- Cardano’s founder said that it’s about time that crypto breaks free from the unstable and volatile banks adding that banks would suffer the moment we digitize securities.
- The call for “crypto de-risk” comes as many speculate that regulators have been specifically targeting crypto-friendly banks.
The cryptocurrency market has shown strong resilience to the recent banking crisis with Bitcoin and altcoins delivering a strong rally. Bitcoin’s recent surge past $25,000 has got everyone talking about BTC emerging as a beacon of hope when traditional systems are failing.
Not only Bitcoin but other altcoins are doing extremely well too. The latest developments have drawn reactions from crypto industry veterans. In a tweet earlier today, March 15, Cardano founder Charles Hoskinson said that crypto needs to de-risk itself from those “unstable and volatile banks”.
Crypto needs to de-risk itself from those unstable and volatile banks
— Charles Hoskinson (@IOHK_Charles) March 15, 2023
This happened as US regulators turned the heat on crypto-friendly banks last week. Soon after the crisis at the Silicon Valley Bank, the Fed, and the FDIC intervened announcing a shutdown of the Signature Bank. The failure of these banks to offer crypto-friendly services could have potential implications for the crypto industry, the token market, as well as stablecoins.
Some optimists in the cryptocurrency industry believe that digital assets will eventually replace traditional banks. However, it’s easier said than done considering crypto is facing challenges in re-establishing its connection with the banking system. Several crypto companies have reported that it’s getting much tougher to find banks willing to offer services to crypto firms.
In response to Hoskinson’s tweet, one user called on the need for decentralized banks. Responding to it, the Cardano founder said:
The moment we can digitize treasuries, it’s game over for banks.
Crypto continues to grow despite the odds
Crypto has faced backlash and attacks from regulators over the past several years, however, it has continued to grow despite all odds. As traditional financial systems fail to deliver, there’s a growing demand of moving towards decentralized systems.
These decentralized alternatives will reduce any dependency on traditional banks, however, it’s too early to completely break free from traditional market players. To avoid this banking friction, Binance CEO Changpeng Zhao even considered buying banks. Last year in November 2022, during his interview with Bloomberg at the Web Summit conference in Lisbon, Zhao said:
There are people who hold certain types of local licenses, traditional banking, payment-service providers, even banks. We’re looking at those things.
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He also called investing in a bank a smart strategy since the crypto market is still a lot dependent on fiat liquidity. However, in such a case, it’s certainly not going to be an easy escape from regulators. Binance has yet to act on this call from Zhao.
With regulators shutting down Signature Bank, many have been speculating that this is a coordinated attack by the regulator on crypto-friendly banks. However, an NYDFS spokesperson stated that that was not the case. Signature Bank didn’t provide “reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership” with crypto being a small part of its business.