The crash of Silvergate, Silicon Valley Bank (SVB), and Signature banks has shown the weaknesses and vulnerabilities of the existing banking industry. It led to the loss of fiat collateral for many digital projects and crypto investment funds in the US.
Most experts believe that the failures of SVB and Silvergate were mainly caused by negative conditions in the financial markets and insufficient risk management by bank administration.
At the same time, the closure of the Signature is a more debatable issue. Many sources argue that the bank was not under threat of default.
The financial institution's administration mostly stabilized the capital outflow when U.S. authorities decided to take it under their control.
The cryptocurrency community perceived this as a political solution directed to push cryptocurrencies out of the United States.
Consequences for the cryptocurrency industry
Taking into account that Silvergate and Signature were key banks providing financial services to crypto companies in the U.S., their shutdown could have a serious impact on the ability of digital startups and crypto investment funds to interact with the banking system, which is based on the U.S. dollar.
Crypto businesses will be forced to seek other forms and types of relationships with the financial sector, applying alternative solutions to meet their banking needs.
The crash of large U.S. banks has caused a ripple effect in the financial industry. Credit Suisse, Switzerland's second-largest financial institution, faced a major crisis, and the Swiss Central Bank provided $54 bln in funding to resolve the consequences.
The crash of SVB, Silvergate, and Signature could further provoke broader repercussions in the banking system that could have an impact on other banks around the world.
Cryptocurrency startups will have to adapt to the changing financial environment and look for new, safer ways to interact with banks.
At the same time, the collapse of the banking sector will stimulate a wider interest in cryptocurrency, which many investors consider an alternative to fiat and the existing financial system.