Has cryptocurrency finally reached its tipping point? Stefan Rust, a crypto investor and CEO of data aggregator TruFlation, suggested that traditional finance is nearing a tipping point as a result of multiple bank failures in the United States and near-meltdowns at two banking behemoths in Switzerland and Germany, and that investor concerns are at the root of this week’s surge in crypto prices.
“It appears that people are realizing that the banking crisis isn’t really over and, given all of the noise out there, a lot of people are starting to question the approach that they’re taking to their savings and wealth management,” Rust wrote. “I believe that many techprenuers and SVB clients will move some of their savings into crypto.”
“Indeed, there already appears to be a demand to move some of this across into bitcoin and Ether on-chain, which could explain some of the recent price rises – especially given that former SVB clients are currently receiving their savings back from the FDIC,” he added.
Rust noted that the failure of crypto-friendly banks has removed valuable resources for investors and others eager to participate in the digital asset ecosystem, and he alluded to rising regulatory pressures in the United States that may be impeding the industry’s growth. “Many are attempting to navigate the on-ramp situation and find loopholes,” he wrote.
The Securities and Futures Commission (SFC), Hong Kong’s leading financial regulatory agency, has recently proposed new, more crypto-friendly regulations as a result of this turn of events. The SFC is seeking public feedback on the proposed rules, which could create a new licensing regime for crypto service providers and allow licensed platforms to serve retail investors with certain safeguards.
“Many Asian customers who had crypto in SVB are now transferring funds to Hong Kong, where they can open accounts and use the Hong Kong banking system to on and off ramp,” Rust wrote. “Indeed, it’s interesting to see that, at a time when the Western banking world is in the grip of another crisis, a small tax haven in China like Hong Kong is inviting crypto companies to collaborate with them to identify new regulations that could be put in place to build a sustainable crypto economy.”
Rust believes that the recently tense relationship between DeFi and TradFi will be resolved. “In the long run, there will be a completely new on and offramp system between DeFi, crypto, and the Fiat world, as trust in centralized, regulated institutions has undoubtedly been broken,” he wrote. “There is no longer any reason to keep all of your funds in one bank, one central entity that holds all of your assets in custody, because who knows what will happen to that entity and, ultimately, your savings.”
“Markets always take a little time to readjust, reacquire confidence, and find new paths and funding streams,” he added, “but money will always move uphill.”