As we’ve discussed here, in order to disrupt and destroy the oppressive system of fiat money and other old-fashioned stores of value, such as gold, cryptocurrencies need a hell of a lot of the stuff they seek to replace. And to expedite their revolution, it would be awfully convenient if they could have direct, ready access to it as quickly and seamlessly as possible.

They say direct access to the Fed’s payment systems would allow them to more quickly and cheaply process orders from customers buying and selling digital assets. Currently they must partner with traditional banks that have accounts with the Fed…. If they have their way on access to the Fed’s payment systems, that could encourage more firms to follow their example, introducing more competition for banks.

Sure, that sounds exactly like the kind of thing Gary Gensler & co. are eager to do.

Traditional banks say the newer financial firms are supervised relatively lightly and lack the internal controls needed to ensure against money laundering and other illicit activities—concerns that regulators have expressed about the crypto industry more broadly. And they say the firms are riskier because they aren’t insured by the Federal Deposit Insurance Corp…. Regulators are also concerned that some types of crypto activities could pose risks to financial stability if they grow big enough. For example, some officials worry that so-called stablecoins—a form of digital currency pegged to the value of the dollar and other traditional currencies—could be susceptible to the kinds of runs that affect banks and mutual funds in a crisis.

Luckily for all of us (well, all of us who aren’t dedicated to the crypto program for either fun or profit), the fever dream over the farrago of fake money is destined to break, according to a guy who knows a thing or two about sniffing out worthless garbage.

I would say that cryptocurrencies are a bubble. I would describe them as a limited supply of nothing. So to the extent there’s more demand than the limited supply, the price would go up. But to the extent the demand falls, then the price would go down. There’s no intrinsic value to any of the cryptocurrencies except that there’s a limited amount.

Cryptocurrencies, regardless of where they’re trading today, will eventually prove to be worthless. Once the exuberance wears off, or liquidity dries up, they will go to zero. I wouldn’t recommend anyone invest in cryptocurrencies.

Hmm, so what would you invest your actual money in, then, John Paulson?

SPACs, on average, will be a losing proposition….

Do you think that gold is a good investment at this price?

Yeah, we do.

I guess, in retrospect, that was a question that didn't really need to be asked.

Crypto Firms Want Fed Payment Systems Access—and Banks Are Resisting [WSJ]
Billionaire Paulson who shorted subprime calls crypto 'worthless' [Bloomberg BNN]

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