Coinbase’s head of institutional research, David Duong, believes recent US financial failures have shown cryptocurrency’s resiliency and blockchain technology’s importance. Coinbase research and insights.
The recent US banking crisis, according to a leading researcher at Coinbase, has highlighted the importance of blockchain and cryptocurrency technologies.
In a recent investigation, David Duong, the head of institutional research at Coinbase, claims that cryptocurrency has “exhibited resilience” in the face of failures at some traditional banks.
Cryptocurrency’s medium- to long-term forecast appears positive. Technology enables trustless blockchains and transparent smart contracts. This stands in contrast to the subpar risk management procedures that caused chaos in the US financial sector last week. Digital assets can serve as a replacement and fix for flaws in the current financial system. These factors bolster the arguments in favor of using cryptocurrencies.
Duong agrees that short-term issues may arise for crypto businesses “due to the loss of some fiat payment rails.”
FDIC Sells Cryptocurrency-Friendly Signature Bank to Flagstar
Earlier this month, Silicon Valley Bank (SVB) had a bank run and went under after disclosing $1.8 billion in losses, most of which came from the sale of US bonds that had lost a significant amount of value as a result of the Fed’s aggressive rate hikes.
The New York State Department of Financial Services shut down Signature Bank after its clients withdrew deposits totaling $10 billion in a single day as a result of the impact from SVB.
A “bridge bank” was established by the state regulator to hold all of Signature’s assets until the financial institution could be auctioned off, and the FDIC was given control of it.
This past weekend, the FDIC sold Flagstar Bank, a division of New York Community Bancorp, the crypto-friendly institution known as Signature. According to a press release from the FDIC, the $38.4 billion sale comprises “substantially all deposits and certain loan portfolios” of the defunct bank.
However, the agreement’s terms do not cover Signature’s roughly $4 billion in deposits related to its digital assets banking operation. According to the FDIC, it will provide those consumers their money directly.
According to Reuters, the regulator demanded that any banks interested in purchasing Signature agree to give up all of the company’s cryptocurrency-related activities.