Ruminates on risk, fintech, banking, regulation, sailing, and wine. Bitcoin and lightning too. #Bitcoin #fintech #Lightning
Joined March 2009
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Joshua retweeted
Many startup employees do not recognize the sheer litany of ways that a founder can screw you over without you even knowing. Founder trust is one of the most important things to look at when you’re joining a startup.
From cutting you out of M&A, screwing your retention pool, overdiluting your equity, firing you before your cliff, not having attractive options exercise plans, poor 409a price management, not telling you about QSBS / early exercise, blocking you from participating in secondary, obscuring company performance and many more.
Many many decisions that are made in rooms you are not in as an employee where the only thing that matters is: “does the founder have your back?” Great startups with untrustworthy founders lead to poor outcomes and often good startups with trustworthy founders lead to great outcomes.
Pick wisely.
Joshua retweeted
I think the hardest thing to explain to loan review examiners and auditors is a borrower doesn’t have to cash flow if you have millions in unencumbered assets (not crypto). Consistent cash flow is great but balance sheet lending is also a thing. Just because they don’t cash flow one or two years doesn’t make it a bad loan when they have doors to get out.
The South Carolina entrant for Miss Teen USA 2007 was spot on. youtu.be/lj3iNxZ8Dww
Joshua retweeted
Steve was very generous with his time and advice, and I learned so much from him. This is a massive loss for the state of Wyoming and the university.
Steve Lupien, founding director of the UW Center for Blockchain & Digital Innovation, passed away on July 5 following an extended illness. Read more about Steve and his legacy at uwyo.edu/cbdi
Services are Saturday, 9:30 a.m., July 11, 2026, in Laramie.
Joshua retweeted
Around $3 Trillion dollars were laundered through banks in 2025 despite the warrantless surveillance regimes they facilitate for governments. And they want you to think that people making peer-to-peer transactions on chain are the problem that needs to be outlawed.
Joshua retweeted
I think the kids call this pardonmaxxing
S&P 500 hit another ATH yesterday: 7,365
+22.8% since @realDonaldTrump's second inauguration.
How about same point in Biden’s term?
+7.0%
The first year call reports for de novo banks are generally very weird. And drawing conclusions about the safety and soundness of those banks or regulators’ concerns is usually just speculation. But if I were to speculate, I’d say that Erebor is safe and sound, regulators aren’t worried, and uninsured deposits are not a concern right now.
Why aren’t uninsured deposits a concern? Erebor Bank maintains just shy of $600 million in tier 1 capital and a leverage ratio over 140% as of 3/31/2026. Compare this to the balance of uninsured deposits of approximately $256 million. This is especially important in relation to Erebor’s largest asset category: interest bearing bank balances (i.e. cash parked at the Fed and other correspondent banks), which totaled $1.1 billion on 3/31/2026.
Why does this matter? Because banks live and die (but mostly die) by their asset quality and capital. Take SVB for example. Their last call report showed just under $17 billion in tier 1 capital and a leverage ratio of approximately 8% as of 12/31/2022. When compared to uninsured deposits of $151.6 billion, that made me a little uneasy. But the biggest difference is the asset quality. SVB’s largest asset category was investment securities, namely US treasury securities totaling $92.2 billion. Normally that wouldn’t be a concern; US treasuries are highly liquid assets and the credit risk is essentially nil. The problem is that those securities were longer term and purchased in a low rate environment. When the Fed started increasing rates, those securities couldn’t be sold at or above their book value, resulting in unrealized losses. And those losses had to be realized when those treasuries were sold to cover the outflow of uninsured deposits. Not to mention that those securities plus interest bearing bank balances would have never been sufficient to cover a situation where all uninsured deposits fled the bank.
Regarding Erebor's first call report, which showed that the bank had acquired $1.1B in deposits in just 7 weeks, there's an important difference between depositor safety and bank safety.
- Only 23% of Erebor's deposits are uninsured (compared to roughly 90% for SVB before it failed), and the Erebor deposits that uninsured are from a small set of very large accounts, which are likely friends and family from the Luckey/Thiel multiverse of madness. The rest of the deposits are either with depositors under $250,000 or spread out through IntraFi.
- However, 88% of Erebor's deposits are interest-bearing (compared to roughly 50% for SVB), which, combined with the rapid growth, is cause for concern. This is a profile that is common in bank failures. You pay up to quickly acquire hot deposits, which is usually followed by excessive risk taking on the asset side of the balance sheet.
- Now, we don't know exactly what Erebor is going to do with the deposits. It hasn't made a single loan in its first 7 weeks. Palmer Luckey has said that the bank will have "the most conservative loan-to-deposit ratios of any bank in history," with early indications targeting around 50%, meaning the bank intends to lend out only half of every deposit dollar it takes in. However, this doesn't mean that the bank won't, at some point, take some risky gambles. Before it failed, SVB had a loan-to-deposit ratio below 50%.
The reality is that we don't know much yet. All we can say for sure is that the bank looks both safe to depositors and unsafe to regulators.
That may seem like a contradiction, but that's banking for you ...
Joshua retweeted
No one is ready for the real solution to Gerrymandering:
A return to the Constitution's original standard of 1 Member of Congress for every 30,000 Americans, resulting in an 11,000-member House with city-council sized districts so small you can't Gerrymander them if you tried.
Joshua retweeted
It remains a mystery how the Fed is supposed to be independent for one purpose, but not for others.
If independence over bank regulation/supervision is undesirable or unconstitutional, the Fed should be stripped of its authority.
Warsh is set to tell lawmakers on Tuesday that the Fed's independence in setting rates is "essential" but that policy decisions related to bank regulation and "public monies" should not be given the same deference.
He will also argue that "inflation is a choice" and that price stability should be pursued "without excuse or equivocation"
I would love to see the cost comparison of maintaining 53+ MTLs versus a national license with “enhanced” compliance expectations. My gut says it’s a wash or slightly beneficial for a national charter.
Source: I worked at MTLs, consulted banks’ and broker-dealers’ AML/CFT program remediations, regulated banks as a commissioned OCC national bank examiner, and chartered a trust company
OCC compliance is vastly more expensive, demanding, and complicated than MTL compliance.
There are benefits but for many it will be vast overkill.
Source: I worked at MTL-licensed entities... and @jpmorgan
Joshua retweeted
I'm going to make a prediction that will shock many of you:
Going forward, for at least the next few years, MTL licensure in the US will be obsolete.
And everyone who has a litany of MTLs will feel the compliance burden of an outdated vehicle they bought and paid for.
In it's place will be the occ bank trust charter (which is not the same as a depository bank charter like you'd interact with at JP morgan). The bank trust charter will turn into a kind of federal crypto license.
You've seen over the last few months many conditional or full approvals for bank trust.
@stablecoin, @coinbase, @bitgo, @nubank, etc
That will be the new norm. Bookmark this post.
Joshua retweeted
"Victim." I remember how terrible I felt the day in 1993 that I got that skinny envelope from @StanfordLaw. "Rejected". I wish I could back in time and tell myself to cheer up--you might have just dodged the biggest bullet by not learning law from these people.
Joshua retweeted
Someone’s looking for a pardon and doesn’t realize the Clarity Act would have you locked up for much longer than 25 years.
My legislation couldn’t be more different than the bill you tried to buy from Congress over my objection in 2022.
We do not need—nor want—your support.
The CLARITY Act will be a huge milestone for crypto and a huge achievement for @realDonaldTrump.
I was championing a similar bill to get crypto out of Gensler's hands when Gensler helped Biden's DOJ put me behind bars. financialservices.house.gov/…
Joshua retweeted
In contrast to the hundreds of other actual companies who did successfully register with them.
(jk there are none)
Joshua retweeted
One thing i think about often is how much we could stoke growth in this country if we just made it easier to start new banks. Too much money concentrated in the top 10 banks does stifle local growth.
Joshua retweeted
Turning the world into a casino is irresponsible and detrimental to society.
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Joshua retweeted
My view is that the Bitcoin stack is the ultimate stables delivery platform winner, if we make it so by running at it hard. That actually increases demand on spot bitcoin via LN utilization, etc. Missing this opportunity could be a drag on bitcoin only in the sense that if we want Bitcoin to reign supreme, embracing stables and integrating them into every bitcoin company alongside fiat rails USD support will fuel a shift from stablecoins literally everywhere else in crypto and back to the chain where stables started: Bitcoin. Otherwise, we're really acknowledging a long-term multi-chain future where Bitcoin isn't the beneficiary of this massively validated market. Stables aren't going away as a matter of U.S. policy. They will accelerate. They have to in order for Treasury to sell U.S. debt as international rivalries get increasingly contentious.
If anyone is working on a primary issuance platform for a Bitcoin-native USD-pegged stablecoin, I'd like to talk with you. Dry powder locked and loaded.
