Gemini Exchange co-founder Tyler Winklevoss described the US banking system as a modern-caste system where the people with the top banks are protected while the rest are exposed to risks.
In a March 17 Twitter thread, Winklevoss categorized US bank customers into those banked by the bulge bracket banks, regional banks, and unbanked banks.
The Bulge banks are the financial institutions the US government considers Systemically Important Financial Institutions (SIFIs); in other words, banks that are too big to fail.
Winklevoss noted that customers with uninsured deposits in these banks usually don’t have to worry because the government will almost always come to their aid.
However, those with uninsured deposits in regional banks are more at risk. Whether the government will backstop their deposits depends on the impact of such banks’ failure on the greater banking system.
According to him, the decision about the bank to save is determined by the majority of the Federal Deposit Insurance Corporation (FDIC) board, the Federal Reserves, the Treasury Secretary, and the President. This means that banks that are not valuable enough could be denied protection.
Winklevoss added that “there is no guarantee” for the customers.
For context, the government had to step in to save Silicon Valley Bank (SVB) customers because its failure could have been disastrous for the broader financial landscape.
Meanwhile, the third category is those without bank deposits, which are therefore not eligible for FDIC $250,000 minimum deposit insurance. “This is not a level playing field,” he concluded.
In a separate tweet, Winklevoss said:
“The US government did a great job averting a banking crisis. Almost as great of a job as they did starting it.”
Meanwhile, several crypto community members said Bitcoin (BTC) solves the problem highlighted by Winklevoss.