The collapses of Signature Bank and Silicon Valley Bank have left many people in disbelief, with skeptics questioning the stability of the traditional financial system.
Cryptocurrency, sadly, did not do much to capitalize on that skepticism, considering Bitcoin (BTC) tanked at the first sign of trouble for USD Coin (USDC), which briefly lost its peg to the dollar.
Still, the crisis also provided a golden opportunity for the crypto industry to demonstrate its resilience and offer viable alternatives. As faith in the traditional banking system wanes due to SVB causing “a crisis in confidence,” venture capital (VC) firms and startups are increasingly embracing self-custody solutions for digital assets, ensuring that individuals maintain full control over their funds.
The shift toward self-custody and decentralized finance (DeFi) systems is indicative of a larger trend that sees more people embracing cryptocurrencies and the principles of financial sovereignty. This increased interest in decentralized solutions is fueling innovation and investment in the space, which is ultimately good for both the crypto ecosystem and the broader financial landscape.
Related: Let First Republic and Credit Suisse burn
Some readers may find the notion of celebrating a bank’s collapse objectionable, arguing that it undermines the credibility and importance of established financial institutions. Additionally, others may argue that the promotion of cryptocurrencies and self-custody can be viewed as opportunistic, capitalizing on a crisis to advance a particular agenda.
The current financial landscape is undergoing a major transformation, with many people expressing distrust in traditional financial institutions. A recent survey revealed that 85% of “US institutions account for 85% of Bitcoin buying.” This preference for digital assets is not only evident among institutional investors but also among retail investors. A 2022 survey by the Economist found that 85% of investors “agree there is a need for open-source digital currencies as a diversifier in a portfolio or treasury account.”
FDIC seizes Silicon Valley Bank and takes control of its deposits. Regulators shouldn’t push bank custody for digital assets in the future. Multi-hundred billion dollar banks going bankrupt and swinging 10-30%+ in days doesn’t inspire confidence in the system. #Bitcoin #Gold pic.twitter.com/vubKN2bVwj
— Gabor Gurbacs (@gaborgurbacs) March 10, 2023
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