BlockNews.com
  • Crypto
  • NFT
  • Metaverse
  • DeFi
  • Business
  • Technology
  • Opinion
  • Guides
No Result
View All Result
SUBSCRIBE
BlockNews.com
  • Crypto
  • NFT
  • Metaverse
  • DeFi
  • Business
  • Technology
  • Opinion
  • Guides
No Result
View All Result
BlockNews.com
No Result
View All Result
Home Business

Why the Collapse of SVB and Silvergate isn’t a Sign of Crypto Weakness

BlockNews Team by BlockNews Team
March 15, 2023
in Business, Crypto, Finance, Media
Reading Time: 3 mins read
A A
crypto weakness
1
SHARES
11
VIEWS
Share on TwitterShare on Reddit

The cryptocurrency industry is robust and offers prospects for growth and innovation despite the recent failures of Silicon Valley Bank and Silvergate. At the same time, it exposes the flaws in the established financial system and the requirement for regulatory reforms.

You might also like

Crypto Clients Of Signature Bank Have Been Advised To Close Their Accounts Before April 5

Circle To launch USDC Stablecoin on Cosmos via Noble Network

MetaMask Issues Warning Against Fake Airdrop Rumors

  • The failure of Silvergate and SVB instead reveals the flaws in the established financial system, not a vulnerability in cryptocurrencies.
  • As the globe transitions to a decentralized future, the long-term prospects for the bitcoin market are still promising.

Commotion in Crypto Market

The failure of Silvergate and Silicon Valley Bank (SVB) last week created a commotion in the cryptocurrency market. Investors, regulators, and customers were alarmed by SVB’s forced admission into Federal Deposit Insurance Corporation (FDIC) receivership on March 10 and Silvergate’s prior liquidation. Even though the news may have given some people the impression that cryptocurrencies were weak, it demonstrates the industry’s resilience to shocks. It sheds light on the flaws of the conventional financial system.

The Collapse of Silvergate

Since 2016, Silvergate has been a critical player in the cryptocurrency market, with assets that peaked at over $16 billion. The bank operated as an on and off-ramp for significant cryptocurrency exchanges, notably the now-collapsed FTX. However, the FTX connection and the market’s waning confidence in cryptocurrencies caused Silvergate’s deposits to drop by more than 50% in Q4 2022. It compelled the bank to sell its assets at a loss to meet redemptions, resulting in a classic bank-run scenario. The bank made numerous failed attempts to be saved before choosing to go into voluntary liquidation and proposing a winding-down plan that included a “full refund of all deposits.”

The Collapse of SVB

With around $209 billion in assets at the end of 2022, SVB, in contrast to Silvergate, was the 16th-largest bank in the US. Two former employees of the company founded the company. Although SVB’s failure was unrelated to cryptocurrencies, it had uncanny parallels to Silvergate’s loss. In a classic bank-run scenario, it faced withdrawals that exceeded the value of its assets. Thus it had to sell those assets at a loss to offset the leaves. Both times, US Treasuries were used as an asset instead of a risky cryptocurrency token.

The Vulnerabilities of the Traditional Financial System

Due to Treasury bonds currently worth less than what was paid, US banks now hold more than $600 billion in unrealized losses. Due to recent occurrences, regulators will recognize the cryptocurrency industry and might even be more willing to include it on their regulation agenda. The failure of Silvergate and SVB illustrates the flaws in the conventional banking system rather than placing the blame on cryptocurrencies.

The Positive Outlook for the Cryptocurrency Market

Contrary to popular belief, the collapse of Silvergate and SVB does not signify weakness in cryptocurrencies. Instead, it is an indication of the resilience of the cryptocurrency ecosystem to shocks. As regulation cranks up, other jurisdictions may step in, while US enterprises who wish to be active in Web3 will take their activities abroad. The UK, whose Prime Minister has shown a determination to transform London into a cryptocurrency center, and China, which is covertly opening the door to digital currencies through Hong Kong, are two significant examples. Countries that have supported cryptocurrencies will have the advantage when widespread adoption occurs.

Conclusion

The recent failure of Silicon Valley Bank and Silvergate does not indicate that the bitcoin market needs to be stronger. Instead, it draws attention to the flaws in the conventional financial system and the necessity of legislative changes. The industry has a chance to develop and invent due to the bitcoin ecosystem’s resistance to shocks and some nations’ readiness to accept it. The long-term picture for the cryptocurrency market is still optimistic, despite the possibility of some short-term drawbacks. The importance of cryptocurrencies is anticipated to grow as society transitions to a decentralized future.

Tags: BusinesscryptoSilicon Valley BankSilvergateSVB
TweetShareShare

Recommended For You

Crypto Clients Of Signature Bank Have Been Advised To Close Their Accounts Before April 5

by BlockNews Team
March 31, 2023
0
signature bank

US FDIC advises crypto clients to move their funds and close all accounts on Signature bank before April 5. Signature's payments platform, Signet, is still up for grabs...

Read more

Circle To launch USDC Stablecoin on Cosmos via Noble Network

by BlockNews Team
March 31, 2023
0
circle pay crypto

USDC will be launched on the Cosmos ecosystem as a replacement for Terra’s fallen UST Noble aims to provide a solution for bridging assets from the Cosmos ecosystem...

Read more

MetaMask Issues Warning Against Fake Airdrop Rumors

by BlockNews Team
March 31, 2023
0
metamask

MetaMask has issued a warning to its users about rumors of an imminent MetaMask airdrop circulating on social media, which the company has dismissed as false and dangerous....

Read more

AllianceBlock Partners With Crunchbase To Make Its Data Accessible To Data Tunnel Users

by BlockNews Team
March 31, 2023
0
Allianceblock

AllianceBlock announces a partnership with Crunchbase to give its Data Tunnel users access to Crunchbase's data. This is a working example of a partnership between Web2 and Web3....

Read more

NFT Investor Accidentally Burns $135K CryptoPunk Trying to Borrow Money

by BlockNews Team
March 31, 2023
0
cryptopunk #685

NFT collector accidentally burns a $135K CryptoPunk while trying to borrow money through wrapping, sparking discussions on confusing user interfaces and wash trading in NFT markets. While trying...

Read more
Next Post
sweden banks

Crypto Banking Crisis Sees Companies Turn To Swiss Banks For Rescue

Related News

RAK DAO UAE

UAE Announces Free Zone for Digital and Virtual Asset Firms

March 17, 2023
Polygon, Ocean Protocol, Mercedes-Benz Work Toward a Decentralized Data Marketplace

Polygon, Ocean Protocol, Mercedes-Benz Work Toward a Decentralized Data Marketplace

August 1, 2022
Israeli-Flag-with-Bitcoin

Israeli Crypto Exchange Receives Capital Markets License in Country First

September 27, 2022

Browse by Category

  • Breaking News
  • Business
  • Crypto
  • DeFi
  • Finance
  • Gaming
  • Guides
  • Investing
  • Media
  • Metaverse
  • NFT
  • Opinion
  • Politics
  • Social
  • Technology
  • Uncategorized
BlockNews.com

BlockNews.com brings you the most important Crypto and NFT news in the space.

CATEGORIES

  • Breaking News
  • Business
  • Crypto
  • DeFi
  • Finance
  • Gaming
  • Guides
  • Investing
  • Media
  • Metaverse
  • NFT
  • Opinion
  • Politics
  • Social
  • Technology
  • Uncategorized

RECENT POSTS

  • Crypto Clients Of Signature Bank Have Been Advised To Close Their Accounts Before April 5 March 31, 2023
  • Circle To launch USDC Stablecoin on Cosmos via Noble Network March 31, 2023
  • MetaMask Issues Warning Against Fake Airdrop Rumors March 31, 2023

© 2022 BlockNews.com - Crypto and NFT news website by JRNY Club.

No Result
View All Result
  • Home
  • Crypto
  • NFT
  • Metaverse
  • DeFi
  • Business
  • Technology
  • Opinion
  • Guides

© 2022 BlockNews.com - Crypto and NFT news website by JRNY Club.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?