The chairman of the Federal Deposit Insurance Corporation (FDIC) has advised Americans not to withdraw all their money from banks to safeguard against market volatility in the stock market caused by the coronavirus pandemic. Bitcoiners have nothing to worry about; as long as users hold the keys to their Bitcoin, they are already their own bank.
Just yesterday, US Federal Reserve Chairman Jerome Powell said the US might already be in a recession. But McWilliams message reassures Americans that their money is safe at the banks. “The last thing you should be doing is pulling your money out of the banks now, thinking that it's going to be safe for someplace else,” she said.
“You don't want to be walking around with large wads of cash and you certainly don't want to be hoarding cash in your mattress. It didn't pan out well for so many people, and I will tell you this; no depositor has lost a penny of their insured deposits since 1933 when the FDIC was created,” she added.
The FDIC is a government corporation that provides insurance to depositors in US commercial banks and savings banks. It secures $250,000 per person, for each type of bank account, and has a $100 billion line of credit with the US Treasury.
Crypto enthusiasts responded to the news with glee; proof that the principle of “not your keys; not your Bitcoin” applies to the traditional financial world, too. If crypto is held by their owners, it is not possible for centralized organizations, like banks, to run down the reserves of cryptocurrencies.
“The FDIC was created to indemnify Americans in the event of a bank run. Scaring people from taking self custody of their own money displays a terrifying incompetence,” wrote one Bitcoiner on Twitter.
Can't place my finger on it, but something about this video is not inspiring me with confidence in the banking system. https://t.co/8BRzoEJSfT
— Mati Greenspan (tweets are not trading advice) (@MatiGreenspan) March 24, 2020
“What most people still don't get is that the money you deposit in a bank is not yours anymore, it belongs to the bank. The is only 5 to 10% real physical cash available for withdrawal. The bank run has already begun which explains this intervention by the FDIC. Be your own bank!” wrote another.
Of course, Bitcoin’s closest analog to banks—crypto exchanges—are often far less insured than high street banks, and frequently misappropriate customer funds or become insolvent. Quadriga CX, Einstein Exchange, Binance and Mt. Gox are all examples of cryptocurrency exchanges that have lost user funds. The list of cryptocurrency exchanges that have had trouble producing user funds goes on: COSS, BT360, FCoin, Cryptopia, and many more.