Subscribe To Our Newsletter

    Get the latest crypto news right into your email box. No spamming. We hate it too. Only pertinent news you need to know

    Latest News

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 2022

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 2022

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 2022
    Facebook Twitter Pinterest LinkedIn
    RareHippo – Crypto, Bitcoin, Blockchain News & Views
    Facebook Twitter Pinterest LinkedIn
    • Home
    • Bitcoin
    • NewsWire
      1. Latest News
      2. Top Stories
      3. Features
      4. What’s Hot
      5. Must Read
      6. Trending
      7. Spotlight
      8. Editors’ Picks
      9. View All

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      El Salvador’s Companies Barely Bother With Bitcoin

      March 19, 2022

      New Jersey legislation aims to prevent public officials from being gifted NFTs

      March 18, 2022

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Crypto’s Preferred Currency for Political Donations Isn’t Bitcoin. It’s Dollars

      March 19, 2022

      Meta Sued by Australian Watchdog Over Scam Crypto Advertisements

      March 18, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      Two Senators propose crypto legislation for tax exemption on capital gains

      May 1, 2022

      Wall Street Reluctantly Embraces Crypto

      May 1, 2022

      Warren bill draws outcry over broad terms, but seems unlikely to pass

      March 20, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Russia-Ukraine War Is Bringing Out the Good, Bad, & Ugly of Cryptocurrencies

      March 18, 2022

      The ‘world’s most advanced’ digital human wants you to buy her NFT art

      March 15, 2022

      FTX crypto exchange wins license in Dubai to open regional headquarters

      March 15, 2022

      Crypto Startup Founded by Ex-Meta Employees Raises $200 Million

      March 16, 2022

      U.K. Crime Agency Wants to Regulate Crypto Transaction Mixers

      March 15, 2022

      A Wall Street Quant Turns His Crypto Firm Into a Unicorn

      March 14, 2022

      Standard Chartered’s crypto custodian to help clients earn yield on token holdings

      March 14, 2022

      Man passing as UN affiliate convicted for crypto scheme

      March 18, 2022

      The Future of Crypto Is Boring — and Bright

      March 15, 2022

      Investors turn to crypto funds, companies as Russia-Ukraine crisis escalates

      March 15, 2022

      Binance Wins Crypto Licenses From Dubai, Bahrain

      March 15, 2022

      Why Bitcoin’s Environmental Problems Are So Hard to Fix

      March 16, 2022

      Americans Want Crypto From Their Banks

      March 15, 2022

      Why Decentralized Exchanges Are Important in the Crypto Economy

      March 10, 2022

      Binance plots M&A spree as regulators scrutinize crypto trading unit

      March 10, 2022

      Amid New Executive Order, White House Director Sheds Light On Crypto Policy

      March 16, 2022

      Bitcoin Evangelist Saylor Tells Economists Why They’re Wrong

      March 15, 2022

      Crypto Mania in Texas Risks New Costs and Strains on Shaky Grid

      March 15, 2022

      Bitcoin’s scared of commitment, Mr. Biden

      March 15, 2022

      Coinbase Fixing Problem That Halted Payments From US Banks

      October 9, 2022

      Binance May Spend Over $1 Billion This Year on Deals, CZ Says

      October 9, 2022

      Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

      May 1, 2022

      Two Senators propose crypto legislation for tax exemption on capital gains

      May 1, 2022
    • Altcoins
      • Ethereum
      • XRP-Ripple
      • Solana
      • Dogecoin
      • Cardano
      • Shiba Inu
    • Topics
      • Cryptocurrencies
      • Investments
      • Markets
      • NFTs
      • DeFi
      • ETFs
      • DAOs
      • Crypto Regulation
      • Metaverse
      • Blockchain & Web3
      • Blockchain Gaming
      • Crypto Exchanges
      • Crypto Mining
      • Stablecoins
      • Cybersecurity
      • Digital Currencies – CBDC
      • Crypto Book Reviews
      • Technology
      • Internet of Things
    • Opinions
    • Explainers
    • Press Releases

      Former Uber LatAm Head of Policy Leads Crypto Ride-Hailer Drife Toward Planned Global Expansion

      March 7, 2022

      European index provider for crypto assets Vinter raises $3.4m funding

      February 22, 2022

      PR – British crypto processor brings in $60 million for expansion in Europe

      January 25, 2022

      PR – CoinMENA obtains 2nd crypt0 license from European Union

      January 25, 2022

      NFT investment specialist looks to acquire Pluto Digital for £96m

      January 24, 2022
    RareHippo – Crypto, Bitcoin, Blockchain News & Views
    Home»DeFi»DeFi’s Dark Corners Evoke 2008 Crisis
    DeFi

    DeFi’s Dark Corners Evoke 2008 Crisis

    ByOlga Kharif
    March 18, 2022By Bloomberg3 Mins ReadNo Comments
    Facebook Twitter LinkedIn Pinterest Reddit WhatsApp Email Tumblr VKontakte Telegram
    Share
    Facebook Twitter Pinterest Reddit WhatsApp Email LinkedIn Tumblr Telegram

    DeFi is being lumped in with CDS and MBS — two financial acronyms that became synonymous with financial risks and perils during the 2008 crisis — in an academic paper making the rounds.

    Proponents of this controversial corner of crypto may want to give the paper a read before they pounce at the next offer of outsize returns that seem too good to be true.

    Donate to RareHippo Now!

    In “Defi: Shadow Banking 2.0?,” Hilary Allen, a law professor at American University’s Washington College of Law, compares DeFi, or decentralized finance, with the credit default swaps and mortgage-backed securities that strained the financial system more than a decade ago.

    All three have the same markings of complexity, high leverage and rigidity – except DeFi apps may be exhibiting them to an even greater degree.

    Allen warns that if traditional financial institutions wade into DeFi – by offering stablecoins, for example, or supporting DeFi loans or above-market interest rates – they run the risk of triggering all kinds of negative consequences, including bank runs. 

    Relates to defi’s dark corners evoke 2008 crisis
    Source: @binance

    DeFi’s promise of decentralization is just an illusion, Allen says. Most of these apps are controlled by small groups of developers or venture capitalists. And they are often clunkier, slower and less efficient than the centralized services of traditional finance, she argues.

    Even more worrisome, there are few consumer protections: You can’t call your bank and request a refund if something goes wrong. Other than the lure of pure speculation, it’s hard to understand why thousands of mostly retail users have poured more than $100 billion into DeFi.

    Ironically, part of the reason for its popularity – like the rise of crypto itself – may lie in the perception that DeFi is a preferable alternative to the system that led to the 2008 meltdown and the bailouts that rescued banks but not their customers.  

    “I find it hard to wrap my head around it myself, it seems so obviously warped to me,” Allen said in an interview. “Some of it is coming from desperation. We saw 2008, and saw financial institutions not having to pay much for that. People are disillusioned with the existing financial system. People desperately want to find a new way of doing things. But this is worse.”

    In her paper, Allen argues that “DeFi innovation has limited benefits for society” — and that the fledgling industry should, in fact, be stifled. But she doesn’t have high hopes for regulators and lawmakers following her advice. Only time will tell if that’s a good or a bad thing.

    “DeFi’s proponents speak of a future where sending money is as easy as sending a photograph, but money is not the same as a photograph,” Allen said.  

    Charting it out

    Crypto Contributions

    Top recipients of political donations made in cryptocurrencies

    Defi is being lumped in with cds and mbs — two financial acronyms that became synonymous with financial risks and perils during the 2008 crisis — in an academic paper making the rounds.

    Hearing them out

    Celebrity athlete and businessman A-Rod speaks of the promise of blockchain technologies for sports teams and their fans at the Futures Industry Association conference in Boca Raton, Florida

    “With blockchain, I think millions of people around the world will have an opportunity to own a sports team, if not a small stake in one.”

    Read full story on Bloomberg

    DeFi Investment
    Previous ArticleCrypto exchanges face ‘fork in the road’ over Russia, LSE Group chief says
    Next Article NFT’s Run-Up Rekindles Chatter About Manipulation Ahead of Deal

    Related Posts

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 20221 Min Read

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 20223 Mins Read

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 20224 Mins Read

    Two Senators propose crypto legislation for tax exemption on capital gains

    May 1, 20225 Mins Read

    Wall Street Reluctantly Embraces Crypto

    May 1, 20225 Mins Read

    Warren bill draws outcry over broad terms, but seems unlikely to pass

    March 20, 20225 Mins Read
    Add A Comment

    Leave A Reply Cancel Reply

    Donate to RareHippo Now!
    Latest News

    Coinbase Fixing Problem That Halted Payments From US Banks

    October 9, 2022

    Binance May Spend Over $1 Billion This Year on Deals, CZ Says

    October 9, 2022

    Crypto Real Estate Is Here – Bitcoin Mortgages Are Just The Beginning

    May 1, 2022

    Two Senators propose crypto legislation for tax exemption on capital gains

    May 1, 2022

    Wall Street Reluctantly Embraces Crypto

    May 1, 2022
    Follow US & Win Prizes
    • Facebook
    • Twitter
    • LinkedIn
    • Pinterest
    Don't Miss
    Bitcoin

    Craig Wright Lawsuit Over $57B in Bitcoin Could Be Headed for Mistrial

    December 2, 20213 Mins Read

    When presented with two impossible options, sometimes it’s best to just shrug your shoulders and…

    Square Issues White Paper for Decentralized Bitcoin Exchange

    November 20, 2021

    Stablecoin supply grew by 388% this year, driven by DeFi and derivatives

    December 20, 2021

    Why Big Brands Are Spending Millions On NFTs

    December 25, 2021

    Subscribe to Our Newsletter

    Get the latest crypto news right into your email box. No spamming. We hate it too. Only pertinent news you need to know

    Crypto news & Views
    Facebook Twitter Pinterest LinkedIn
    • Home
    • Privacy Policy
    • About Us
    • Donate to RareHippo
    • Get In Touch
    • NewsWire
    © 2023 RareHippo. Powered by 8 Dimensions

    The content of this website is for informational purposes only and is not intended as a substitute for investment or financial advice.

    Type above and press Enter to search. Press Esc to cancel.