Software engineer Molly White thinks businesses now considering banking options may have to deal with “shadier” solutions in the wake of the collapse of three big banks with connections to crypto startups.
Speaking on March 14 at the South by Southwest (SXSW) panel “Popping the Web3 Bubble” in Austin, Texas, White suggested that the alternatives available to cryptocurrency firms after the failure of the crypto-friendly Signature and Silvergate banks may force them metaphorically underground. White compared the scenario to that of 2017 and 2018, when cryptocurrency projects encountered “problems accessing banking” due to a lack of institutional understanding and acceptability.
Only a small number of American institutions were eager to accept cryptocurrency clients, according to White. I believe that the absence of Silvergate and Signature will have a significant influence on the cryptocurrency business, which still requires access to traditional sources of funding and U.S. banking systems.
She added:
“I believe that the crypto sector would struggle without [Signature and Silvergate]. They will either have to turn to some of the more dubious shadow banks or struggle to find other banks willing to cooperate with them, which was already difficult and will likely become far more so when these institutions fail.
As Signature Bank had ties to cryptocurrency businesses, many inside and outside the industry have argued that the New York Department of Financial Services’ decision to shut it down was an example of government overreach. Former U.S. Representative and Signature board member Barney Frank speculated that the bank’s closure was an attempt by American officials to send a “strong anti-crypto message,” while the New York regulator reportedly claimed that Signature had not provided “reliable and consistent data” on its operations.
There will be numerous speakers from the cryptocurrency and blockchain industries at the SXSW festival in Austin, which runs through March 19. Chelsea Manning, a cybersecurity expert and activist, was interviewed by Cointelegraph about how blockchain technology may be applied to problems with artificial intelligence.
