Macro Mondays – Systemic? Where does the digital ecosystem go after FTX? It remains the dominant question, and it deserves a macro perspective. After all, the history of financial fraud is a long one. Insurance of ships was one of the first documented. Lenders provided funding for a voyage, secured by the vessel and its cargo. When the delivery was made, the lender received funds plus interest or could take possession of the ship and its contents. Hegestratos, a merchant, had a different plan. He sailed an empty vessel to sink it – the lender, playing the role of insurer, would have no claim, and the excess funds were kept by Hegestratos. Financial panics routinely revealed fraud. None of them prevented progress. On the contrary, adjustments were made to discourage the behavior. The SEC was created in response to such fraud in the 1920s, when “stock pools” controlled by wealthy investors manipulated share prices. FTX is a setback, not a fatality. There is no systemic consequence to digital or otherwise. Systemic risks are about hidden leverage. Leverage is limited. Active loans by prominent lenders in the digital ecosystem are in the tens of basis points relative to total market capitalization. The digital asset ecosystem has only penetrated traditional finance through one tool – stablecoin. US dollar stablecoin is collateralized predominantly with Treasury bills and is the third largest asset in the ecosystem. No leverage. The risk is akin to a money market breaking the buck rather than a systemic threat to the banking system. Bear markets lead to hardship. Hardship is the stoic recipe of discipline and growth. This too shall pass.