As days continue to pass, the demand for asset managers has been rising among cryptocurrency firms. This is in relation to the ongoing turmoil being witnessed in the global sector.
With the turmoil and uncertainty constantly rising within the crypto industry, the situation is taking the worst turn. Crypto firms have started losing their interest in banking firms and the banking systems.
The US regulators are showing no mercy against the banking firms that are supporting the crypto firms. As time passes, more and more crypto-pro banks may end up getting taken down by the US Feds.
Crypto firms now have this particular uncertainty in mind about the banking system. Therefore, they have decided to take hasty steps to ensure that they do not end up facing huge losses and losing access to the banks and their funds.
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Major Shutdowns in the Banking Industry
So far, three major bank shutdowns have been recorded in the banking system by the US regulators.
The first bank was Silvergate, which was on the hit list of the regulators but it ended up closing down its operations on its own. The bank announced that due to the financial crisis, it had decided to go for liquidation.
The bank shut down its operations and announced the liquidation of all of its assets to return funds to the depositors. The bank ended up going down before the regulators could act against it.
As for the second bank, it was the Silicon Valley Bank (SVB) that was taken down by the Feds on March 10. The FDIC shut down the entire banking, taking over its assets, and later announcing that the funds would be returned to the depositors.
The third takedown was of the Signature Bank which was taken down by the financial regulator from New York State. The particular bank was taken down on March 12, two days after the SVB’s demise.
Similarly to the SVB, the Feds announced that the depositors will get their money back.
Crypto Industry is Looking for other Solutions
With the banking systems failing to accommodate the crypto firms, the crypto industry has started looking for other options.
They want to move their funds to secure and safe platforms, so they can store their money, without the risk of losing them.
The crypto firms are not even looking forward to partnering with the banks in light of the recent events. The bank collapses have raised many concerns among the crypto firms and they do not want to be linked with the banks given the current circumstances.
Asset Management Firms are Growing in Demand
Due to the current situation, crypto firms have started to move their funds to asset management firms, capable of holding cryptocurrencies.
These are not conventional or traditional banks, so the regulators cannot take them down as easily as the banks. Their resilience is much higher than the banks so it is now becoming the top choice among troubled crypto firms.
Major crypto asset management firms have started reporting a great influx of crypto firms and their funds into their system.
Even one of the largest crypto asset management firms such as Fidelity has acknowledged the recent spike. As per the officials at the firm, the demand for their services and platform has grown significantly in recent weeks.
They have confirmed that in a matter of three days, they had 25 companies from the crypto industry move their funds to their platform.
Among the 25 crypto companies that approached Fidelity are some of the latest venture firms and market makers from the crypto industry.
With the funds of the crypto firms being unsafe in the banking systems, it is important that the funds are kept safe.
The realization has resulted in bringing in more demand for decentralized exchanges and other kinds of firms offering similar services.
This ensures that the future of cryptocurrencies and decentralized finance is gaining more strength over time.