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Banks, investment firms, and pension funds are steering clear of crypto following the collapse of crypto exchange FTX, increased scrutiny & crackdown against crypto, and lack of regulatory clarity.
The U.S. regulators including Federal Reserve, Treasury Dept, and FDIC closed three major crypto-friendly banks Silvergate Bank, Silicon Valley Bank, and Signature Bank to unbank the crypto sector. The move triggered the banking crisis and made venture capital and investment firms become reluctant to invest in crypto.
According to an SEC filing by the Metropolitan Commercial Bank on April 18, the bank has almost terminated cryptocurrency-related services. It has only $278.5 million in cryptocurrency-related deposits remaining as of March 31, with core deposits totaling $4.9 billion. Deposits by active institutional crypto asset-related clients account for 4% or $217.6 million of total deposits.
Canada’s Ontario Teachers’ Pension Plan (OTPP) decides to move away from the crypto market after it write-off a $95 million investment in FTX. Pension funds, sovereign wealth funds, and government-owned corporations lost millions of money due to FTX crisis.
“We’re still working through what exactly happened there and you’re going to be careful”, OTPP chief executive Jo Taylor told the Financial Times. “It’d be unwise for us to rush” into another crypto investment based in part on “feedback from our members.”
Taylor alleges that FTX didn’t share all the important details that were necessary to make a balanced decision. Other funds have also lost millions in crypto such as Caisse de dépôt et placement du Québec lost 150 million in Celsius. These funds are now looking to invest in other sectors including real estate, logistics, and life sciences.
Also Read: Crypto Expiry: Bitcoin and Ethereum Bearish Price Move To Break Key Support Levels?
Crypto Firms Seek US Exit Due to Lack of Regularity Clarity
Crypto exchanges such as Coinbase, Kraken, Binance, and others planning to move offshore amid regulatory crackdowns led by the U.S. SEC. Coinbase CEO Brian Armstrong warned of leaving the U.S. if regulators fail to come up with clear rules. The crypto exchange received a license in the Bahamas this week which shocked the crypto community.
Binance has already made several moves such as ending partnerships and trading activity in the U.S. amid action by the U.S. SEC and other regulators. The crypto firms believe Hong Kong can become a major crypto hub and have already started to apply for a license.
Also Read: TrueUSD Stablecoin Makes the Biggest Bitcoin Trading Pair, Here’s How
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