The chief executive officer of Binance, Changpeng Zhao (CZ) recently claimed that Crypto’s success is not dependent on traditional banking failures. He added that Banking and cryptocurrency systems can coexist and thrive together.
According to the news, CZ, chief of the largest crypto exchange worldwide, said that the crypto ecosystem should not seek Bitcoin’s success at the detriment of banking systems. He started this in response to a question that popped up during a recent Twitter AMA.
During the program, a journalist asked CZ if the failing banking system is befitting for Bitcoin to succeed. The CEO responded by saying the crypto and banking systems can successfully coexist without any hassle.
In addition, CZ dismissed the general impulse that banking failure or success would deeply impact BTC. He clarified that crypto is only one of the numerous ventures people can invest their funds after withdrawing from banks. Other ventures include stock, real estate, gold, etc.
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US Financial Authority Seized The First Republic Bank
Recently, American regulators impounded the First Republic Bank. As such, after the Washington Mutual Bank collapsed in 2008, First Republic Bank is the second biggest bank to ever collapse in the history of America.
According to the news, about 11 US banks donated a cumulative lifeline sum of $30 billion to the First Republic. The donors include giant financial institutions like Citigroup, Wells Fargo, JP Morgan, Bank of America, and others.
Since it received the lifeline donations, First Republic continued to warn of its imminent collapse. In addition, the FDIC, Federal Deposit Insurance Corporation, reportedly tried to no avail to broker the sale of the troubled bank.
Meanwhile, JPMorgan reportedly plans to buy some portion of the business, such as securities, deposits, and loans. It also planned to convert the existing extensions of First Republic to JPMorgan wealth centers.
Even though it gave off obvious signs of being under intense pressure, banking speculators said First Republic’s failure was a long-term ring effect of the multiple bank collapse that occurred in March. Meaning, First Republic Bank’s failure was caused by the same reason Silvergate Bank, Signature Bank, and Silicon Valley collapsed a few weeks ago.
CZ Claimed Investors Have Other Choices Than Crypto
Commenting on the issue, CZ stated that more banks may collapse. He added that the banking sector was established ages ago, hence it is subjected to inefficiencies in the era.
In addition, he added that the investors in the banking industry are not at fault for pulling out their investments. He explained that their action is fueled by ambition to invest in markets that offer them incentives for taking risks.
According to the report, a few days after the collapse of Silicon Valley Bank, Signature Bank, and Silvergate Bank, BTC rose above $20,000 price. Four weeks later, the primary crypto coin surged above the $31,000 price level.
Spectators attached the massive price action of BTC to the three bank failures. They believed it shifted investors’ sentiments from the banking industry to the crypto industry as it has a finite supply.
However, Binance’s CEO rebuffed the notion, claiming that different investors are interested in different types of crypto assets. And given the numerous market options available, investors do not have to focus on crypt markets alone to de-risk from banks.
Furthermore, CZ pointed out that the growth and success of the crypto industry depend on the utility cases and numerous opportunities it provides rather than the failure of banks. He said the industry achieves rapid growth by providing faster and cheaper transactions to customers than the banking industry.