Wall Street Banks might not step in and save crypto firms from the ongoing dilemma in the digital currency market, according to reports published by some analysts. The cryptocurrency market is an existential threat to the banking industry as it seeks to replace the commodity they deal with — fiat currencies. Thus, the step might seem like a no-brainer.
“Banks are the natural enemy of the crypto industry because they both sell purportedly the same product line, so it’s unlikely that they would be willing to step in to assist the industry.”Dick Bove, Chief Financial Strategist of Odeon Capital Group
However, Wall Street firms have stepped into financial crises in the past. A classic example can be John Pierpont Morgan’s intervention in the banking industry in the early twentieth century. But, according to analysts and experts, that might not happen this time.
In a statement, the Bank Policy Institute, a body that represents some of the biggest banks, said that policymakers should be wary of signing deals with crypto firms. The institute also warned against placing cryptocurrency in the middle of the financial system in light of the mess FTX got itself into.
According to them, prioritizing cryptocurrencies could “threaten financial stability.”
This development comes amidst a time when banks are desperately trying to gain a foothold in the digital currency industry. Some highlight deals between banks and crypto firms include JPMorgan Bank’s signing of Coinbase and Gemini as its first crypto exchange customers and Silvergate’s signing of over 850 digital currency customers.
“The banks that are in this business are going to say, ‘It’s not going to cause a problem for us,’ and the ones who aren’t in it will say, ‘We told you so,’ but they’re not going to be of any help.”Dick Bove, Chief Financial Strategist of Odeon Capital Group
However, as the crypto winter keeps ravaging, these Wall Street banks are hit. Silvergate Bank’s stock value has plummeted by a solid 10% following the FTX collapse.