Another traditional banking crisis equals another blame game within the finance world.
To start, the sudden March 10th collapse of Silicon Valley Bank (SBV) represented the second-largest bank failure in the United States. The FDIC had to step in after worried depositors did their best to withdraw as much cash as possible.
The ripple effect of SVB’s downfall quickly spread.
Signature Bank in New York also closed down, leading state regulators to take charge over the weekend in an attempt to ensure financial stability. Before SVB’s downfall, Silvergate Capital announced on March 8th that it would voluntarily liquidate and shut down operations.
Unsurprisingly, the news of turmoil within the traditional financial sector led some of crypto’s biggest skeptics to sound off against digital assets.
On March 8th, U.S. Senator Elizabeth Warren Tweeted that Silvergate was “the bank of choice for crypto” and called on regulators to “step up against crypto risk.”
Will Crypto Weather The Traditional Bank Crisis
While Silvergate and Signature are seen as crypto-friendly banks, the latest banking crisis only continues to make it clear that a pro-crypto future is still the only way forward.
To start, DWF Labs managing partner Andrei Grachev explained “new innovative challenger banks” have an excellent opportunity to replace more prominent entities like Silvergate and Signature in the crypto world.
Stablecoin issuer Circle was troubled after it could not mint or redeem USDC through Signature’s Signet program amid the chaos. While the stablecoin did temporarily depeg, Circle found a new banking partner by late Sunday to keep the company in operation come Monday. Additionally, Signature Bank board member (and former Congressman) Barney Frank signaled in an interview that there was not a crypto issue but rather more of an issue about messaging.
Speaking to CNBC, Frank explained there was “no real objective reason” for Signature to be seized and elaborated on the point that “I think part of what happened was that regulators wanted to send a very strong anti-crypto message… “We became the poster boy because there was no insolvency based on the fundamentals.”
The Failures Of Traditional Banking Do Not Extend To Crypto
Amid the fallout, many argue that the collapse of these leading traditional banks resulted from mismanagement and general failures in conventional finance.
George Kaloudis wrote in CoinDesk how the SVB Bank run was “spurred on both by SVB mismanaging risk, losing money by putting customer deposits in the wrong financial securities (like long-dated Treasuries or the wrong flavor of mortgage-backed securities) and by fear stoked by the venture capitalists who own massive financial interests in many of the companies banked by SVB.”
Understandably, the increased skepticism many more have about traditional finance has boosted cryptocurrencies’ notoriety and value. As of March 15th, Bitcoin enjoyed its best four-day stretch price-wise since February 2021, briefly hitting a $26,500 recent trading peak. In addition, Bitcoin soared 7.5% over 24 hours from March 12th to March 13th as news about the banking crisis dominated headlines.
Others believe crypto markets could continue to surge in growth if the Federal Reserve decides to ease back on raising interest rates and take a more cautious approach amid the traditional banking turmoil. A change of philosophy from the Federal Reserve could mean investors will be more open to allocating money towards crypto and stocks instead of Treasury Bills.
How Can Crypto Help?
Even though billions worldwide rely on fiat currencies to buy, sell, and trade, cryptocurrencies like Bitcoin represent the future of finance due to the asset’s advantages over traditional cash.
The latest banking crisis has highlighted the fragility of the traditional financial system. Several banks across the globe are facing liquidity problems, with rising debt levels and decreasing profits. This has led to the closure of several branches, reducing access to financial services for customers.
On the other hand, cryptocurrencies, such as Bitcoin and Ethereum, offer a decentralized and secure financial system- free from government and institutional control. Cryptocurrencies allow for peer-to-peer transactions and eliminate the need for intermediaries, such as banks, to process payments.
Furthermore, cryptocurrencies are not subject to inflation, as they have limited supplies, which offer significant advantages over traditional currencies. With the current global economic climate, cryptocurrencies’ immunity to inflation offers a more stable asset class and a safer and more secure option for investors.
Bitcoin’s seamless cross-border nature, inflation resistance (compared to fiat), and the security and stability of the blockchain make it a viable economic tool.
How Can You Keep Your Investments Safe?
For those even more dissatisfied with traditional banking and finance after the latest banking crisis news, where should they turn?
You’ll want to set up a ByteFederal crypto ByteWallet to keep your digital assets safe as you buy and trade. A secure wallet is always a much better choice than storing your coins on an exchange, as the news about the massive implosion of FTX proves.
The ByteWallet offers cutting-edge security tools, features integration with leading protocols like the Lightning Network, and offers you complete control over your private keys and crypto. Uniquely, ByteWallet users can also use physical Bitcoin ATMs to transact while instantly logging in with a QR code.
Visit ByteFederal’s website to learn why ByteWallet and crypto commerce are superior to traditional banking.
