Bitcoin rises around 14% in 7-day span as US banking system wobbles

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Welcome back to Chain reaction.

It’s been crazy busy and chaotic these past seven days. Unless you live under a rock, you probably know what I’m talking about. But for those who don’t (or just want a recap), let’s get into it.

Last week, a few major US banks made headlines. Signature Bank, a crypto-friendly regional bank in New York, was shut down by regulators due to systemic risks that could threaten the US banking system. This closure came just days after Silicon Valley Bank crashed and Silvergate Capital went out of business.

Signature, known as one of the biggest crypto lenders, was the second casualty of the ongoing US banking crisis, but regulators said customers will be made whole, meaning the government is stepping in to protect the economy from further damage.

For reference, Signature Bank had 40 branches across New York, California, Connecticut, North Carolina and Nevada. As of December 31, 2022, the bank had $110.4 billion in total assets and total deposits of $82.6 billion. Around 30% of the bank’s deposits came from the crypto industry.

Going forward, the crypto industry needs to keep a close eye on deposit flight from regional banks over the next week, said Tegan Kline, chief business officer and co-founder of Edge & Node. “If it gets worse, the regulators have a huge problem on their hands. Many regional banks may have to close.”

In the wake of all the banking chaos, bitcoin and ether, the biggest cryptocurrencies by market capitalization, had seven-day gains of about 15% and 8%, respectively, at press time, according to CoinMarketCap data. The global market capitalization of all cryptocurrencies also rose 8.3% in the same time period to about $1.1 trillion, down slightly from a weekly high of $1.14 trillion on Tuesday, the data showed.

However, the general market turmoil has apparently created a bullish mood in the crypto-economy, as traders reacted positively to the news and the overall market capitalization rose this week.

This week in web3

Chaos in US banks could push the crypto industry towards decentralization (TC+)

The crypto industry lost a number of run-ins for banks due to recent collapses in the US banking industry, signaling that there may be a shift in the space towards decentralization and the need for regulation going forward. With these banks closing, it will be difficult for cryptocurrency businesses to move money between entities and access banking services, said Mina Tadrus, CEO of quant investment management firm Tadrus Capital LLC and general partner of Tadrus Capital Fund. “Unfortunately, such closures can mean reduced confidence from investors who may no longer be aware of the necessary safeguards involved in their banking transactions.”

SVB’s mess could become stablecoins’ problem (TC+)

After USDC dropped from $1 last week, many in the crypto industry are questioning whether Silicon Valley Bank’s collapse will have larger implications for the stablecoin ecosystem. If anything, this latest market event will “trigger more interest in the stablecoin sector among global regulators,” said Lucas Kiely, chief investment officer of digital wealth platform Yield App. “This can only be a good thing for the industry, which needs much clearer guidelines for more institutions to enter.”

Meta is ending support for NFTs on Instagram and Facebook

Looks like Meta is NGMI, as some might say. Meta’s head of trading and financial technologies, Stephane Kasriel, posted on Twitter that the company will discontinue NFT and digital collectibles on Instagram and Facebook. This short-lived product first began testing with select Instagram creators last May, plus some Facebook users in June. In July, Meta expanded NFT support on Instagram for creators in 100 countries. Less than a year later Meta is moving on from NFTs…RIP.

Hackers steal around $200 million from crypto lender Euler Finance

Euler Finance, a non-custodial DeFi protocol, leveraged around $197 million worth of crypto on Monday. While this sounds like a lot of money—and it is—it’s only the 26th largest crypto theft ever, according to the Rekt Database, which tracks DeFi scams, hacks and exploits. Since then, the team behind the protocol has launched a $1 million reward for information leading to the attacker’s arrest and the return of the funds.

India Probes ‘Several’ Crypto Money Laundering Cases, Seizes Over $115M

India’s Enforcement Directorate is investigating “several” crypto cases for money laundering schemes and has seized $115.5 million in such crimes to date, the finance ministry said, the latest in a series of government crackdowns on the nascent space. The revelation comes at a time when India is pushing for rules to better scrutinize the activities of cryptocurrency firms, although New Delhi has so far resisted formulating a blanket law to regulate virtual digital assets.

The last pod

For last week’s episode, Jacquelyn interviewed Jack Mallers, the founder and CEO of Strike, a bitcoin-based payment network and financial app that is trying to grow the cross-border payments and money transfer markets. Last year, Mallers’ company raised $80 million in a Series B round to expand into that space, and has also partnered with major companies such as Visa, Clover and Fiserv.

Mallers is also the CEO of Zap, a bitcoin investment and payments company that transacts on the Lightning Network, which is a second layer on Bitcoin’s blockchain that allows off-chain transactions between parties.

We discussed Mallers’ story, how he entered the Bitcoin scene in his late teens, whether the lightning network could be better than the payment networks that exist today and how big players could enter the space. This episode was heavily focused on Bitcoin, so stick around.

We also went into:

• Lightning Network’s global potential
• El Salvador’s adoption of Bitcoin
• Creating new infrastructure to make Bitcoin more accessible
• The Future of Strike and the Bitcoin Ecosystem

Subscribe to Chain reaction on Apple Podcasts, Spotify or your favorite pod platform to catch up on the latest episodes, and leave us a review if you like what you hear!

Follow the money

1. Backed with $3 million, Soul Wallet aims to bring self-hosted crypto wallets to the next billion
2. KuCoin and Circle are backing Chinese yuan-pegged stablecoin CNHC in a $10 million round
3. Virtual fashion platform DressX raises $15 million
4. DWF Labs invests $10 million in blockchain infrastructure provider Orbs Network
5. NFT social platform Metalink raises $6 million in a seed round

This list was compiled using information from Messari as well as TechCrunch’s own reporting.