "stimulus" the way Congress can. They can just change the asset classes on their books. But because of their unique position, the choice of those asset classes affects how much money ends up back in their reserve accounts.

Only the Treasury can create new money. The proliferation of banknotes, which are considered legal tender, makes it a bit more complex and thus money in your checking account is money by some definition, but could not exist without base money. The Fed can change the incentives that drive the level of debt, and in that way manage the money supply.

It is for this reason that some call CBDC "digital base money." It is the money that is in reserves or cash, not merely an IOU... even if that IOU is federally insured.

But yea, monetary reserves held in Federal Reserve accounts is also digital already.

CBDCs are a digital equivalent to cash more than currency as a whole - they are something you hold yourself in a "wallet" instead of existing as bank deposits, and in fact they could end up reducing the need for current accounts by providing digital and automated payments directly, although banks will still serve other purposes and most will likely still not want to hold all their own money for security and just general change aversion.

Just like a dollar, digital currency would be liable to your central bank, whereas the digital forms of payment that you use now are liable to your bank. So a digital currency would allow people to spend digital money without the need of a bank account.

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