The first three months of 2023 saw the collapse of three large US banks – Silicon Valley Bank (SVB), First Republic Bank (FRB), and Signature Bank. The effect of the collapse caused further distrust in the US financial system. While it is common knowledge that two of the banks – SVB and Signature Bank – were crypto-friendly banks, Eric Donovan,
Global Head of FX at StoneX Group, Inc, at the Miami Bitcoin 2023 event, said that their relationship with crypto had nothing to do with their collapse.
Speaking in defense of the importance and advantages of Bitcoin, Eric noted that, as much as there are insinuations that crypto affected the banks, since two of them were crypto-friendly, it didn’t cause the collapse of either SVB or Signature Bank.
Prior to its collapse, Silicon Valley Bank (SVB) allowed customers to transfer funds from their accounts or cards to licensed and regulated digital asset trading companies offering crypto products in the USA.
In the same manner, Signature Bank also supported crypto activities in the US. With the help of its payment system, Signet, crypto companies made instant money between the crypto market and the traditional market. In January, the bank held $10 billion in crypto deposits.
“They actually went under because they didn’t manage their interest rate risk exposure appropriately,” the CEO added. Eric believes that this makes Bitcoin a unique asset even when the traditional system does not want to be fully part of it yet.
Shortage of crypto services in the US
Eric went on to tell the audience that one effect of the collapse of the two crypto-friendly banks listed above is that it is harder to “get banking services” that are linked to crypto, especially Bitcoin or “multi-currency accounts.”
He added that notwithstanding the anthem of holding your bitcoin being good for the industry, “there’s a lot of liquidity that comes into the market on fiat assets.”
Eric revealed that more than ever, investors are looking for the best platforms and ways to secure their crypto assets. There is “a move towards counterparties and players that are reputable and well-known.” Investors don’t want to lose their crypto assets, especially bitcoin, which “is the clear winner over the last couple of months” based on its price.
Decentralization or not?
Citing the advantage of a global financial system that is decentralized, Eric noted that the world will gain more from such a structure than the opposite. He highlighted how the sanctions on Russia after the war with Ukraine started have not stopped the intercontinental trading of Russian rubles.
“With the Russia-Ukraine crisis, it was still possible to trade Russian Ruble for an extended period of time even when every major government in the world said sanctions.’ But the difficulty of decentralization in crypto is that there are regulations yet, the CEO noted.
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