Why Celsius and Voyager Were More Like Uninsured, Quasi-Banks

cryptonews.com:

William D. O'Connell, PhD Candidate, Political Science, the  University of Toronto.______

There is a well-known saying shared by both crypto experts and skeptics: “Not your keys, not your coins.” The phrase, popularized by Bitcoin entrepreneur Andreas Antonopoulos, refers to how the contents of a crypto wallet are the property of whoever has access to that wallet’s digital “keys.”

This means that unless you personally have the keys to your crypto assets and store them offline, you are vulnerable to hacks, scams and bankruptcies. The endless stream of crypto scams has been well documented. So have the security breaches — and not to mention the eye-popping carbon emissions.

Of course, offline storage requires an extra level of understanding, technological sophistication, and inconvenience. Enter crypto exchanges like Coinbase and Crypto.com, which offer simple, convenient platforms for users to buy and sell cryptocurrencies and NFTs.

However, the crypto crash has revealed that these firms are not just exchanges — they are more like banks. Except defunct crypto exchanges like Celsius Network and Voyager Digital were only banks if you read the fine print. Most customers, of course, did not.

Until very recently, crypto exchanges were all the rage. They had A-list celebrity spokespeople, stadium naming rights and public endorsements by major politicians.

Crypto exchange companies market themselves as platforms for users to buy and sell crypto. But they also function like stockbrokers and, more concerningly, their core business models quite closely resemble banking.

Traditional exchanges, like the New York Stock Exchange, rarely go bankrupt. And since they do not offer account services, if they do go bankrupt their clients are