Two American banks collapsed this month in rapid succession. One is a crypto-focused bank, while the other is a traditional bank. One bank required a bailout. One did not. You might be forgiven for thinking that the crypto-focused bank was the one that required a bailout from the Federal Deposit Insurance Corporation (FDIC).
The tides of financial banking have shifted at breakneck speed. Crypto has long been accused of being a risky and volatile investment asset. However, there has been a change in the course of events. At the moment, the collapse of a centralized bank has taken crypto with it.
Luga o Defi and the crash of CeFi
Two high-profile bank closures are causing havoc in the cryptocurrency market, with leading tokens bitcoin and ether down nearly 10% for the week each as fears of an industry liquidity shortage grow.
Silvergate, a traditional bank founded in 1987, lent out the majority of its funds to crypto exchanges, and the collapse of $32 billion FTX, run by Sam Bankman-Fried (SBF), exacerbated the situation.
Elizabeth Warren, a senator from the United States, stated in a tweet that the failure of Silvergate Bank, the preferred crypto bank, is disappointing but predictable. This bank’s failure has ushered in the end of fiat currency and a great deal more.
Crypto advocates stated that centralized banks were to blame. Their conception of an alternative financial system untethered to large banks and other gatekeepers was superior. They argued that the recent crackdown by government regulators on crypto firms had sown the seeds of the bank’s demise.
Source: https://www.cryptopolitan.com/death-of-fiat-and-the-rise-of-digital-banks/