Cardano’s co-founder Charles Hoskinson has proposed that the crypto industry isolate itself from traditional financial institutions such as banks following the ongoing crisis in the banking sector.
In a Twitter post on Wednesday, Hoskinson said that crypto “needs to de-risk itself from “these unstable and volatile banks.” He further said that it will be a “game over” for traditional financial companies once the industry can digitize treasuries.
Second Largest Bank Failure
The tweet came after the collapse of three American commercial banks, Silicon Valley Bank (SVB), Silvergate, and Signature Bank, over the weekend, which propelled multiple losses for the crypto space due to their close ties with companies offering digital asset services.
Many crypto firms declared significant exposures to the fallen banks. Stablecoin issuer Circle held $3.3 billion in SVB before its collapse, which marked America’s second-largest bank failure since Washington Mutual collapsed in 2008. Coinbase also revealed $240 million exposure to the bank.
The bank’s liquidation also adversely affected stablecoins, forcing tokens such as USD Coin (USDC) to depeg from their $1 benchmarks.
President Biden Urges Americans to Trust the Banking System
Due to the effects of the bank’s failures on crypto, Cardano’s founder proposed that crypto firms should stop collaborating with the traditional financial system, which one of the respondents agreed to, noting that the industry needs a “decentralized crypto bank.”
In a Q & A session at a Web Summit in November, the millionaire crypto proponent said that crypto needs cross-chain decentralized identities (DIDs) to survive and not centralized exchanges such as Binance and Coinbase, which controls users’ funds.
He further explained that these entities must comply with the international anti-money laundering rules (AML) and the know-your-customer (KYC) requirements issued by law enforcement agencies to track potential money laundering.
Hoskinskon also said authorities might be able to restrict the movement of crypto assets on exchanges through the data obtained from the AML and KYC registrations as well as the Travel Rules, which demand digital assets service providers to hold and transmit users data when conducting VA transfers for transactions above the $1000 limit.
