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Is the U.S. crypto industry in danger of collapse?

Recently, the USA has been rocked by financial news: several relatively large banks have collapsed one after another: Silicon Valley Bank, Silvergate, and Signature Bank. The shares of other banks have fallen by 50-70%. What they have in common is that they were a hub for startups and crypto companies.
As a result, billions of dollars were frozen. Because of this, one of the stablecoins, USDC, which had more than $3 billion in collateral in the Silicon Valley Bank, temporarily lost its 1:1 peg to the USD.
And the question is: is the U.S. crypto industry in danger of collapse?

The short answer is - no. As we can see now, the USA stock market is gradually recovering, frozen funds are being recovered. Moreover, the U.S. Federal Reserve has already announced that it will urgently create a bank funding program for up to one year to get through this systemic crisis (although this creates an inflation problems).

There is also a shift in liquidity towards cryptocurrencies, as the banking system is not as confident as it was, for now. But startups will look for lenders in other banks. For example, despite the collapse of the Silicon Valley Bank, Silvergate, and Signature Bank, according to CoinDesk, other large banks such as Bridge Bank, Mercury, Series Financial, and others are ready to serve the crypto industry.

This means that the financial problems associated with the banking system crisis will be resolved soon.

But why is it happening? In recent years, regulation in the crypto sector has only been tightening. If we look at the events of the last few months, we could observe some "raids" on crypto companies by the USA Securities and Exchange Commission (SEC) after the FTX collapse. In addition, there were statements about the need to recognize all coins and tokens, including ETH, as securities; cases against crypto exchanges, like Kraken, in which the business paid $30 million in fines.
The case is that governments are constantly losing in the race with business and technology development. Therefore, governments try to win some time by making such "quasi-regulations" before providing a reasonable legislative frame for a new industry or technology. And in the case of crypto, those "quasi-regulations" took the form of attempts to slow down the activity in order not to allow an uncontrolled movement of assets and money which in some cases may threaten national security.
Therefore, nothing has changed for businesses globally in the light of the recent collapses of banks. Although, with such an approach, we can expect the coming U.S. crypto regulation to be rather harsh towards the various crypto service providers.
Author: Danyil Voloshchuk, senior lawyer of Technologies and Investments at Juscutum