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We know that US banks participate in "fractional reserve banking" and thus do not have the dollars to cash out every account holder. If there is a run on the banks, the account holders are not going to get all their cash out.
This likely also means that US-based centralized crypto exchanges lack the dollars in their bank accounts to cash out every account holder. If there was a massive sell-off event, the exchange would then have a large balance of their customers' fiat sitting that would likely exceed any balances they had in their actual bank accounts. Imagine large numbers of customers then attempting to withdraw their fiat to their bank accounts. I'd imagine many customers would get error messages or the exchange would disconnect its servers.
dont know the answer,but back in 2020,moneymarket accounts which invest in private securities (not US treasures) have problem meeting redemption as they cant liquidate their holdings fast enough to raise cash,that where the Fed comes in and buy all the papers.
to extend this issue further,Venezuelan Central Bank has scraped off the marks on its gold bars and flew them to an African country where they were melt down and sold to Middle Eastern buyers!
This is the only way they can keep the country running,to buy fuels and meet obligations.
We know that US banks participate in "fractional reserve banking" and thus do not have the dollars to cash out every account holder. If there is a run on the banks, the account holders are not going to get all their cash out.
This likely also means that US-based centralized crypto exchanges lack the dollars in their bank accounts to cash out every account holder. If there was a massive sell-off event, the exchange would then have a large balance of their customers' fiat sitting that would likely exceed any balances they had in their actual bank accounts. Imagine large numbers of customers then attempting to withdraw their fiat to their bank accounts. I'd imagine many customers would get error messages or the exchange would disconnect its servers.
New bill would hand Treasury blank check to ban crypto at exchanges
And not just crypto. Provision in the America COMPETES Act would allow Treasury to secretly prohibit any kind of transaction it deems a “concern” without any public notice or input.
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