BTCNews.Today

The fundamental lesson we have to relearn is that even in a modest crisis deposits cannot be sacrificed, and rules on haircuts for provision of liquidity will go out of the window. Banks are wards of the state partly because they are at the heart of the credit system, but even more because their deposit liabilities are so politically important. The marriage of risky and often illiquid assets with liabilities that have to be safe and liquid within undercapitalised, profit-seeking and bonus-paying institutions regulated by politically subservient and often incompetent public sectors is a calamity waiting to happen.

In its downgrade of the entire sector, the rating agency noted the extraordinary actions taken to shore up impacted banks. But it said other institutions with unrealized losses or uninsured depositors still could be at risk. The Federal Reserve established a facility to ensure that institutions hit with liquidity problems would have access to cash. The Treasury Department backstopped the program with $25 billion in funds and vowed that depositors with more than $250,000 at SVB and Signature would have full access to their funds. But Moody’s said that concerns remain. The firm said it expects the U.S. economy to fall into recession later this year, further pressuring the industry.

Please tag @BTCNEWS_TODAY on Twitter to submit tweets.

Following generations of taxpayer support and government involvement, politicians, regulators, and lobbyists have supplanted the market in determining what counts as capital, how it is calculated, and how much is enough. This artificial mechanism has resulted in a decline of both the level and quality of capital among the world’s largest banks. As the regulators have supplanted the market in setting bank capital standards, they increasingly rely on ever more arcane and complicated methods to determine how much capital a bank should hold. They assign risk weighs to the different asset categories held by banks. In contrast, the absence of the largest banks having sufficient equity capital as they entered the Great Recession, required governments to infuse public funds into many of them. It will be at significant public cost if that lesson must be relearned should bank capital weaken.

Following the failure of Silicon Valley Bank — the biggest bank bust since the dark days of 2008 — and with Monday’s closure of Signature Bank, bitcoin has surged nearly 20% in the past 24 hours. While traditional banks struggle to maintain the trust of their customers, bitcoin’s decentralized system is suddenly looking at least a little appealing. As Satoshi Nakamoto, bitcoin’s enigmatic creator, once put it, “The root problem with conventional currency is all the trust that’s required to make it work." Well, turns out bitcoin’s trustless system has its own allure.

The way the banking system works is, essentially, banks take your deposits and lend them out at higher interest rates than they pay you. They often keep reserves in U.S. treasury bonds, among other things, and everything seems to work until it doesn’t. Regional banks will bear the brunt of this hit, as demonstrated by the recent collapse of SVB. Federal regulators are desperately trying to prop up confidence in the system by backing 100% of depositors’ money, but at what cost? The scenario playing out before us is a stark illustration of what happens when trust starts to break down in a system fundamentally based on the idea of trusting, rather than verifying. Bitcoin is fundamentally different. You can eliminate reserve requirements, duration and interest rate risks, counterparty risks and the like. There is no trust in Bitcoin. There is only code.

Because only the first $250,000 of each deposit at a U.S. bank is insured by the Federal Deposit Insurance Corporation (FDIC), last week's collapse of SVB sparked concerns that its small-business clients would be unable to pay employees. Some 89% of around $200 billion in deposits held by SVB at the end of 2022 was uninsured, according to the FDIC. Regulators have now removed that risk. But in doing so "they took another step towards demonstrating that they are unwilling to allow free markets to sort themselves out," said Toronto-based independent proprietary trader Kevin Muir. Some analysts said the U.S. actions were not a bailout, because shareholders and unsecured debtholders of SVB would not be covered.

Please tag @BTCNEWS_TODAY on Twitter to submit tweets.

Isaac led the FDIC in the early 1980s amid widespread bank failures and high interest rates. In a Politico article published Sunday, he said of the SVB failure, “There’s no doubt in my mind: There’s going to be more. How many more? I don’t know. How big? I don’t know. Seems to me to be a lot like the 1980s.” On Saturday, the FDIC asked officials at small and midsize lenders, including First Republic Bank, about their financial situations, Bloomberg reported. They also reportedly discussed setting up a new special vehicle to reassure depositors—and help contain any panic.

Please tag @BTCNEWS_TODAY on Twitter to submit tweets.

Federal regulators announced that depositors of Silicon Valley Bank will be paid in full In a statement released Sunday, the Treasury, Federal Reserve and the FDIC said they would "fully protect" depositors with funds in the bank. SVB was shut down Friday afternoon after a stock price crash, leaving customers panicking. The government statement issued on Sunday stated that "Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law."

Regulators have closed down crypto-friendly lender Signature Bank in an attempt to stave off a banking crisis. The Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and U.S. Treasury announced the New York-based bank’s closure under a “systemic risk exception” Sunday (March 12) evening, two days after the collapse of Silicon Valley Bank. According to the statement, Signature Bank was closed Sunday by the New York Department of Financial Services (NYDFS), which turned over control to the FDIC. “All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer,” the statement said. “Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.” Signature Bank had about $110.36 billion in assets and total deposits of about $88.59 billion as of the end of 2022, NYDFS said Sunday.

One unique aspect of SVB was its decades-long focus on the venture capital industry. The bank’s loan growth had been slowing as interest rates rose. Meanwhile, when announcing its $21 billion dollars in securities sales on Thursday, SVB said it had taken the action not only to lower its interest-rate risk, but because “client cash burn has remained elevated and increased further in February, resulting in lower deposits than forecasted.” SVB estimated it would book a $1.8 billion loss on the securities sale and said it would raise $2.25 billion in capital through two offerings of new shares and a convertible bond offering. That offering wasn’t completed. So this appears to be an example of what can go wrong with a bank focused on a particular industry. The combination of a balance sheet heavy with securities and relatively light on loans, in a rising-rate environment in which bond prices have declined and in which depositors specific to that industry are themselves suffering from a decline in cash, led to a liquidity problem.

BOLT, which stands for "Basis of Lightning Technology", refers to a set of technical specifications or protocols that define the rules and procedures for how the Lightning Network should operate. BOLT was first introduced in 2017 by a group of developers working on the Lightning Network, and since then, it has undergone several updates and revisions. The protocols are open source and available to anyone who wants to use or develop Lightning-related applications and services. There are several layers to BOLT, each of which defines a specific set of rules and protocols. Overall, BOLT provides a comprehensive specification for the Lightning Network, allowing different implementations to interoperate with each other seamlessly.

Please tag @BTCNEWS_TODAY on Twitter to submit tweets.

prominent blockchain venture capitalists (VCs) have over $6 billion worth of assets held by the now-defunct financial entity. These include $2.85 billion from Andreessen Horowitz (a16z), $1.72 billion from Paradigm and $560 million from Pantera Capital. A16z currently holds active investments in projects such as Alchemy, Sky Mavis and Yuga Labs, and was previously an investor in cryptocurrency exchange Coinbase. Paradigm has invested in projects such as Compound, Cosmos and Uniswap. Meanwhile, Pantera Capital holds stakes in projects such as 1inch, Ankr and Zcash.

First, SVB was an FDIC insured bank, meaning that up to $250,000 of every insured depository account (checking account, etc.) in the bank is safe. If you have $250,000 or less in an SVB account, it’s no problem — the government will pay you your cash. The problem here is that most of the deposits in SVB — 93%, by most reports — were not FDIC insured, because they were over the $250,000 limit. These deposits will be partially paid off by the FDIC, which will sell SVB’s assets and pay deposit-holders an “advance dividend” sometime in the next week.

Powell pointed to multiple industry collapses beyond the FTX exchange and several high-profile instances of fraud to illustrate “that regulated financial institutions should be quite cautious in doing things in the crypto space.” “We have to be open to the idea that — somewhere in there — there is technology that can be featured in productive innovation that makes people’s lives better … we don’t want to stifle innovation,” Powell told the committee members, adding that he would welcome Congress stepping in with a new “workable legal framework” for the crypto industry. Silvergate Bank, a former favorite of FTX and a perennial caterer to the crypto industry, has been serving as a real-time example of the dangers the regulators highlighted of mixing crypto with traditional banking services. Silvergate’s exposure to the crypto sector has proved to be disastrous for its business prospects, and the bank’s ability to operate is now under question, as most of its crypto customers have withdrawn their deposits from the institution.

Please tag @BTCNEWS_TODAY on Twitter to submit tweets.

Nigerians recently took to the streets to protest a cash shortage caused by government policies adopted in order to push the country into the adoption of its central bank digital currency (CBDC). Protesters attacked bank ATMs and blocked streets, and demonstrations turned violent in some cities. The problem is there aren’t enough new banknotes to go around, and that appears to be on purpose. Bloomberg called the policy “demonetization.” The Central Bank of Nigeria launched its CBDC, called the eNaira, in the fall of 2021. Last October, Bloomberg reported that only about 0.5% of Nigerians had adopted the digital currency. Ironically, about 50% of Nigerians use cryptocurrencies such as bitcoin. It’s not that they spurn digital currency. They just spurn the government’s digital currency.

According to Google Analytics data from 2021, only 14.23% of Bitcoin engagement comes from women. This statistic is indicative of the broader trend in the technology industry, where women are underrepresented. However, in reality, women are playing a critical role in building the foundations of a world that operates on a bitcoin standard. Women like Natalie Smolenski, Susie Violet Ward, Lyn Alden, Margot Paez, Anita Posch, Elizabeth Stark, Hannah Rosenberg, Alana Mediavilla, Bitcoin Bekka, and Angela Chan are paving the way for more women to become involved in these industries and to help drive adoption worldwide. As awareness of bitcoin grows and evolves, women will continue to play an important role in shaping its future.

Please tag @BTCNEWS_TODAY on Twitter to submit tweets.

While Secure Elements sound like a fantastic place to store something like a Seed Phrase, they’re also closed source, proprietary chips that cannot be openly verified due to NDAs the manufacturers force everyone to sign. So if you want your Hardware Wallet to be entirely FOSS (Free and Open Source Software), you can’t use them. Many of the top Hardware Wallets out there all use the same STM32 microcontroller, which becomes a problem because now you have the vast majority of Hardware Wallets all using the same product from the same manufacture: STMicroelectronics.

The dollar hegemony that the world is under is something of a historical serendipity for the U.S., but like any skilled operator, the U.S. has taken this advantage and used it to dominate the world. The result has been an unjust world ordered on a Cantillon hierarchy that the U.S. gets to determine. The best human capital has been captured by the U.S. even as dollars get exported out. The depleted countries become zombies, serving three letter organizations as they get exploited for their resources. Bitcoin fixes the dollar hegemony because Bitcoin takes away the exorbitant privilege of the U.S. Unlike previous reserve currency transitions, however, Bitcoin will not be centrally controlled.