The collapse of Silicon Valley Bank has resulted in finger-pointing and blame being passed around the financial tech industry. The cryptocurrency sector and the traditional tech sector are busy blaming each other over the massive failure of the tech industry’s favorite bank.
The New York Times reports that bitter arguments over the function of centralized banking and the potential advantages of decentralized financial systems, such as cryptocurrency, has been sparked by the recent collapse of Silicon Valley Bank, which sent shockwaves through the technology sector.
SANTA CLARA, CALIFORNIA – MARCH 10: A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California. (Justin Sullivan/Getty Images)
Crypto advocates argue that the collapse of traditional banking institutions highlights the instability of fiat currencies and the need for an alternative financial system that is not beholden to big banks and other gatekeepers.
“Fiat is fragile,” wrote bitcoin advocate Erik Voorhees. Mo Shaikh, the CEO of cryptocurrency company Aptos Labs, stated: “We’re seeing glitches in the machine. This is an opportunity to take a breath and consider the practicalities of decentralization.”
The finger-pointing, however, also went both ways. Some tech investors claimed that the Silicon Valley Bank crisis was caused by the crypto industry’s bad actors and overnight collapses, which had trained investors to panic at the first sign of trouble. “That’s the pattern recognition too many have,” said Joe Marchese, an investor at the venture capital firm Human Ventures.
The crisis at Silicon Valley Bank has prompted renewed discussion about the potential benefits of decentralized financial systems, which are not beholden to centralized institutions and gatekeepers. The host of the cryptocurrency podcast “Mission:DeFi,” Brad Nickel, asserted that “centralized entities are more opaque. If cryptocurrency were powering the financial rails of our world, then a lot of things might not happen or would be a lot less severe.”
According to detractors of the cryptocurrency sector, the failure of Silicon Valley Bank would have been worse for everyone if it had occurred in the crypto space.
“If this was an unregulated crypto bank, then the money could just disappear,” Marchese said. The FDIC’s intervention to resolve the issue in a timely manner demonstrated that “the system is working,” he claimed.
The FDIC will direct a procedure to recover the missing funds in the coming days while paying the bank’s depositors up to $250,000 in refunds. Danny Moses, an investor at Moses Ventures and well-known for his role in foreseeing the 2008 financial crisis in “The Big Short,” stated, “There’s no crypto regulator insuring accounts for $250,000.”
Read more at the New York Times here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship. Follow him on Twitter @LucasNolan