Cyprus Bail-In 2013: What It Teaches XRP Holders About Custody

47 a.5% that's how much of every euro above 100,000 sitting in an ordinary account at the Bank of Cyprus was turned into shares in the same bank in 2013. Now the money didn't go missing in a hack and nobody actually stole it. It was done by decision under the terms of European Rescue. So XRP holders, this one is for you, right? Cypress shut it banks for 12 days in 2013.

Here's what that means for your coins. Because the question it raises isn't really about Cypress. It's about who's holding your money and what they're allowed to do with that money when things go wrong. So, if you own XRP, see what Cypress did to big bank savings before you trust anyone to hold yours. Cyrus's biggest bank turned nearly half of every euro over 100,000 into shares.

So, where is yours? Right? In a bank or on an exchange or in a wallet that you can control. I'm going to tell you a story first fairly because small savers were protected in the end and then we're going to get to what a bail means in the banks exchanges and your XRP and we're going to keep the first link in my description in mind as well. I'm going to be walking you through it inside the first 5 minutes.

It's actually aimed at people who like a clear written plan for where their money is kept. So in Cypress 2013 had a banking system that was huge for the size of its economy. It was actually two biggest banks, the Bank of Cypress and Le which also traded at Cypress's popular bank. They had tokenheavy losses and a lot of it on Greek government debt. Now the country needed a rescue from the rest of the Euro zone and in the early hours of the 16th of March 2013 a Saturday Eurozone finance ministers agreed a rescue worth€ 10 billion.

But that actually came with a condition that shocked people in Cyprus. Money would be taken from bank deposits to help pay for it. Here's how the Germany Chancellor Angela Merkel explained it. Check this out. So, we said people who have their money in Cypress's banks have to contribute to saving Cypress.

So, everyone who has more than €100,000 in his or her account will be taxed by almost 10%. Almost 10% on anything over €100,000. And under that first plan, 6.7% on smaller savings, too. Now, the banks were shut for the weekend when the news broke and the cues formed at the cash machines. But let's be honest, right, about what that story lands with all of us.

Most of us keep our money in two to three places and simply assume it's ours. And we never actually read what happens if the place holding it gets into trouble. And to be honest, that's a silly way to look at things. And what we would do if it couldn't reach it in a Fortnite is another thing we panic about. We just trust that it'll be there.

Now guys, I want to say this very clearly. This is not financial advice. Please do your own research. I'm giving you my opinion and I'm giving you the facts behind the stories and I'm going to be doing that for a long time. So make the decision yourself once you've researched correctly.

So Paul Rose, if you've been here before, please make sure that you've hit the subscribe button. If you're brand new here, welcome. My name is George Lee. Hit that subscribe button for me. We're nearly at 400,000.

But let's leave Cyprus for one minute and think about your own setup. Some savings in the bank, maybe some XRP on an exchange, maybe some in a wallet, right? That's probably what you have. For most of us, that split just happened over time. Nobody ever decided it on purpose.

And I'm not telling you in this video to buy XRP because there may be way better opportunities for your situation. But wherever your money is, it's worth knowing why it's there and what it would actually do if one of those places shut its doors. Now, that's exactly what our altcoin pro course is designed to help with. Okay? It shows you how big a share of your money onecoin should have, which part makes sense on the exchange, and how to keep the rest of yourself without getting in a muddle.

It's also going to show you what your plan is if something goes wrong. So, here's the practical bit. All you got to do is go to the first link in the description. You fill in a short form and then it's easy. Just book your free 15-minute call.

One of the team is then going to walk you through your own strategy and your own situation. Okay? And they'll know better than I do. So, if you're watching this on your phone, just tap the more button under the video. It's the first link you're going to see.

It's a couple of minutes. So, just do it as soon as this section ends and then come back because what happened in Cypress Parliament 3 days later surprised everyone. On the 19th of March 2013, the Criate Parliament voted on deposit tax. It wasn't a single member voted for it. Okay?

36 voted against and 19 abstained. Now, crowds outside were cheering, but voting didn't open the banks. They actually stayed shut while the government looked for another deal. So, on the 25th of March, a Bloomberg reporter on the island described what that meant. Let's watch this together

here because the banks as you just mentioned have been closed now for 10 days and people really have uh not had much of a access at all to their money. Just uh late yesterday the government here put a limit on withdrawals from cash machines at €100. That's the most anyone in this country can withdraw from their bank and through through cash machines while the branches remain shut.

In the early hours of the 25th of March 2013, a new deal was struck in Brussels. Now, the tax on every single account was dropped. This time, deposits up to €100,000 would actually be protected in full, and everything above that was where the losses would land. Now, the second biggest bank was to be closed down. It savers, first €100,000 moved across to the Bank of Cyprus, protected.

The money above that line stayed behind in a so-called bad bank, part of a failed bank that holds the losses while it's wound down. And the Bank of Cyprus would be rescued using its own language depositor's money. Now, here's Bloomberg's report of that morning.

Well, no reaction yet, but as you can imagine, the reaction will not be a positive one because if people as of Friday that had money at Cypress Popular Bank knew that they were going to be mostly wiped out, uh it's a bit of a surprise when it comes to the country's largest bank, the Bank of Cypress. Uh you know, even if EU officials say they will only lose about 40% of their deposits, that's still a huge hit uh to depositors at that bank. mostly wiped out at one bank and a huge hit at the other. That same day, the man who carried those meetings, the Dutch finance minister, Jerome was reported and saying the Cypress approach could be a template for other banks. Now, markets dipped and within days, the European Commission was stressed that Cypress was a specific case. It wasn't actually a template.

So, on the 30th of March 2013, the details about the Bank of Cyprus actually came out. And this is Al Jazz's report. And on Saturday, the fine print of the bailout was revealed, and the losses are far greater than originally feared. Savers at the Bank of Cyprus will see 37.5% of their deposits, over $130,000, turned into shares, but a further 22.5% of savings would be held by the government until it can satisfy the terms of the EU bailout. That means that savers face potential losses of 60%.

In the end, the final number was set on the 29th of July, 2013. So 47 12% of every deposit above €100,000 at the Bank of Cypress was then turned into shares in the bank. So let's make that real. Let's say you'd sold a family business and had €200,000 in the Bank of Cypress. Well, the first €100,000 was protected.

Now, of the second 100,000, 47,500 stopped being money and became shares in a bank that had just needed rescuing. And under the March plan, part of the rest was locked away in fixed deposits for months. So at that second bank Leaky, it was harsher. Money above the line stayed in the bad bank and its owners became creditors waiting to see what could be recovered. Haircut is the word people use in Cypress a lot for this, right?

It's a cut taken off the top of your savings. Now the banks finally reopened on the 28th of March 2013, 12 days after the first deal. People queued for hours. And here's what some of them actually told DW. Things are not at all okay.

My mother couldn't get any money. She couldn't cash a bond. And she has to wait for her pen. My daughter lives with me and I have no other income. Tell the government.

Even if I go to the bank today, they won't give me more than €300.

How long will this last? Everybody's confused and has questions, especially pensioners. €300 a day in cash. According to DW, the money sent abroad was capped at €5,000 a month. And anyone leaving the island could take €1,000 in cash at most. Now, businesses were stuck, too.

Okay, this is the owner of a company, Important Hair Products, speaking to the Associated Press.

We we have a substantial amount of checks that we've collected over the last 10 12 days or so that uh obviously we were unable to deposit in in our bank. Those controls were meant to be short and in the end, the last of them weren't lifted until the 6th of April 2015. That was more than 2 years later. Now, the headline figures hide who was actually above the 100,000 line, but plenty were wealthy, and some of the money came from abroad. But the same line could just as easily catch someone who just sold a house or a business or, let's say, a small firm holding cash to pay wages or savings set aside for one big purpose.

The story people in Cyprus point to most is the Helios orphans. These were children who lost their parents in the Helios Airways air crash in 2005. And according to the Cypress Mail, their compensation money was sitting in the banks and it was caught by the haircut. The Cypress Mail called them the symbol of haircut injustice. Now, in 2026, just this year, more than 13 years after that weekend, the Cypress Mail was reporting on compensation for haircut losses.

So, what is a bailin? Well, here's the plain version, right? When you put money in a bank, legally, you've lent it to the bank. Your balance is really an IOU from the bank. And in a bailout, outsiders, usually taxpayers, put money into a save and failing bank.

So, in a bailin, the bank's own lenders take the losses instead. and depositors are among those lenders. Well, in 2014, Europe wrote that idea into the rule book for failing banks. Here's how the EU describes the system it built for failing banks. Now,

dates its mission is to ensure an orderly resolution of failing banks and banking groups with minimum impact on the taxpayer and on public finances of the participating member states of the banking union. Minimum impact on the taxpayer. So, if taxpayers are not paying, then the losses go to the people who funded the bank. And under the European rules, that took full effect on the 1st of January 2016. The order is roughly this.

The bank owners lose first, then the people who lent it through bonds and only after them. If that isn't enough, the deposits then aren't insured. Here's the fair part because this video is not meant to scare anyone. Okay? Insured deposits are kept out of the bailing completely.

In the Euro zone, that's up to €100,000 per person per bank in the UK. The protection limit went up to 120,000 on the 1st of December last year. So deposits of ordinary people and small firms above that limit also rank ahead of the bank's other ordinary lenders. So for most people with normal savings, a Cypress style loss on their bank account is very unlikely under these rules. Right?

The lesson from Cypress isn't the banks will take your savings. It's that every place you keep money comes with rules about who takes the loss when it fails. And those rules can be written in a weekend. An exchange isn't a bank. Now let's get into this.

The XRP you hold on one is not a bank deposit. And bank deposit protection doesn't cover it. The FCS, for example, doesn't protect crypto. What protects you is the exchangeown rules and the law where it's licensed. So in the European Union, the MICA rules say that a licensed firm must keep its customers coins legally separate from its own.

And that's so the firm's creditors can't touch them if it goes bust. Now, there's a real protection, but it depends on the firm following the rules. And remember guys, those 12 days, right, money can be safe on paper and out of reach at the same time. The XRP ledger's own documentation actually puts it plainly. No one can freeze XRP on the ledger itself.

But an exchange that holds it for you can pause it at its own discretion. So what's the difference between the Cypress banks here? Right? XRP in a wallet where you hold the keys isn't on anyone's balance sheet. It isn't a loan to a bank or a claim on an exchange.

It actually sits on a ledger and only your keys can move it. There's no bank holiday for it and no daily cash limit. Spending it in everyday life though usually means changing it back to ordinary money through a regulated firm. So people noticed that in 2013 and on the 28th of March, the day Cypress banks re reopened, Bloomberg ran an article headline called Bitcoin may be the global economy's last safe haven. But there's a price for that freedom, right?

And it's worth saying out loud. So with your own wallet, you become the bank, the security guard, and the help desk all at once. If that recovery phrase is lost or typed into a fake website, then the coins are gone. And there's no scheme to pay back. The Cypress savers under the line were made whole because a rule covered them.

And in your own wallet, the safeguards are the habits you build. XRP's price can drop sharply whether you keep it or not. Self-custody protects you from someone else's mistakes. It's not from the market. Now, some people will hear this story and want to pull everything out.

That's not the lesson. It's not the aim of this video. Money for bills and everyday life belongs in insured accounts, of course, and the limits are there for exactly that. Now, cash under the bed has its own risks, and crypto isn't a savings account. The sensible lesson is karma.

Know which of your money is protected and by whom. Remember, the limit is per person, per bank. And if you hold larger sums, that's what it's for. So decide what share of your XRP, if any, needs to sit on an exchange for trading. And also, how much belongs in a wallet you control?

And then just write down a plan while things are quiet. Okay, so here's something I'd genuinely like to know. Have you ever read what your exchanges terms say happens to the coins if it fails? If you have, tell me in the comments what surprised you. Okay, if you'd like more stories behind how money really works, then subscribe button is right there under the video.

Go back to those cash machines in Cypress in March 2013. Hundred euros branches shut. Nobody sure what their balance was really worth. What decided how most people came through it wasn't whether they predicted the crisis. It was actually which side of the €100,000 line the money sits on.

And that's really the whole job for your XLP and your savings and your plan. So know where each one sits and who decides what happens to it. Crypto carriers risk and past results are no guarantee of future ones, guys. This is education, not financial advice. As always, stay blessed.

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