Crypto companies are moving their money from banks to asset managers as global banking turmoil continues, but industry insiders don’t see bank failures as the end of banking for the crypto sector.
The upheaval in the banking industry has so far led to the bankruptcy of three major banks in the US: the collapse of cryptocurrency banks Silvergate, Silicon Valley Bank (SVB), and Signature Bank.
To mitigate further damage to the crypto industry, some companies are now taking a hard look at where and how they keep their money, informs Bloomberg.
It added that many crypto companies have struggled to find new banking partners since the bank failure, and asset management companies, rather than traditional banks, are now emerging as more attractive options for the industry.
According to the report, more crypto companies are turning to Fidelity Investments and other asset managers for help, with one crypto industry executive saying he referred about 25 companies to Fidelity in the past three days alone. The companies included crypto market makers and venture capital firms focused on the crypto industry, he said, adding:
“Fidelity is not a traditional bank, but it is certainly safer than tier two banks and above.”
Crypto is “incredibly stable”
According to Tay El-Rjoulah, co-founder and CEO of crypto development company FLUUS, the industry will experience the collapse of a few crypto-friendly banks, but it is unlikely to cause major problems.
“It is important to note that the crypto industry is incredibly resilient and has demonstrated the ability to adapt to changing circumstances,” El-Rjula said in comments published to Cryptonews.com .
He added that many other financial institutions are now working on new types of solutions for the crypto industry, and that new crypto ramps will naturally emerge as the sector grows.
El-Rjoulah also noted that peer-to-peer platforms and decentralized exchanges (DEXs) are on the rise, which can be seen as a natural development given the difficulty crypto companies have had with banking, saying:
“These platforms allow users to trade cryptocurrency directly with each other without the need for a centralized intermediary such as a bank.”
Not a plan to “strangle cryptocurrency”
Yes, Burke Ozdogan, head of strategy at cryptocurrency exchange Dexalot, disagreed with the narrative pushed by some in the crypto community that the banking crisis is somehow part of a strangulation plan cryptocurrencies .
“While the closure of SVB, Silvergate and Signature is a setback for the financial services sector, I do not believe that ‘it was intentional to stifle cryptocurrency,'” Ozdogan said in comments on Wednesday.
He explained that both SVB and Signature Bank had a client base that was “much broader” than just the Web3 firms, and said that narrative didn’t make much sense.
However, the collapse of the three banks opened the door for other banks to serve the crypto industry, Ozdogan noted.
Banks with “stronger risk management practices” can now “outperform and capture market share,” he added.
