From The Blind Spot:
Crypto reflexivity and the ultimate stablecoin reading list
The day of reckoning so many naysayers warned the stablecoin market would eventually experience has finally arrived.
In some respects, the shakeout is probably a good thing. We need to see these aspiring systems fail in controlled ways to understand the scope of their potential contagion if they were ever to get huge and thus too systemic. Now is the time for learning.
What’s more, part of me has always thought of the crypto market as a type of honeytrap for the worst irrational exuberance emerging from the quantitative easing and zirp era. Rather than infecting the core financial system, with crypto it was possible to direct a lot of the worst financial mania into a relatively compartmentalised zone underpinned by the principles of caveat emptor (due to the sector’s libertarian principles).
It’s not nice that the lives of so many people — some of the most financially naive — might be wrecked by this deflection, but it’s not like the regulators didn’t try to warn them. And sometimes you just can’t teach people any other way than through experience.
The scale of the fallout on civil life will be indicative of just how well regulatory risk warnings have been getting through to the public. Sadly, if messages like this popping up on Reddit are anything to go by, the answer is not well enough. Tragic really....
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