Coinbase Drops Promise of Token’s Cash Backing That Wasn’t True

Re:Coinbase Drops Promise of Token’s Cash Backing That Wasn’... by dsr_ on Wednesday August 11, 2021 @10:20AM (#28142294)

If you think USDC is backed 1:1 by US dollars, you should try selling them all and see what you get.

If you sell early enough, you might get most of your money back because other people aren't paying attention, or have been similarly misled.

[ Parent | on HN ]

Re:Coinbase Drops Promise of Token’s Cash Backing That Wasn’... by alisonkisk on Wednesday August 11, 2021 @10:45AM (#28142629)

A regular bank is the same. If everyone withdraws, not everyone gets paid. FDIC offers partial protection, though.

[ Parent | on HN ]

Re:Coinbase Drops Promise of Token’s Cash Backing That Wasn’... by elliekelly on Wednesday August 11, 2021 @11:07AM (#28142921)

It most certainly is not the same. Take WaMu, for example. I think it was the largest bank failure in the history of the United States and it was largely due to a bank run.

Do you know how much money depositors lost? $0.00

And I don’t mean only up to the FDIC insured amount. Even those with WaMu deposits well in excess of FDIC coverage didn’t lose a penny. And it wasn’t thanks to the complex system of placing overnight deposits at various institutions for pass-through coverage in excess of the FDIC amount.

Because do you know how much money the FDIC insurance fund lost paying out claims to WaMu depositors? $0.00

Do you know who did lose a lot of money? WaMu investors and shareholders.

That is not even remotely close to how a stablecoin or crypto “bank run” would play out. Our banking system has built-in safety nets that work. Crypto safety nets don’t even exist.

[ Parent | on HN ]