Skip to main content

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]

For more of the latest in litigation, regulation, deals and financial services trends, sign up for Finance Docket, a partnership between Breaking Media publications Above the Law and Dealbreaker.


powell bitcoin

Jay Powell Trying To Save Cryptos, Possibly At Expense Of His Job

And also, you know, his ability to save cryptos going forward.


President Biden Direct Regulators To Really Seriously Think About This Bit-Thingies

Grandpa Joe’s not quite sure what to do with these newfangled doohickies. But hedge funds are.


Biden Administration Asks Congress To Regulate Stablecoins, Meaning Stablecoins Will Go Unregulated

In a timely but ultimately meaningless coincidence, there’s also another crypto scandal brewing.

By Mike Cauldwell ( [Public domain], via Wikimedia Commons

Did You Know Cryptocurrencies Were All About Helping The Unbanked?

In fairness, the executives saying so probably didn’t know it until they needed to come up with a catchy thing to say at a Congressional hearing.

By Mike Cauldwell ( [Public domain], via Wikimedia Commons

Miami Bitcoin Faithful Feeling Better Than Miami Crypto Investors

No news is good news and oh look here’s Mark Zuckerberg again to ruin everything.


Jamie Dimon Back To No Longer Publicly Hiding His Disdain For Cryptos

He’s back to calling them worthless and comparing them to cigarettes.


Of (Bogus) Love And (Fake) Money

The perils of romance and cryptocurrencies.