• The biggest U.S banks have been mostly unresponsive to crypto customers who recently lost their banking services due to the collapse of Silvergate, Signature and Silicon Valley banks.
• KeyBank, a regional lender based in Ohio, is not taking on crypto clients as they do not meet its “moderate risk profile”.
• Other major U.S banks such as JPMorgan Chase (JPM), Citigroup (C), Bank of New York Mellon (BK) and Morgan Stanley (MS) have either declined to comment or stated that they are not comfortable taking on crypto clients.
No Crypto Banking Port Has Really Opened Up in the US
As Silvergate, Signature and Silicon Valley banks imploded, crypto customers grabbed assets and ran, but those hoping to land at major U.S. banks have been mostly disappointed. Jesse Hamilton explores why this is the case and what this could mean for the future of cryptocurrency banking in the US.
CoinDesk asked the top 20 U.S banks by assets if they were taking on crypto customers, especially those businesses that recently lost their banking homes in the recent carnage. Most of them remained silent on the question with some – including JPMorgan Chase (JPM), Citigroup (C), Bank of New York Mellon (BK) and Morgan Stanley (MS) – declining to comment altogether or stating that they are not comfortable taking on crypto clients. KeyBank (KEY), a regional lender based in Ohio, is between Silicon Valley and Signature in scale but a spokeswoman there said that it is focusing on those that meet its „moderate risk profile“. This means that „crypto-focused firms do not fall within this category at this time.“
Implications for Crypto Companies
The lack of response from major US Banks regarding offering services to crypto companies implies that cryptocurrency businesses will continue to struggle when it comes to traditional banking solutions for now. This could mean decreased access for these businesses when it comes to capital investments or loans which can be critical for growth and development within any business model. Additionally, companies may also face even more stringent regulations than before if any financial institutions decide to work with them as well as higher fees associated with accounts or services offered by smaller financial service providers who specialize in cryptocurrency companies due to their perceived higher risk profiles by traditional lenders.
One potential solution could be an increase in non-banking financial service providers such as Coinbase Custody or Fidelity Digital Assets which offer custodial solutions specifically tailored towards cryptocurrency businesses without needing access to traditional banking channels which could provide more options for these companies while they wait for larger financial institutions to come around regarding offering services directly related to cryptocurrencies or blockchain technology products/services more broadly speaking.
It appears clear at this point that most large US Banks remain hesitant when it comes offering services related directly or indirectly with cryptocurrencies meaning that these companies may need alternative solutions until these institutions become more open minded about working with them in some capacity going forward if at all possible given current regulatory environments both domestically as well as internationally across various jurisdictions globally where many of these businesses operate out from currently today!
• $70 million in USDC positions are at risk of liquidation if the stablecoin depegs by 10%.
• The panic was caused by Circle, the company that issues USDC, tying up $3.3 billion in troubled Silicon Valley Bank (SVB).
• USDC regained its peg on Monday, but traders can still face eight-figure liquidations if it falls below 99 cents or 93 cents.
Risk of Liquidation
Traders using decentralized finance (DeFi) protocols to bet on a USDC revival over the weekend are at risk of eight-figure liquidations if the stablecoin loses its $1 peg again this week. According to data from DeFiLlama, there are $70.8 million in positions that can be liquidated between $1.00 and 90 cents, with two recently filled positions on interest protocol Compound being worth $20.7 million and $15.4 million, respectively.
Cause of Panic
The panic was caused by Circle, the company that issues the stablecoin, announcing it had $3.3 billion tied up in troubled Silicon Valley Bank (SVB). This resulted in USDC slumping to a low of 88 cents on Saturday.
Relief After Regaining Peg
Circle revealed Sunday the $3.3 billion would be available at U.S. banks on Monday, quelling fears over a potential suspension in redemptions and allowing USDC to regain its peg on Monday .
Downside Risk Still Remains
However there is still downside risk for traders as the first of two Compound positions worth $20.4 million will be liquidated if USDC hits 99 cents; the price point for the other position is at 93 cents .
Traders betting on a USDC revival are currently in healthy profit but remain exposed to significant losses should another depeg occur this week .
• Neal Stephenson, author of the science-fiction novel „Snow Crash,“ shares his thoughts on artificial intelligence and its applications.
• Stephenson believes that AI-generated tools, such as ChatGPT, are not interesting when used in creative applications.
• Rather, he says that works of art or books offer a communion with the artist who made thousands of decisions in creating them.
The Author’s View on Artificial Intelligence
Neal Stephenson, author of the science-fiction classic novel „Snow Crash“ where he coined the term „metaverse“ and gave new meaning to the word „avatar,“ sees artificial intelligence in general, and ChatGPT in particular, as underwhelming.
When asked about boundaries on AI technology he said: “Mostly what we’ve tended to see is its use in creative applications, which I don’t think is at all interesting.“ He believes that when engaging with a painting or book, one enters into a „kind of communion with the artist who made thousands of little micro decisions in the course of creating that work of art or writing that book.“ In contrast to this sort of experience a decision generated by an algorithm is simply not interesting according to him.
Stephenson’s Response To The Possibility Of An AI Writing His Novel
When asked if an AI could have written his novel he responded: “Well maybe one did. But if that were the case then you would be reading only output from an algorithm and if that’s interesting to you then fine“. He also went on to say that there are rules and regulations for using AI technology but it depends on how it is used and ultimately should be determined by humans rather than machines making those decisions for us.
In conclusion it appears Neal Stephenson has reservations about ChatGPT (an algorithm-based tool) being used for creative applications due to his belief that real people create works which resonate emotionally whereas algorithms lack sentimentality.
Ultimately it seems as though Stephenson does not believe machines can compete with human creativity as algorithms cannot replicate emotion within their output. Therefore for something truly special we must leave it up to people rather than machines.