Crypto Firms Should Ditch Banks To De-risk From Volatile Systems, Says Cardano Founder
Some crypto-friendly best banks failed due to regulatory uncertainty, a market downturn and a lack of operating funds. The three banks that sent the digital asset market into a downtrend were Silvergate, Silicon Valley, and Signature bank. These banks served leading firms such as Paxos, coinbase, Yuga Labs, Circle, Panterra CapitalAnd Avalanche.
The sudden crash put these crypto firms at risk, leading to a bearish trend in the market. cryptocurrency market. Notably, the trend reversed when the US Federal Reserve support funding announced to protect depositors of a closed bank. This incident prompted Cardano founder Charles Hoskinson to suggest that the crypto industry should abandon banks.
Banks are fickle and unstable, founder of Cardano
Charles Hoskinson tweet reflected his thoughts on the ongoing banking crisis. In his post, the founder of Cardano stated that banks are unstable and that the industry should reconsider their use.
Replying to Hoskinson’s tweet, a user named Crypto Dojo agreed with his suggestion, pointing out that the industry needs a decentralized bank of digital assets. In response, Hoskinson said that banks will not matter once the industry digitizes Treasuries.
Other Twitter users have supported Hoskinson’s idea to abandon banks. One Twitter user passing by KG pointed out that the US dollar abandoned the gold standard and became an independent medium of exchange. Thus, the digital sector should move away from being tied to the US dollar and become a “self-sustaining and eternal ecosystem”.
However, on the post of Hoskinson, one more user suggested that Bitcoin should also distance itself from many volatile coins and tokens in order to be in line with other positive projects aiming for a better future.
Consequences of bank failures for the crypto sector
The three banks that recently collapsed were crypto-friendly institutions. By going out of business, they have put many crypto firms in a stalemate. search for suitable establishments to support their operations. Moreover, it will take time for the industry to re-establish a strong link with the traditional banking system.
In the past, it was very difficult for some crypto firms to get the support of banks. Now the situation is repeating itself once again. Some crypto companies even USD bank transfers suspended in connection with the disconnection of banking support.
In the current situation, Hoskinson’s proposal may not seem far-fetched, given that some people blamed the crypto industry for the collapse of these banks. Despite it might not be true, the closure of these banks suggests increased scrutiny from regulators in the financial industry, including cryptocurrencies. It also shows that the crypto industry is seen as a huge threat to the traditional financial system due to its decentralized nature.
Many supporters of the crypto industry foresee a time when it will surpass traditional finance system. While such a day remains a futuristic reality, the industry has to struggle to reconnect to the banking system in order to continue running smoothly.
Featured image from Pixabay and chart from Tradingview.com
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