The current banking crisis affecting US banks has seen banks like Silvergate Bank, Silicon Valley Bank, and Signature Bank experience difficulties, with the possibility of more banks facing similar pressures. The root cause of the crisis is traced back to the global financial crisis of 2008, which led to the US government’s intervention in the economy through fiscal and monetary policies.
Since then, the government has become addicted to the quantitative easing approach, leading to an overflow of funding in the financial market and signs of inflation. The recent Covid-19 pandemic has only worsened the situation, leading to a fourth round of quantitative easing that has made clean-up costly.
The crisis is relevant to the cryptocurrency industry, with many mistakenly believing that it was triggered by the industry. Still, it is quite likely the opposite, with the cryptocurrency industry not being the root cause of the crisis.
The biggest focus at the moment is how operators of exchanges and other market players can maintain services and operations and ensure that user assets are properly protected should the worst-case scenario materialize. The extreme scenario could mean a further spread of panic, bank runs, and even bank failures.
