Crypto companies are moving their money from banks to asset managers as the turmoil in global banks continue, but industry insiders don’t see the bank failures as the end of banking for the crypto sector.
The turmoil in the banking industry has so far led to three major bank failures in the US with the collapse of the crypto-friendly 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 store their money, Bloomberg reported on Tuesday.
It added that many crypto companies have found it difficult to find new banking partners in the wake of the bank collapses, and said asset management firms – not traditional banks – now stand out as more attractive options for the industry.
Per the report, a growing number of crypto companies have reached out to Fidelity Investments and other asset managers for help, with one crypto industry executive telling Bloomberg that he has referred around 25 companies to Fidelity in the last three days alone to Fidelity. The companies included crypto market makers and venture firms focused on the crypto industry, he said, while adding:
“Fidelity isn’t a traditional bank, but they’re certainly safer than the tier-two-and-beyond banks.”
Crypto is “incredibly resilient”
According to Tey El-Rjula, co-founder & CEO of crypto ramping company FLUUS, the failure of several crypto-friendly banks will be felt by the industry, but it is unlikely to pose any major problems.
“it’s important to note that the crypto industry is incredibly resilient and has shown the ability to adapt to changing circumstances,” El-Rjula said in a comment shared with Cryptonews.com.
He added that many other financial institutions are currently working on new types of solutions for the crypto industry, and that new on-ramps to crypto naturally will emerge as the sector grows.
El-Rjula also pointed out that peer-to-peer platforms and decentralized exchanges (DEXs) are growing, which could be seen as a natural development given the difficulties crypto companies have had with banking, saying:
“These platforms allow users to trade crypto directly with each other without the need for a centralised intermediary like a bank.”
Not a plan to “choke crypto”
Also commenting to Cryptonews.com, Berk Ozdogan, Head of Strategy at crypto exchange Dexalot, took issue with the narrative that has been pushed by some in the crypto community about the banking crisis somehow being part of a plan to choke crypto.
“While the closure of SVB, Silvergate and Signature is a setback for the financial services sector, I don’t buy into the ‘this was intentional to choke crypto’ narrative,” Ozdogan said in a comment on Wednesday.
He explained that both SVB and Signature Bank had customer bases that were “much wider” than just Web3 firms, and said the narrative therefore doesn’t make much sense.
Still, the failure of the three banks has opened up the door for other banks to serve the crypto industry, Ozdogan pointed out.
Banks with “stronger risk management practices” can now “excel and grab market share,” he said.