The rise of cryptocurrencies in the corporate sector halted after the US banking crisis in the early months of 2023. After the closure of Silicon Valley Bank, Silvergate Bank, and Signature Bank, an atmosphere of uncertainty emerged, especially among large institutional investors.
Corporate Trading Felt the Most
According to the report prepared by Chainalysis, during this period, the ‘corporate’ transaction volume exceeding $10 million declined rapidly, while institutions with smaller trading activities remained unaffected.
The effects of this banking crisis also impacted crypto exchanges and lending platforms. In particular, the collapse of leading crypto exchanges like FTX and Alameda Research led to questioning the US’s reflection in the crypto sector.
On the other hand, allegations involving the collapsed banks questioned the lack of regulation in the sector for a long time. Silvergate being associated with major fraud allegations, and FTX’s money laundering claims drew the attention of regulators (SEC) in this direction.
The realization of Silicon Valley Bank’s billion-dollar bond loss, followed by a subsequent deposit influx, led to a shaken confidence in US dollar liquidity in the crypto world.
Loss of Confidence in Stablecoins
Following the US Dollar, stablecoins became one of the crypto assets most affected by this crisis. Specifically, the US-based Circle USD (USDC) lost its dollar pegging for a short time.
The report presented by Chainalysis reveals that the top 50 crypto services began shifting in stablecoin activity from US-licensed platforms to non-US-licensed platforms. This is interpreted as a sign that the crypto world is becoming more globalized and that confidence in the US is diminishing.