Charles Hoskinson, the founder of Cardano, has taken a bold stance against crypto critics after recent bank failures and emphasized that crypto adoption can provide a viable alternative to traditional finance.
Hoskinson argued that the risks associated with the crypto industry are not unique. Traditional financial assets have also faced significant challenges and failures, such as the 2008 financial crisis and the recent Silicon Valley Bank (SVB) failure.
In a recent tweet, Hoskinson compared the operations of major crypto firms such as Circle, Paxos, and Tether with recent bank failures. He highlighted that these firms have been able to thrive even under rigorous conditions, which caused several banking institutions to collapse.
Circle/Paxos/Tether: “we’re going to hold collateral mostly in cash and T-bills.”
Government: “CRYPTO IS SUPER RISKY.”
Banks: “we’re going to hold collateral mostly in longer-dated TradFi bonds.”
Government: “SEE, CRYPTO IS SUPER RISKY.”
— Charles Hoskinson (@IOHK_Charles) March 13, 2023
As Circle, Paxos, and Tether announced their decision to hold collateral mostly in cash and T-bills. However, despite their cautious approach, the government has labeled cryptocurrencies “super risky.”
Hoskinson concluded that although crypto companies show signs of strength and resilience, the public’s viewpoint towards cryptocurrencies has remained unchanged. This criticism of crypto is not uncommon, but it has caused concern for those invested in the market.
In January, the White House released a statement titled “The Administration’s Roadmap to Mitigate Crypto’ Risks,” which provided legislative advice to the U.S. Congress on addressing the risks associated with cryptocurrencies.
Recent Bank Failures: SVB, Silvergate & Signature
Silicon Valley Bank has become the most recent bank to succumb to bankruptcy. This sudden demise of the banking institution has left an unfathomable amount of money belonging to businesses and investors stranded, making it the most significant bank failure since the 2008 financial crisis.
SVB ranked 16th among America’s largest banks based on its assets for Q4 of 2022, which totaled $209 billion. Its deposits came to a total of $175.4 billion. Evidently, only one failed bank that surpassed these numbers was Washington Mutual, with a total of $307 billion in assets before closing in 2008.
Silvergate Capital, a bank that embraces and supports the crypto industry, has announced its intention to end operations and liquidate its assets in the last week. To prevent any contagion effect on other banks in the United States, Signature Bank was closed down by regulators on Sunday.
Related Reading | Bitcoin Observers Compare Silicon Valley Bank Crisis to Cyprus Moment
Global financial giant HSBC has come to the rescue of the U.K. division of Silicon Valley Bank, which had gone defunct. The acquisition by HSBC will save the subsidiary and enable it to continue operating as usual.