Chaos at US banks could push the crypto industry toward decentralization
The crypto industry lost some banking ups and downs due to the recent turmoil in the US banking sector, indicating that there may be a shift in the space towards decentralization and a need for regulation in the future.
Last week, Silvergate Capital, Silicon Valley Bank, and Signature Bank all shut down or were shut down, leading crypto companies and users alike to scramble to move their assets.
“Silvergate and Signature serve as the primary entry and exit points for the crypto space with their SEN and Signet products, respectively,” Standard DAO CEO Aaron Rafferty told CoinTech+. “The tie for SVB has been more on the side of big space startup and VC capital with organizations like Lightspeed, Y Combinator.”
The closure of these banks also has a bigger impact on the crypto industry, as some of them provided services to the industry, said Mina Tadrus, CEO of quantitative investment management firm Tadrus Capital LLC and general partner of Tadrus Capital Fund. “These banks enabled cryptocurrency traders and businesses to deposit, transfer and convert fiat currency into digital assets such as bitcoin, ethereum and other cryptocurrencies.”
With the closure of these banks, it will become difficult for cryptocurrency companies to move money between entities and access banking services, Tadrus noted. “Furthermore, such closures could lead to reduced investor confidence who may no longer be aware of the necessary safeguards in their banking transactions.”
This could lead to an overall decrease in participation within the crypto community and could ultimately reduce liquidity within crypto markets and make it difficult for crypto startups to build new products or remain operational in the long run, Tadrus added.