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Comment by roenxi | Hacker News Reader

There is no way any institution powered by humans can be trusted to sit on a couple of billion (or trillion) dollars in liquid assets and leave them alone for long periods of time. Are they trustworthy today? Maybe. 10 years? Maybe. 30? No. 100? Very emphatic no.

Some bright spark will notice that they don't need all these untouched reserves and will do something with them, increasing the risk and, eventually, getting hit with a bank run.

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If in 10 years from now we are still as dependent from the USD as we are today, I will safely consider all of crypto a failed experiment.

There should be by then other mechanisms to get liquidity and that can represent the economic output of the world. It could be a basket of CBDCs from multiple countries, or tokenized (and legally standing) representations of bonds, titles and property. But the current system is far from the final design.

A couple of billion in liquid assets is a pretty low bar that includes lots of corporate treasuries that hold custodial accounts that aren’t nearly as regulated as a bank.

Basically every sizable payment processor for instance meets that bar and it’s incredibly rare to have a scandal with those institutions.

I'm not saying there will be a scandal, I'm saying they won't leave assets sitting around the way people seem to want a model stablecoin to.

Fractional reserve banking isn't a scandal, it is routine business.

They are not a bank to make loans. They are custodians of money minted and backed by the US government.

There's no gold in fort knox

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