It took the crypto business many years to win the confidence of the biggest Wall Street institutions, as well as their financial support. The chaotic collapse of Sam Bankman-crypto Fried's empire has revived comparisons of the digital-asset business to the Wild West just as more significant traditional players appeared on the verge of entering the rapidly expanding blockchain marketplaces.
In May of this year, JPMorgan Chase signed two popular crypto exchanges as clients, indicating that Wall Street is beginning to accept cryptos to the point where it sees value in them for their own future.
While the grand FTX fiasco is causing several traditional institutions to back out of the crypto space, many are wondering if this is the time when some Wall Street banks might try to get a foot firmly into the crypto space and help out struggling crypto firms for their own later gains. However, experts believe that it is quite unlikely.
As Dick Bove, the Odeon Capital Group chief financial strategist said, “Banks are the natural enemy of the crypto business because they both ostensibly market the same product line.”
However, as a counter to Bove’s statement, the banks that have tried to get into the crypto world are already many in numbers. In addition to JPMorgan, crypto-friendly banking firm Silvergate Bank signed over 850 digital currency customers, including 61 exchanges, 541 institutional traders, and 248 other prospects.
Regarding the matter, Bove further said that "The banks that are in this business will say, 'It's not going to cause a problem for us,' and the banks that aren't in it will say, 'We told you so,' but they're not going to help."
In relevant news, Silvergate's inventory fell 10 percent in November when the company disclosed exposure to the bankrupt crypto exchange FTX. As of September 30, the banking institution had a total of $11.9 billion in deposits from all digital asset potential, with FTX accounting for less than 10 percent.
After the grand FTX fiasco, as the exchange and partner firms declare bankruptcy, The Bank Policy Institute had this to say about regulation after the collapse of the crypto exchange, "Policymakers should ensure they do not embed by putting crypto firms in the heart of the financial system through Fed accounts.”
The statement further claimed that if they indeed do so, "the next crisis in the cryptoverse could threaten financial stability."
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash