• Many people are wondering if crypto had any role in the fall of Silicon Valley Bank and Signature Bank, two of the largest US bank failures.
• Experts say crypto was not to blame but instead point to thinned out banking regulations and too much concentration in single areas as contributing factors.
• Boston College law professor Patricia McCoy also mentioned that holding large amounts of the crypto USDC didn’t help, intensifying a bank run at Silicon Valley Bank.

Banks’ Failures

The collapse of Silicon Valley Bank and Signature Bank were two of the biggest bank failures in US history, leaving many people wondering if cryptocurrency had anything to do with it.

What Experts Say

Experts have weighed in on the matter, saying that cryptocurrency did not have a role in either institution’s downfall. David Yermack, a finance professor at NYU’s Stern School of Business, attributed the failure to thinned out banking regulations over the past six years and too much concentration in single areas. Furthermore, Boston College law professor Patricia McCoy said that having large deposits of crypto USDC exacerbated issues by causing a bank run at Silicon Valley Bank.

The Real Issue

Yermack concluded that this situation is emblematic of how banks are supervised and regulated; they should have been required to write down their bonds to value them in real time so problems would be more apparent sooner.

FTX Collapse

2022 saw FTX crash from being one of the top five digital currency trading platforms within three years to becoming one of its most prominent failures.

Conclusion

Cryptocurrency may have had an indirect effect on these banks‘ failures but experts agree that its involvement is minimal compared to other factors such as regulation and concentration issues.