Crypto Winter Is Coming: Why Big Finance Might Need Frostbite Insurance 🥶💸

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If you listen hard enough at a blockchain symposium-in Wyoming, which is basically a place where cows outnumber crypto wallets-you might hear Custodia Bank CEO Caitlin Long quietly telling Big Finance that their risk models are about as modern as a fax machine in a windstorm.

“Big Finance is here in a big way,” Long chimed at CNBC, evidently believing if you say something twice it gets doubly true. “And, unless someone blows a vuvuzela, they’ll keep driving this cycle…right until it skids into a ditch.”

Legacy financial institutions are used to playing with leverage like toddlers with scissors; not to worry, the system is padded with fail-safes, discount windows, and tolerance for faults that would make the Discworld’s Patrician raise an eyebrow. Their idea of a stressful day is surviving until happy hour, assets intact.

But just when you thought it was safe to trust maths and calculators, crypto comes along. With settlement in “real time,” meaning the speed at which anxious traders chew their ties, those old bonuses like time delays and weekends off evaporate faster than the plot of a horror movie sequel.

“Those kinds of fault tolerances are built in because, back in the day, updating things instantly was like expecting politicians to make sense,” mused Long. “But crypto is a different beast-real-time means real panic.”

Long gave a dramatic sigh, no doubt recalling markets as yesteryear’s rollercoasters rather than today’s queues at the guillotine. “I do worry how those titans of finance will react when the bear market inevitably comes again. Some are chirpy optimists, probably writing sonnets about infinite bull runs, but I’ve seen winters colder than a wyvern’s heart since 2012.”

Institutional investors (the kind who consider “fun” a spreadsheet with extra columns), especially crypto treasury firms, now dominate the market like wizards at a bingo night. It’s good for those keen on adoption. For everyone else, it’s a bit like watching tourists gleefully overleveraged at Ankh-Morpork’s casino, moments before someone yells “contagion!” and the system catches a financial flu.

Custodia CEO echoes what everyone with a crystal ball already suspects 🤔

Chris Perkins, president of CoinFund and the sort of person who says “systemic risk” before breakfast, pointed out, “One side settles in real-time; the other side takes weekends off-possibly with piña coladas. It’s a recipe for a liquidity crisis so classic, it should come with a tiny cocktail umbrella.”

As Perkins explained to CryptoMoon, mismatched settlement mechanics are basically the reason crises are allowed to wear fancy hats and appear in headlines. If you need a metaphor: it’s like trying to hold a swordfight with one person using a spatula.

In June, VC firm Breed released a report so gloomy it made Eeyore seem upbeat: new Bitcoin treasury companies probably won’t survive the next downturn. Their prediction? Overleveraging plus declining asset prices equals an unstoppable doom cycle that’ll have these treasury firms tossing coins out the windows like confetti, cutting prices further and sending the market into recursive sadness.

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2025-08-24 01:32