Banking system instability caused widespread panic over the last few days. On the other hand, crypto networks continued operating without missing a beat.
Mistakes in banking were to blame for bank runs that could have caused the whole financial system to come crashing down. Only the intervention of the U.S. Treasury, the Federal Reserve, and the FDIC was able to stop the contagion spreading further.
As government and regulators were intent on doing their utmost to pull the cryptocurrency industry down, fatal flaws in the banking sector were going unnoticed.
Banks that had purchased long term bonds back in 2020 were suddenly forced to sell them before term at a loss in order to pay creditors who had become scared and suspicious at the banks’ lack of liquidity with which to pay them.
Cathie Wood, founder, CEO and CIO of Ark Invest, tweeted that while the U.S. banking system was seizing up, crypto networks did not “skip a beat”.
While the US banking system was seizing up in response to bank runs threatening regional banks, Bitcoin, Ethereum, and other crypto networks didn’t skip a beat. Instability in the banking system threatened stablecoins, the on-ramps to DeFi, in stark contrast to regulator rhetoric https://t.co/r5xwC96Pdj— Cathie Wood (@CathieDWood) March 15, 2023
She mused on the irony of how regulators had become so focused on crypto that they had missed the failures that had been looming in the banking industry.
Whereas the narrative has always been that crypto threatens the stability of the traditional banking system, Wood tweeted that it was the instability of the banking system that had threatened stablecoins and the onramps to DeFi.
In another tweet she remarked:
“instead of blocking decentralized, transparent, auditable and well-functioning financial platforms with no central points of failure, regulators should have been focused on the centralized and opaque points of failure looming in the traditional banking system.”
Wood was dismissive of regulators, saying that “they should have been all over the crisis that was looming in plain sight”, citing how short rates had surged 19-fold in less than a year, and how banking deposits were falling year-over-year for the first time since the 1920s.
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