A top researcher at Coinbase has stated that the recent financial crisis in the United States has proven the need of blockchain and cryptocurrency.
The recent US financial crisis, according to a leading researcher at Coinbase, has highlighted the importance of blockchain and cryptocurrency technologies.
In a recent analysis, David Duong, the head of institutional research at Coinbase, claims that although some traditional banks failed, the cryptocurrency market “exhibited resiliency.”
“Overall, we believe the medium to long-term outlook for cryptocurrencies has been reinforced to the upside. The technology behind open trustless blockchains and transparent smart contracts stands in stark contrast to the poor risk management practices that led to the turmoil witnessed in the US banking sector this week. That supports the fundamental arguments in favor of digital assets as an alternative and solution to the points of failure witnessed in the existing financial system.”David Duong
Duong agrees that short-term issues may arise for crypto businesses “due to the loss of some fiat payment rails.”
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 Commissioner 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 “essentially all deposits and some loan portfolios” of the defunct bank.
Nevertheless, the agreement’s terms do not cover Signature’s roughly $4 billion in deposits tied 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.