Crypto shelters SVB, Signature bank runs, says Cathie Wood

Cathie Wood, CEO of the asset management business Ark Invest, said that cryptocurrency functioned as a haven during the pandemonium surrounding several bank runs in the United States.

She attributed the recent failures of Silicon Valley Bank (SVB), Signature, and others to the Fed’s failed policies.

With the US financial crisis, cryptocurrency values increased by double digits, with Bitcoin and Ether reaching multi-month highs.

On March 16, Wood questioned the Federal Reserve’s failure to prevent bank runs despite several warning indications. She said that she was “amazed that banks and regulators were unable to persuade the Fed that a catastrophe was imminent.”

She believed that the Fed’s stance was the fundamental cause of the continuing financial crisis since there was a shortage of venture capital financing.

When deposits fled the financial system for the first time since the 1930s, attention was drawn to the asset-liability mismatch, which, although common in most situations for banks, was unacceptable in the present environment.

When deposits began to leave the system, it became unsustainable for banks to earn 1-2% on their securities, compared to 3-5% on their deposits. Other banks, including SVB, were compelled to sell HTM securities, incurring losses that drained their equity coffers.

In addition, she reminded everyone that the current crisis was not caused by cryptocurrencies, since the ecosystem has been under intense scrutiny since FTX’s demise, which led to a major regulatory crackdown.

According to Wood, authorities are exploiting cryptocurrency as a scapegoat for their supervision failures in conventional banks.

Long recognized as a crypto advocate, Wood’s organization has often invested in new areas, including crypto.

She added that the present financial crisis would not have been conceivable in the decentralized, transparent, auditable, and over-collateralized environment for crypto assets.

Wood proposed crypto as a remedy to the old financial system’s key points of failure, opaqueness, and regulatory errors.

As a result of being made the scapegoat for policy errors, crypto will shift abroad, robbing the United States of one of the most significant breakthroughs in history.