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Caitlin Long 🔑⚡️🟠 Profile picture
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May 10 • 3 tweets • 3 min read
1/ I'VE BEEN THINKING--#bitcoin may prove to be the exact opposite of #tradfi where cost of debt is < cost of equity. On-chain #bitcoin will prove over time to have a cheaper cost of capital than #bitcoin-denominated debt--bc #bitcoin isn't an IOU & has no lender of last resort.
2/ This may take time to play out & all the leverage-based financialization games being played by the fast-money crowd need to be flushed first. To be clear, such games are increasing the cost of capital for the whole ecosystem now (by increasing #bitcoin's price volatility).
3/ But that flush will happen (& good riddance to the games when it does). That's when #WallSt crowd will figure out just how different bitcoin is.

Per @TraceMayer, #bitcoin is the apex predator of finance.

Reminder: if you don't own on-chain #bitcoin, you don't own bitcoin.

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More from @CaitlinLong_

Caitlin Long 🔑⚡️🟠 Profile picture
Apr 8
1/ REMARKABLE SPEECH by US federal bank regulator abt #stablecoins (even cites yours truly at footnote 20). He discusses potential special-purpose, ring-fenced, non-lending banks as stablecoin issuers--ie, what #Wyoming SPDIs are. + nods to state efforts.
occ.gov/news-issuances…
2/ This feels like the moment when another national group (the ULC), which had initially been critical of #Wyoming jumping ahead to recognize digital assets in its commercial laws, started to replicate some of Wyoming's good ideas. The ULC later saluted Wyoming as a pioneer. 🙏🤠
3/ While I wouldn't ever expect the federal bank regulator to salute #Wyoming as pioneer here (there's a long history of fighting between the federal & state bank regulators), the nod he gives to the **IDEAS** is remarkable.

Here are snippets from OCC Acting Commissioner Hsu:
Read 8 tweets
Caitlin Long 🔑⚡️🟠 Profile picture
Apr 1
STILL THINKING abt the SEC's staff acctg bulletin abt #crypto custody. It's an ENORMOUS change that disadvantages custody of crypto vs custody of securities, commodities, art, etc, for which many of the same issues exist. @HesterPeirce--can the SEC simply overrule FASB by fiat?
Here's my thread from yesterday, with initial reactions:
To illustrate just how staggering a change like this could be, here are State Street's numbers from its latest 10-K (2021):
* assets under custody: $43.6 trillion (TRILLION!!)
* on-balance sheet assets: $314.6 billion
* shareholders' equity: $27.3 billion
Read 5 tweets
Caitlin Long 🔑⚡️🟠 Profile picture
Mar 31
1/ THE SEC's new staff accounting bulletin on #crypto custody brazenly violates "same activity/same regulation" principle. There are similarly huge counterparty risks in securities custody, but the SEC doesn't require extra disclosure of those, or on-balance sheet acctg treatment
2/ Can you imagine if securities custody banks like State Street/BONY/etc had to account for securities custody on-balance sheet + hold 5% tier 1 capital against those huge liabilities? They'd be staggeringly undercapitalized. Yet that's what SEC now requires of crypto custodians
3/ It's a SHOCKING double standard, esp when the SEC knows that securities custody entails many of the VERY SAME RISKS! For ex, there are huge differences in the treatment of assets under custody in receivership that depend on whether your custodian is a bank vs. a trust company.
Read 5 tweets
Caitlin Long 🔑⚡️🟠 Profile picture
Mar 15
MORE on the below 🧵. There's so much inconsistency in #tradfi collateral posting rqmts (eg, most govts & corporates aren't req'd to post while trading firms are but with v diff collateral thresholds). It's all obfuscated. I lament that these derivative games are now in #crypto😢
There's no question derivatives games put a lid on #bitcoin's price appreciation in recent cycle, just as the same #WallSt derivatives games do same to #tradfi mkts. But when the epic short squeeze inevitably finally hits you get #LME-type games (yep, even in regulated mkts).
And derivatives can debauch otherwise strong balance sheets VERY fast in unexpected ways when BIG moves happen.

Little known fact: big banks' interest rate trading books often have BIG swaps receivables from state/local govts & swaps payables to corporates--UNCOLLATERALIZED.
Read 6 tweets
Caitlin Long 🔑⚡️🟠 Profile picture
Feb 19
I LEARNED interesting things at #ETHDenver2022—#DAOs are organizing under either coop or LLC laws🤠, & despite testing all the thousands of attendees for COVID a staggeringly low # were testing positive. I hope the latter is basically over🤞—the former seems to be taking off tho.
For #DAOs that choose to register there’s a race btwn using state cooperative laws vs state LLC laws. WY’s #DAO LLC law is hot but so is CO’s coop law. Our panel didn’t have time to dive into the differences in how each limits liability for members. #crypto lawyers—pls debate it!
Here's a blog on the topic of limiting member liability for coops. I'm hoping #crypto lawyers pick this thread up & start discussing bc there are likely differences between state coop laws & state LLC laws when used by a #DAO. I find the topic interesting. cooperativesfirst.com/blog/2020/08/0…
Read 6 tweets
Caitlin Long 🔑⚡️🟠 Profile picture
Feb 10
1/ SO MANY TRUTH BOMBS in this terrific blog post.🧐MUST READ for US customers of #crypto exchanges/custodians (hint:😱, if yours goes bankrupt). Note @AdamLevitin analysis applies US-wide *EXCEPT* in #Wyoming bc it mostly fixed the very issues he lays out creditslips.org/creditslips/20…
2/ Truth bomb #1: "I do not think customers understand the legal nature of the custodial relationships, and exchanges have no incentive to make the legal treatment clear to customers." ...
3/ "In bankruptcy, it is likely to be treated as a debtor-creditor relationship, not a custodial (#bailment) relationship. That means that customers are taking on REAL CREDIT RISK with the exchanges, which is a particular problem because of the opacity of the exchanges..."🎯
Read 25 tweets

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