Crypto Companies Transfers Funds to Asset Managers Including Fidelity Amidst Banking Turmoil.
Crypto companies are moving their cash away from banks and toward asset managers as long as the uncertainty in international banks continues. But, industry analysts do not believe that the bankruptcy of these banks would ultimately spell the end of banking for the cryptocurrency sector.
With the fall of the crypto-friendly banks Silvergate, Silicon Valley Bank (SVB), and Signature Bank, the upheaval in the financial sector has resulted in three significant bank failures in the US.
According to Bloomberg, several businesses are now carefully considering where and how they store their money to prevent further harm to the cryptocurrency sector.
They claim that finding new banking partners has become difficult for some cryptocurrency companies due to the bank failures’ aftermath. As a result, asset management companies have gained popularity in the sector as viable alternatives to traditional banks.
According to the report, many cryptocurrency businesses have contacted Fidelity Investments and other asset managers for help and assistance. One executive in the crypto sector claimed to have recommended about 25 companies to Fidelity in the past three days alone. He added: “The businesses included crypto market makers and venture firms targeted at the crypto industry.”
Although Fidelity isn’t a traditional bank, it is unquestionably safer than banks in tiers two or higher.
Crypto is “incredibly resilient.”
Tey El-Rjula, co-founder and CEO of the crypto-ramping business FLUUS, claims that while the sector would notice the loss of some crypto-friendly banks, it is less likely to cause any further issues.
In a statement provided to Cryptonews.com, El-Rjula stressed that the cryptocurrency industry is extremely resilient and has demonstrated its ability to change with the times.
He continued by saying that other financial institutions are now developing novel approaches to the crypto sector’s problems and that new entry points will inevitably appear as the market expands.
El-Rjula also noticed that peer-to-peer platforms and decentralized exchanges (DEXs) are growing, which might be seen as a logical development given the difficulties that crypto firms have when it comes to banking. These platforms enable users to conduct cryptocurrency exchanges between themselves without the need for a centralized middleman like a bank.
Not a plan to “choke crypto”
The head of the strategy at the cryptocurrency exchange Dexalot, Berk Ozdogan, also made comments to Cryptonews.com. He disagreed with the claim made by some in the cryptocurrency community that the financial crisis was an intentional attempt to stunt the development of the crypto industry.
Although he agreed that it is a setback for the financial services business, Ozdogan said in a comment on Wednesday that he doesn’t believe the claim that the closure of SVB, Silvergate, and Signature was done on purpose to restrict the expansion of the cryptocurrency industry.
According to Ozdogan, SVB and Signature Bank served more than simply Web3 companies; thus, the claim that the bank closures were purposeful sabotage of the cryptocurrency business doesn’t make sense.