How Crypto Replayed the 2008 Financial Crisis with David Morris

 
 

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“If you consider your APR a marketing tool, you’re dead in the water. That is not the business that you’re actually in…. ‘we’re gonna gather all of these customers by offering this unsustainably high APR, and then we’re going to figure out later how to deliver it’ and that doesn’t work.”
— David Morris

SHOW DESCRIPTION

David Morris is the Chief Insights Columnist at CoinDesk. In this interview, we discuss the contagion that has ripped through the crypto market, and how it mirrors the worst failings of the 2008 financial crisis. Is regulation required for crypto to protect people from getting rekt?

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Over the past few months, the crypto industry has experienced a series of seismic events resulting in yet untold numbers of retail investors being wiped out. Those to blame are considered to be, at best, criminally negligent. What the heck happened?

By now, the “I told you so” refrain has long been worn out amongst groups of Bitcoiners. Unfeasibly high APRs, complex stablecoin algorithmic pegs, crypto funds attracting huge amounts of capital - this was background noise that many just cancelled out by a blanket rejection of the whole sector.

But there were targeted warnings of danger within the altcoin ecosystem. Those with a keen interest in the sector, who couldn’t be co-opted, started to investigate the fabulous promises being offered. They found alarming weaknesses, obvious failings and ruinous incentives structures. The red flags were hoisted, but, by this time, too many were caught up in the hysteria to take notice.

As we start to undertake the autopsy, on what is still metaphorically a warm body, the obvious questions arise. How did we as a collective let this happen? How can we stop this from happening again? Are we in the same position as the banking sector following the global financial crisis? Do we need regulations to enforce protections for investors?

TIMESTAMPS

00:04:09: Introductions
00:06:03: Background, and the role of regulation
00:12:08: How the crypto bubble burst
00:20:11: Getting rekt
00:26:49: NFTs
00:30:43: The crypto contagion: LUNA, 3AC, Voyager, Celsius
00:48:25: Punishment for crypto fraud
00:51:45: Parallels to the 2008 Financial Crisis
00:56:23: The need for some regulation
01:01:26: Self-regulation and proof of reserves
01:10:32: What does the future hold?
01:20:21: Final comments

 

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SHOW NOTES

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