Category: Tech

The Federal Reserve has announced a timeline for the launch of its long-awaited FedNow payment service that will let banks offer customers instantly available funds and execute real-time payments, with critics flagging concerns like lack of cross-border payment processing and raising questions about surveillance.

Amid all the chaos surrounding multiple bank runs in the United States, Cathie Wood, CEO of asset management firm ARK Invest, said cryptocurrencies have acted as a safe haven amid the ongoing banking crisis in the United States. She blamed the recent downfall of the likes of Silicon Valley Bank (SVB), Signature and others on the policy failures of the Federal Reserve.

Wood also pointed out that the ongoing crisis wasn’t caused by cryptocurrency, with the ecosystem under heavy scrutiny since FTX’s downfall, which has led to a regulatory crackdown. Wood said that regulators are using crypto as a scapegoat for their own lapses in the oversight of traditional banking.

As the underlying issues in our economy are exposed by recent banking failures, Bitcoin stands as a trustless, alternative money.

As unrealized losses piled up, Silicon Valley Bank (SVB) gradually, then suddenly became insolvent, followed by the collapse of Signature Bank and people beginning to wake up to issues pervading our financial system. Modern day bank runs, though digital, can force banks to sell reserve assets at a loss, inevitably leading to insolvency.

The scenario playing out before us is a stark illustration of what happens when trust starts to break down in a system fundamentally based on the idea of trusting, rather than verifying. In modern times, people think they need to hold their money in banks, but they have to trust the banks to maintain effective risk-management strategies in order to secure their deposits.

California regulators closed Silicon Valley Bank on Friday. The FDIC was named receiver.

The bank reportedly holds $173 billion in deposits.
The crash could cause a recession.

The company provided funding to 44% of all venture capital-backed tech and healthcare companies that publicly listed on a stock exchange last year, according to its website.