To all the people replying that crypto isn't regulated: that's a myth. Exchanges are regulated and keep KYC info of their customers.
If the FTX hack is true, then all that KYC info will be sold in the black market.
Regulation didn't prevent the hack (or rug-pull?). Self-custody with DeFi does prevent it.
It's shocking how some people are for tinkering hardware/software and self-hosting services like Nextcloud, but it comes to money they would rather leave their life savings with a third party (a bank or a custodial exchange) and renounce to all financial privacy.
FDIC. Everyone else pays for your shitty banking choices via inflation instead.
To me the crypto version is better TBH, which would force either private insurance or none at all. Believe it or not you can buy private insurance for crypto, which would achieve something like FDIC.
FDIC covers only up to 200k USD. Many people have lost life savings when banks collapse. Also, not everybody lives in the US or in countries with a semi decent banking system.
> Many people have lost life savings when banks collapse.
Do you have some data for this statement? (in the US, post FDIC deposit era)
Because even when a bank fails, there is usually more than enough to cover depositors, and what the FDIC does is arrange for the bank to be taken over by a healthy bank, with the deposits migrated (but equity and bondholders can take a bath). E.g. no depositor lost a penny in the financial crisis of 2008 -- which was the biggest financial crisis since the Great Depression -- even if they had money in excess of the limits. However it's quite unusual to have money in excess of the limit -- if you have that much, you wont keep it as a deposit, you'll hold some government guaranteed bonds like agencies or treasuries. It is extremely poor cash management for an individual to have more than 200K in a demand deposit account when they can be earning more with government guaranteed bonds that are just as liquid as cash. You can even open an account with Treasury Direct.
The events of the bank closing may be deflationary.
The giving of now-gone money to the depositors is inflationary.
The fallacy of your above statement is you're considering the system of 'fail, then FDIC pays out depositors' when in fact the alternative is 'fail, depositors eat losses'. The former is inflationary relative to the latter, and in fact punitive to those who chose banks that didn't fail. The net difference between the two is the discussed inflationary event 'FDIC pays out depositors.'
No, it doesn't increase the money supply because the FDIC has a pre-existing fund for it. They're not funded by the Treasury and when they are they pay it back.
Though the US could've used more inflation at any point up to 2021 considering our inability to ever get unemployment low enough. (since they're theoretically more or less directly related)
Pre-existing Funds that are just sitting waiting around to be put into depositor accounts once a bank fails have low to no velocity. Giving them to money-spending depositors is inflationary by virtue of increasing the velocity of that money that was previously just sitting on the sideline. Even in the scenario you present is inflationary.
Eh, if it was sitting in a bank before and now it’s sitting in a different bank that’s not a difference. The depositors never got an unexpected increase in spending power, they just avoided an unexpected decrease.
What matters is where the old funds went. The bank might’ve been spending it out the back, but in that case the inflationary actions already happened.
Is it really that surprising people would rather keep their money in a bank that has hired professional security guards rather than at home under their mattress?
Whatever info FTX had, sure. Looks like your private documents were stored with Stripe, a much better steward of your data:
> FTX partners with Stripe to ensure a secure identity verification process. Please note data will be stored and may be used according to the Stripe and FTX privacy policies.
I wouldn't be surprised if FTX has a copy of all documents and PII. I don't think regulators would accept "Stripe suddenly went under" as a valid excuse for not having KYC data.
You mean a hacker that would need to enter your house, look for your hardware wallet, beat the mnemonic out of you and quickly enough steal the coins for you to not be able to transfer them yourself before he manages to find a computer with internet access that is sufficiently hidden to not be traced back?
Selfhosted services are typically entirely self-contained. You access them with clients controlled by you, with devices on your network, and apart from updates from trusted sources of your choice, not exchange with untrusted parties at all. I'm all for decentralised financials but the topic is orders of magnitude harder.
This is AML. It has nothing to do with protecting client funds.
Though knowing FTX, they might have advertised compliance with "Employees must wash hands" as "We are a fully reglulated exchange complying with all applicable local and national laws"
I've seen posts on r/selfhosted about Uniswap out other DeFi protocols being downvoted to oblivion and with comments like "burn crypto too the ground". They want people to have autonomy, except when it comes to money.
If the FTX hack is true, then all that KYC info will be sold in the black market.
Regulation didn't prevent the hack (or rug-pull?). Self-custody with DeFi does prevent it.
It's shocking how some people are for tinkering hardware/software and self-hosting services like Nextcloud, but it comes to money they would rather leave their life savings with a third party (a bank or a custodial exchange) and renounce to all financial privacy.