Good morning [%first_name |Dear Reader%],

Welcome to this week’s edition of Tokenised.

Over three weeks in October, 1907, the US banking system went through significant turmoil. The New York Stock Exchange tanked, many banks faced a run on their deposits, and financial leverage came home to roost with a vengeance. This panic eventually came to be known as the Knickerbocker Crisis—named after Knickerbocker Trust, a bank that collapsed during this upheaval. 

There was a lot going on that led to the Panic of 1907, but how and why it happened are not what I want to talk about today. Suffice to say that it starred some of the usual suspects—attempted market manipulation based on flawed assumptions, unregulated side bets just waiting to cascade into disaster, greed…

So why the history lesson? Well, because the Knickerbocker Crisis also led to the creation of the US Federal Reserve (the US didn’t have a central bank at that time) and its obligation as the lender of last resort. 

Now, over a hundred years later, global crypto markets are beset by turmoil (for many of the same reasons), and with lenders in the space stumbling left, right, and centre, crypto is also birthing its own bailouts.