It’s been another wild week of financial mayhem connected to crypto. But this time the crisis focused on banks.
It started earlier this month [March], when Silvergate Capital shut down operations. The California-based bank serviced various crypto companies like Coinbase and Gemini. But its most notorious clients included the now-bankrupt crypto exchange FTX and its sister firm Alameda. As these two giants faltered, Silvergate suffered a series of financial difficulties and fell under intense regulatory scrutiny, leading to its eventual shut down.
Then, last Friday, one week ago now, the tech and startup-focused Silicon Valley Bank collapsed. It was the largest bank failure since 2008, and incited investor panic.
By late last Sunday, another domino had fallen: New York State regulators announced they were taking possession of Signature Bank. It was moving to retreat from crypto, but was still known for having some ties to the digital asset industry, at one point even launching a crypto-payments platform. This was the third-largest bank failure in the US to date. Bloomberg reported that regulators took action after they “lost faith in management.”
This trio of recent closures is another blow to crypto - leaving the industry nearly cut off from the fiat banking sector. All the while a Bitcoin rally ensued, but has since cooled a bit.
So. In the aftermath of one of the biggest weeks in finance so far this year, how has the crypto industry fared? And how does it move forward?
Bloomberg senior executive editor Chris Nagi joins this episode.
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