Animoca’s Yat Siu says crypto is becoming a “safety net” amid the banking crisis

Yat Siu, chairman of Asia’s largest blockchain investor Animoca Brands, believes volatile cryptocurrencies are a relatively safe investment as the traditional financial world is rocked by the Credit Suisse turmoil and the failure of a number of US banks.

“If you take a look at what happened recently with the whole development with Silicon Valley Bank, which was obviously shocking, and with Credit Suisse being acquired by UBS … actually the narrative played out quite differently for crypto,” Siu said via a video link on Monday at the Web3 Investment Summit in Hong Kong. “It actually started to unravel as some people had predicted, which is the kind of future, let’s say, safety net.”

To be sure, cryptocurrencies are risky investments. The largely unregulated market saw about 60% of its value evaporate from its peak in November 2021, according to CoinGecko as of Monday. It comes after a series of corporate disasters, including the bankruptcy of Sam Bankman-Fried’s FTX cryptocurrency exchange.

Siu said the “safety net” turned out to be bitcoin and ether, the two largest cryptocurrencies by market capitalization, rather than stablecoins, which were perceived as safe because of their claims to connect to fiat currencies. Bitcoin hit a nine-month high of around $28,200 on Monday night Hong Kong time, while ether rose to a seven-month high of nearly $1,800, CoinGecko data showed. However, USDC, the second-largest stablecoin, briefly lost its US dollar peg in mid-March after its issuer Circle admitted it had $3.3 billion set aside for the now-failed Silicon Valley Bank.

Meanwhile, investors have dumped Credit Suisse shares after rival UBS agreed to take over the 167-year-old bank for $3 billion on Sunday. The Swiss banking system saw its share price plunge almost 60 percent on Monday. It comes hot on the heels of the collapse of crypto-friendly US banks Silvergate Bank and Signature Bank, as well as Silicon Valley Bank, a major lender to startups and venture capital firms.

“In light of that, crypto and specifically bitcoin and ether are becoming attractive alternative ways to store value without the particular traditional banking risks,” Siu said in a written response to Forbes. “These cryptocurrencies have made remarkable gains just as the banking crisis came to prominence. It’s not a coincidence. I think what we’re seeing now is a flight of mainstream money into some cryptocurrencies.”

Although Hong Kong-based Animoca was not “directly affected” by the banking crisis, some of the more than 380 companies in its investment portfolio “would be affected,” Siu said. The Animoca founder said that the deposits of these companies are safe and that “the problem is not critical.” The company has previously informed its investors that it has not banked with Silvergate or Silicon Valley Bank.

Animoca, which counts Singaporean sovereign wealth fund Temasek, Sequoia Capital and others as its investors, has been hit by the ongoing crypto winter. Most of the crypto tokens for their blockchain games, including flagship titles the Sandboxhas dived more than 90% from its peak during the 2021 crypto boom.