• Crypto institutions should differentiate themselves from traditional banking sector due to its instability and volatility.
• Charles Hoskinson, the founder of Cardano, suggested that crypto should cut ties with banks in order to de-risk itself.
• The recent collapse of Silvergate Capital, Silicon Valley Bank, and Signature Bank shook America’s financial system.
Cardano Founder Calls for Crypto Cut Ties With Banks
Cardano founder Charles Hoskinson has recently urged the cryptocurrency industry to differentiate itself from the traditionally “unstable and volatile” banking sector by cutting ties completely. This statement came following the events of three leading American financial institutions – Silvergate Capital, Silicon Valley Bank, and Signature Bank – being shut down by regulators earlier this month and resulting in huge losses for numerous crypto-focused firms.
Unstable Banking Sector
In a tweet shortly after these events occurred, Hoskinson shared his thoughts on the matter by saying that crypto needs to de-risk itself from those “unstable and volatile” banks. He also predicted a “game over” scenario for banks once we can digitize treasuries effectively.
Impact on the Crypto Industry
The shutdown of Silvergate Capital, SVB and Signature Bank had a direct effect on several large cryptocurrency companies such as Circle which had $3.3 billion stuck in Silicon Valley Bank when their asset plunged to as low as $0.87 (CoinGecko data). Coinbase reported having $240 million in corporate cash tied up at Signature bank while Paxos revealed it had $250 million tied up at Square’s Cash App investment arm during this time as well.
Crypto vs Banks: A Long Term Battle?
It is clear that cryptocurrency institutions are facing some serious competition from traditional banks who continue to be too powerful despite their volatility and instability issues within their sector. It will likely be an uphill battle for crypto organizations to distinguish themselves long term if they don’t begin separating themselves now by cutting ties with banks altogether – something which Charles Hoskinson has already called for today.
The recent collapse of major financial institutions in America has served as a wakeup call for many cryptocurrency organizations who need to make sure they do not become too reliant on bank services if they want to survive long-term in this competitive market space against traditional banking giants such as Silvergate Capital, SVB & Signature Bank etc.