During a recent Twitter Ask Me Anything (AMA) session, Binance CEO Changpeng Zhao (CZ) expressed his belief that the success of Bitcoin should not depend on the failure of traditional banking institutions. In response to a question about whether banking collapses could benefit Bitcoin, CZ stated that banking and cryptocurrency can coexist and that it is not a zero-sum game. He also dismissed the notion that the success or failure of banks has any significant impact on Bitcoin. CZ emphasized that cryptocurrency is just one of several options for individuals looking to park their money outside of traditional banks, including real estate, stocks, and gold.
First Republic Bank Collapse
First Republic Bank recently became the second-largest collapse in US banking history, after regulators seized the bank. Despite receiving a $30 billion lifeline from 11 other banks, including Bank of America, Wells Fargo, Citigroup, and JPMorgan, First Republic could not avoid collapse. JPMorgan has agreed to acquire parts of the business, including its loans, securities, and deposits, with plans to convert existing branches into “JPMorgan wealth centers.” While some experts have called First Republic’s collapse a “delayed reaction to the turmoil in March,” CZ implied more bank collapses could happen due to the long-established and inefficient nature of the banking industry.
Crypto as an Alternative to Banks
Although Bitcoin rose above $20,000 in March due to vulnerabilities exposed by the failure of Silicon Valley Bank, Signature Bank, and Silvergate Bank, CZ downplayed the correlation between banking failures and the growth of cryptocurrency. He believes that different people prefer different types of assets and that cryptocurrency is not the only choice for those looking to de-risk from banks. CZ emphasized that the growth of cryptocurrency should come from improving its use and utility, rather than counting on the demise of traditional banks. He suggested that cryptocurrency can be better than banks in terms of faster and more cost-effective transactions.
CZ’s comments highlight the need for the cryptocurrency industry to focus on its own growth and development rather than relying on the failure of traditional banks. While cryptocurrency may be an attractive alternative to banks for some individuals, it should be viewed as one of several options for managing personal finances. As the industry continues to evolve, it will be interesting to see how cryptocurrency can compete with traditional banking institutions in terms of transaction speed, cost-effectiveness, and overall utility.