Trust Fall
“Trust Fall” – a cartoon that illustrates how FTX has played the role as a backstop to the crypto industry.
Realizing the dangers to the broad economy of bank runs, governments provide an insurance backstop for retail consumer accounts (e.g. the first $250K for consumers in the US).
The crypto industry has sought to distance itself from regulatory oversight and made a great play on “banks are not your friends” to attract retail investors.
However, many consumers may have wished their money was in banks as there is no government insurance cover for the $2 trillion wipe-out in crypto currency markets.
A surprising bright spot is how FTX, a well-run crypto trading platform, has stepped in to become the industry’s backstop – helping some of the absolute dogs live another day.
FTX has provided liquidity to some players, outright buying companies teetering on bankruptcy and generally stopping the contagion from spreading.
Nothing about FTX’s moves is altruistic, but it does demonstrate an alternative narrative that the only way to stabilize the industry is through further government regulation.
