> Some low-income households are “using crypto gains to take out new mortgages.” When crypto prices go down, those families’ homes are going to be at risk.
Part of me sees the utility in heavily regulating financial instruments to prevent this sort behavior, part of me thinks that these people are too stupid to be allowed to live in society.
albinomule on
> Regulators and economists are not worried primarily about the damage that this new era will do to individual households, however. They are worried about chaos in the crypto markets disrupting the traditional financial system—leading to a collapse in lending and the need for the government to step in, as it did in 2008.
This article is a little unhinged. The global market cap of all digital assets is 1.6 trillion USD (as of 2023, so let’s say ~3.5t today ). By comparison, the market cap of the *US* housing market – which led to the GFC – is ~52 trillion, which still understates the level of systematic significance to the world/US economy. Where personal home financing is and was integral to financial markets, crypto assets are not. Relatively few people actually invest in cyrpto by a percentage of US Americans (~7%), and of those that do, the vast majority use digital assets as the “hot sauce” of their investment portfolio (i.e. a volatile, speculative asset that represents a small sliver of their total allocation). Conversely, mortgage-backed securities prior to the GFC – and to a lesser extent today through agency securities – encompassed a massive portion of institutional investors’ portfolios.
If you listen to anything Gary Gensler has to say about crypto – arguably head of one of the most important regulators and probably the most vocal critic of digital assets – he is immensely concerned about the level of fraud in the digital asset space, precisely because of the harm that it will do to individual mom and pop investors, and much less so about the systemic exposure to the financial system.
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[https://archive.ph/vkzss](https://archive.ph/vkzss)
> Some low-income households are “using crypto gains to take out new mortgages.” When crypto prices go down, those families’ homes are going to be at risk.
Part of me sees the utility in heavily regulating financial instruments to prevent this sort behavior, part of me thinks that these people are too stupid to be allowed to live in society.
> Regulators and economists are not worried primarily about the damage that this new era will do to individual households, however. They are worried about chaos in the crypto markets disrupting the traditional financial system—leading to a collapse in lending and the need for the government to step in, as it did in 2008.
This article is a little unhinged. The global market cap of all digital assets is 1.6 trillion USD (as of 2023, so let’s say ~3.5t today ). By comparison, the market cap of the *US* housing market – which led to the GFC – is ~52 trillion, which still understates the level of systematic significance to the world/US economy. Where personal home financing is and was integral to financial markets, crypto assets are not. Relatively few people actually invest in cyrpto by a percentage of US Americans (~7%), and of those that do, the vast majority use digital assets as the “hot sauce” of their investment portfolio (i.e. a volatile, speculative asset that represents a small sliver of their total allocation). Conversely, mortgage-backed securities prior to the GFC – and to a lesser extent today through agency securities – encompassed a massive portion of institutional investors’ portfolios.
If you listen to anything Gary Gensler has to say about crypto – arguably head of one of the most important regulators and probably the most vocal critic of digital assets – he is immensely concerned about the level of fraud in the digital asset space, precisely because of the harm that it will do to individual mom and pop investors, and much less so about the systemic exposure to the financial system.