Weekly Pizza Bits #4 - 18-Mar-2023
1) Silicon Valley Bank Collapse Has Affected Many Crypto Companies
Ahhh, this is the biggest news of the week that’s flooding all over the news media, and for most of us, this is the first time we have ever heard of Silicon Valley Bank. The massive withdrawals worth a humongous total of $42 Billion dollars in a single day.
Many of the big company firms such as Circle ($3.3 billion), Roku ($487 million), BlockFi ($227 Million), Roblox ($150 Million), Ripple (Undisclosed), Avalanche (Undisclosed) & Yuga Labs (Undisclosed, the company that established the popular Bored Ape Yacht Club NFTs) are either highly exposed or limited exposed to the bank’s downfall.
In Malaysia, the government has announced that the banks in Malaysia have limited exposure to Silicon Valley Bank, so currently Malaysia looks safe for now. However, as crypto people whom are used to utilizing blockchain technology to track our transactions, we need to demand more transparency & auditability from our local banks by letting them to prove their reserves so that we are able to trace their transactions through the blockchain and will not get a repeat of the 1MDB fiasco. After all, every single bank has mandatory collected our personal information to also trace our money flows to prevent money laundering. Why not let the people do the same to banks too?
I also highly recommend Coldfusion’s video explaining the story of Silicon Valley Bank and the truth behind the disaster of US banking system to further understand the big picture.
2) Other Banks such as Credit Suisse & First Republic Bank are next in line
We may see new exodus of bank runs after the SVB fiasco, with Credit Suisse are also having trouble getting the backing of one of its major shareholder, Saudi National Bank, and they are planning to exercise a loan of up to $54 Billion dollars from the Swiss National Bank to boost its liquidity.
Furthermore, First Republic Bank is next in line to be axed after being heavily exposed to Silicon Valley Bank too. However after this news, the “bank rescue team” comprising of JP Morgan, Bank of America, Citigroup and Wells Fargo each injected $5 billion into First Republic Bank, while Goldman Sachs & Morgan Stanley also injected $2.5 billion each.
This problem of banks bailing out each other is not going to end well, as the US national debt has reached $31 trillion as of writing and may not have more funds to bailout more banks & companies. Let’s see how the US government is going to weather this storm in the coming months & years.
3) BlackRock CEO Touts Tokenization, Warns US ‘Lagging’ in Innovation
Larry Fink, the CEO of BlackRock which is the largest asset manager in the world that owns everything and has $10 Trillion in assets under management as of January 2022, has been pushing for continuous innovation to build faster and more efficient payments in India, Brazil and parts of Africa. The CEO also believed the next generation for markets & securities will be tokenization of securities.
Tokenization is basically a process of issuing tokens that represents real digital tradable assets. Imagine you can tokenize stocks, bonds, gold & commodities, and all these financial assets are minted on the blockchain which has higher transparency, auditability & operational efficiency in terms of trading these tokenized assets in the blockchain, while you’re able to truly own these assets in your wallet without the need to create the usual login & password account that the brokers are in control of. This would definitely revolutionize how we own financial assets and achieve true freedom.
I agree with Larry on this future but it’ll take time to develop a system like this in a secure & regulatory-friendly manner.
4) Rep. Tom Emmer: Is the FDIC Weaponizing Market Chaos to Kill Crypto?
Now this is a very good example of how to fight for a better future of your country as a politician. Tom Emmer wrote a letter to the Federal Deposit Insurance Corporation (FDIC) to question the motives to target the banking sector that offers crypto services to purge them out from the US.
[For Malaysians’ information, basically FDIC is similar to PDIM to which ironically is also called FDIC in the Malay language.]
In his own words:
The Administration’s demonstrated effort to choke off digital assets from the United States financial system is a lazy and destructive regulatory strategy that is stagnating innovation and subjecting American users of digital assets to less sophisticated regulatory jurisdictions.
I totally agree that just banning the development of cryptocurrencies based on the mismanagement of centralized platforms such as FTX shows how lacking FDIC are in coming out with a fairer solution to provide the financial freedom that crypto brings especially to the people that don’t have access to basic banking services, while setting proper regulation to ensure centralized entities have the necessary standards to not overleveraged consumers that have access to banking services.
Cryptocurrencies can at least be 10x more efficient & effective as a medium of exchange if governments put out the right policies to spur the growth of the blockchain & cryptocurrency innovation so that potentially everyone will be able to achieve financial sovereignty from owning their wealth and boosting the economy further, no matter if the person has a bank account or not.
5) Why Dipping Into Your EPF Savings is More Harmful Than You Think
To roundup the Pizza bits for the week, I stumbled across a local article that states why withdrawing from your retirement savings early can have long-term consequences for your financial well-being.
The author proposes a compelling reason to which she quote:
Many argue that our EPF funds are our money and we should be able to do what we want with it. However, we are not taking our own money, but we are stealing from our future selves.
For me, it’s actually pretty subjective. The people who got badly affected by the high inflationary prices without relatively similar growth in income will see withdrawing EPFs as a necessity to pay down their bills. They might say sorry to their future selves, btu they are doing it in a way to at least survive in the short term.
This argument only works if the people have a comfortable enough savings but they still wish to withdraw their EPF funds to put into risker, but higher return investments. If these people did not do their research & risk management properly, they are in more trouble of losing their entire savings.
I think it depends on the financial situation of one self. As what I covered in my last weekly Pizza Bits, taking out emergency loans using EPF savings as collateral may be a more viable option to buy the people some time to sort their financial situation out without losing any of their EPF savings as long as they repay their loans responsibly.
That’s all for now. Do subscribe to receive new pizza bits every week!
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