Satoshi Nakamoto created Bitcoin as a means for people to transact freely without banks or governments, and ever since crypto has been defined by a libertarian spirit. This includes a lot of banter on crypto Twitter about how regulators are corrupt and incompetent, and the popular “money printer go brrrr meme” that mocks government profligacy.
So it was more than a little ironic when Silicon Valley Bank collapsed to watch many erstwhile crypto libertarians shriek that the government had to ride to its rescue. This included David Sacks, a PayPal cofounder and major crypto investor, who spent the weekend stoking warnings on Twitter of catastrophe unless the feds helped his startup buddies who had money at the bank. This led the Wall Street Journal to label Sacks and fellow billionaire Bill Ackman as “financial panic spreaders.”
The feds eventually did step in, of course, and in a big way. On Sunday night, the Treasury Department and other agencies announced measures to raise the $250,000 cap on deposit insurance and ensure everyone at SVB got their money back. So Sacks and his chums got what they wanted even though they likely contributed to the situation that forced the government intervention in the first place.
I’m no expert on systemic risk, but the government likely made the right call. Allowing SVB customers to lose their deposits would have inflicted massive harm on America’s valuable tech sector, and the risk of contagion across the broader economy was real. Still, it’s hard not to be outraged by the gall and hypocrisy of the Silicon Valley elite. This is the same crowd who for years have extolled the virtues of Ayn Rand and decried any sort of help for the likes of student loan borrowers but then called for collectivism when their friends are in trouble. Socialism for us, but not for you in other words.
To be fair, not every crypto booster is cheering the FDIC backstop. Some on social media are saying that the SVB debacle shows that Satoshi was right all along—and that we need Bitcoin more than ever to escape the control of big banks and government. But for every crypto venture capitalist and startup founder that spent the weekend whining about why the government simply had to help them, it would be a fine time to learn some humility.
Jeff John Roberts
[email protected]
@jeffjohnroberts
DECENTRALIZED NEWS
Hackers stole around $200 million from DeFi lending platform Euler Finance. (TechCrunch)
Barney Frank, the former Democratic House leader who gave his name to a 2010 financial reform bill, says crypto is being unfairly scapegoated for the current bank turmoil. (Politico)
Frank was also one of the supporters, however, of a measure that removed financial “stress tests” for midsize banks like Signature and SVB. (NYT)
The Justice Department is investigating the collapse of the Terra stablecoin, a likely prelude to criminal charges against its founder, Do Kwon. (WSJ)
Meta is scrapping its support for NFTs on Instagram and Facebook only six months after launching them in the U.S. (Fortune)
MEME O’ THE MOMENT
“Crypto will be completely bankless”:
This is the web version of Fortune Crypto, a daily newsletter. to get it delivered free to your inbox.
