Alex Mashinsky used to like to tell people that “banks are not your friends”. Banks stopped caring about their depositors, he said, and haven’t innovated since the automatic teller, a line he borrowed from former Federal Reserve chair Paul Volcker.
Mashinsky, chief executive of crypto lending platform Celsius, is now suffering from a rather banklike problem: after a big increase in withdrawals of crypto deposits, his company has had to suspend such redemptions. The move will “put Celsius in a better position to honour, over time, its withdrawal obligations”, according to a company statement. To honour over time: this, too, is a rather banklike way of phrasing a promise.
It’s always satisfying to watch the third act of a play about hubris. But banks, particularly American banks, are not your friends. They provide month-to-month liquidity to consumers through credit cards at rates that remain high no matter what the Fed does. They make transfers needlessly difficult and expensive. They charge by the month to manage small-dollar deposits, and can’t quit the destructive habit of imposing huge fees on minor overdrafts. Something does need to fix banks. It’s just that crypto assets, crypto liabilities and crypto culture don’t seem to have been up to the task.