Crypto acted as safe haven amid SVB and Signature bank run: Cathie Wood

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Amid all the chaos around several banking operations in the US, Cathie Wood, CEO of asset management firm ARK Invest, said cryptocurrencies act as a safe haven amid the banking crisis in courses in the United States. She blamed the recent downfall of companies like Silicon Valley Bank (SVB), Signature and others on the failure of federal policy.

Cryptocurrency prices soared in double digits, with Bitcoin (BTC) and Ether (ETH) hitting new multi-month highs amid the US banking crisis.

In a Twitter thread on March 16, Wood criticized the Federal Reserve’s inability to avoid bank runs despite all the signs present. She said she was baffled that banks and regulators couldn’t convince the Fed that disaster was looming. She argued that Fed policy was primarily responsible for the ongoing banking crisis due to a drought in venture capital funding.

Crypto did not force SVB and Signature into bankruptcy. In my opinion, Fed policy was the main culprit. Due to a shortage of venture capital funds and higher returns on money market funds, deposits left the US banking system.

Cathie Wood (@CathieDWood) March 16, 2023

Pointing to the mismatch between assets and liabilities, which, while typical in most circumstances for banks, was unsustainable in the current scenario, with deposits leaving the banking system for the first time since the 1930s. Securities revenues for banks were only 12% against deposits paying 35%, which eventually became unsustainable when deposits started leaving the system. Like SVB, some banks were forced to sell held-to-maturity securities, recognizing losses that depleted their equity accounts.

Wood also reminded everyone that the ongoing crisis was not forced by cryptocurrency, with the ecosystem coming under intense scrutiny since the fall of FTX, resulting in a severe regulatory crackdown. Wood said regulators are using crypto as a scapegoat for their own shortcomings in oversight of traditional banks.

If you’re right, Congressman, then the FDIC and others will prevent the United States from participating in the most important phase of the Internet revolution. Like you, I think regulators are using crypto as a scapegoat for their own shortcomings in oversight of traditional banks. https://t.co/UDh3bwB2pB

Cathie Wood (@CathieDWood) March 16, 2023

Wood has long been a known supporter of crypto, which is often reflected in his company’s investments in emerging markets, particularly crypto. She noted that the current banking crisis would not have been possible in the decentralized, transparent, auditable and oversized crypto asset ecosystem.

Related:The US Credit Crunch Means It’s Time to Buy Gold and Bitcoin: Novogratz

Wood projected crypto as a solution to the central points of failure, opacity, and regulatory errors of the traditional financial system. As the scapegoat for political mistakes, crypto will move overseas, robbing the United States of one of the most important innovations in history.

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