Crypto Resilience Through the Banking Crisis
The recent and sudden collapses of Silvergate, Silicon Valley Bank and Signature Bank, as well as the buyout of Credit Suisse from UBS, have shown that despite ongoing scrutiny over cryptocurrency companies and services, the crypto industry is not to blame for the unraveling of banking systems, but the banking systems themselves. This was further highlighted by First Republic’s $30-billion deposit rescue offered by eleven of the largest banking institutions in the United States.
In the midst of equity market panic, major cryptocurrencies like bitcoin and ether have been put on brighter display, with prices against the US dollar continuing to trend upward through the banking crisis. Narratives play a powerful role in driving investor behavior in the crypto space, and we’re seeing growing confidence in a shifting narrative as crypto being an attractive asset class.
This banking turmoil has reinforced both retail and institutional interest in an alternative system that is delinked from traditional centralization. The fundamental value proposition of digital assets lies in their inherently transparent technological infrastructure based on smart contracts, contrasting that of more traditional models with single points of failure, organizational inefficiencies and inadequate compliance and risk management protocols.
Data from real-time mobile insights provider Apptopia shows that downloads for the top 10 crypto exchange and wallet apps increased by 15% in the United States following the collapse of Silicon Valley Bank, while downloads from the top 10 digital and traditional banking apps fell by 3% and 5%, respectively. The top 10 crypto apps analyzed here include Binance, Coinbase, Crypto.com, Trust, Bitcoin and Crypto DeFi Wallet, Blockchain.com, KuKoin, Kraken, eToro and BitPay.
Understandably, similar shortcomings can also be pinpointed to several crypto-native companies after the FTX collapse from late 2022, and the other major crypto companies that preceded it. Neither the traditional nor the crypto landscapes are without bad actors, as evidenced by numerous industry players acting not on behalf of their customers’ best interests, but their very own.
Transparency is being increasingly advocated in our industry to avoid such calamities from taking place again by providing its participants with more visibility, and crypto companies with more regulatory clarity. As interest in digital assets continues to rise, we must continue to work more closely together towards developing a more stable and inclusive ecosystem. At the heart of this ecosystem lies our fundamental mission to build innovative and secure solutions that contribute to the sustainable growth of the digital asset economy and facilitate wider global adoption.
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With confidence in digital assets as an attractive alternative system gradually increasing, the overall outlook of the digital asset economy shows promising signs of strengthening despite a banking turmoil rattling global financial markets. Partnering with a compliant, audited, institutional custodian provides institutional investors with the necessary peace of mind to safely participate in the crypto economy.
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Ceffu is a compliant, institutional-grade custody platform offering custody and liquidity solutions that are ISO 27001 & 27701 certified and SOC Type 1 & Type 2 attested. Its multi-party computation (MPC) technology, combined with a customizable multi-approval scheme, provides bespoke solutions allowing institutional clients to safely store and manage their digital assets through its insured, segregated cold storage solution, Qualified Wallet. Institutions also benefit from Ceffu’s secure gateway to a wide range of liquidity products within the Binance ecosystem as Binance’s institutional custody partner.
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