Winning crypto is not dependent on bank failure
Binance CEO Changpeng Zhao (CZ) said we shouldn’t rely on bank collapses for Bitcoin’s success.
“From a crypto community perspective, we should not rely on our success on the failure of others.”
During a Twitter AMA, a question arose about bank failures in favor of Bitcoin. In response, CZ said he believes banking and crypto can coexist and it’s not a zero-sum game.
Furthermore, CZ rejected the notion that bank success or failure has any meaningful impact on Bitcoin – clarifying that crypto is just one of many places to park money outside of banks, such as real estate, stocks or gold.
First Republic Bank
Regulators seized First Republic Bank, making it the second largest collapse in US banking history – after Washington Mutual’s collapse in September 2008.
First Republic received a $30 billion lifeline from 11 other banks in March, including Bank of America, Wells Fargo, Citigroup and JPMorgan. Since then, it has continued to sound the alarm, with the Federal Deposit Insurance Corporation (FDIC) unsuccessfully trying to broker a buyout in the meantime.
After the collapse, JPMorgan has agreed to buy parts of the business, including loans, securities and deposits, with plans to convert existing branches into “JPMorgan wealth centers.”
Despite warning signs of an industry under pressure, banking experts have called First Republic’s collapse a “delayed reaction to the turmoil in March” — rather than an intensification seven weeks ago, when Silicon Valley Bank, Signature Bank and Silvergate Bank stretched or were seized .
Crypto is not the only option
Giving his views on the matter, CZ hinted that more bank collapses could happen, saying the banking industry is long established and prone to inefficiencies. In addition to being familiar with rescue operations, companies operating in this area are incentivized to take on risks.
“I don’t blame the players, but you have to look at the game.”
On March 11, following vulnerabilities exposed by the failure of Silicon Valley Bank, etc., Bitcoin surged above $20,000, peaking at $31,000 four weeks later.
The move was mainly attributed to shifting investor sentiment towards hard assets, such as Bitcoin, due to the limited supply.
However, CZ downplayed the correlation, saying that different people prefer different types of assets. And given the range of options for parking money, he doesn’t see crypto as the only choice for those looking to de-risk banks.
“It doesn’t matter when one thing has risk; people are coming to crypto directly. There are many other choices in between.”
The growth of cryptocurrency comes from improving its use and utility — rather than relying on the demise of traditional banks, CZ said. He emphasized that this can be achieved by being better than the banks, for example faster and more cost-effective transactions.
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