Inside the Wall Street Tool that Could Ruin Bitcoin [Pt. 2]

Note: This is part 4 in a multi-part article series exploring rehypothecation and commingling in bitcoin and other cryptocurrency markets. Part 1 and part 2 are interviews with Caitlin Long and parts 3 and 4 ask the question, “How did we get to a place that where laws look like this?”

The Problem with Clearing

Beyond costs to the issuers themselves, this system has resulted in a huge rise in brokerage costs with over $100 billion in post-trade servicing fees every tear. Finally, there’s the issue of ownership, something that should be hugely familiar to cryptocurrency enthusiasts who chant the mantra, “If you don’t own your private key, you don’t own your bitcoins.” This is familiar thanks to the oh-so-painful experiences of millions of bitcoin being stolen over the course of 30+ hacks. It turns out that shareholders don’t own their stocks either, with the DTCC owning 99 percent of shares. Instead what most people own and trade are “security…