Bank Silicon Valley Bank Bank Banking Crypto Activities Decreased

JAKARTA - The crypto market has experienced a sharp decline due to the closure of a number of crypto-supporting banks in the United States, including Silicon Valley Bank, Signature, and Silvergate. All three are known as crypto-friendly banks, but have stopped their services.

The institution-scale crypto trading was disrupted after a series of major bank failures in the US in March. This was revealed by blockchain intelligence platform Chainalysis.

The latest report from Chainalysis shows that the volume of transactions "institutional", which includes transactions worth more than US$10 million (Rp158 billion), has decreased since April 2023. Meanwhile, smaller "professional" and "retail" trading activities remain stable.

"The banking crisis last March led to the closure of Silicon Valley Bank and other crypto-supporting banks such as Signature and Silvergate, impacting the decline in crypto activity," the report's author said.

This slowdown trend was coupled with the failure of a number of crypto exchanges and loan desks in the previous year, especially FTX and Alameda Research in November.

Beberapa bulan kemudian, Silvergate ditutup karena dugaan keterlibatan dalam penipuan besar-besaran. Hal ini menarik perhatian regulator dan berujung pada penutupan Silicon Valley Bank serta bank lainnya yang go bankrupt akibat kerugian besar pada portofolio berkasi bawah lautinnya. Kondisi ini menyebar ke bank lainnya, termasuk Signature Bank.

Although the reasons for the fall of these three companies are different, the impact is the same: the crypto business has lost access to liquidity in US dollars. As a result, many seek financial support abroad.

In addition, stablecoins, which are used in 90% of global crypto activity and are usually held at US dollars, have also experienced a significant decline in North America since February. Between February and June, the share of crypto volume using stablecoins in the region fell from 70.3% to 48.8%.

Chainalysis notes that since spring 2023, the majority of stablecoin inflows to the 50 largest crypto services have shifted from US licensed services to non-US licensed services.

This banking crisis rocked stablecoin stability. Circle USD (USDC), the second-largest stablecoin, lost its benchmark value to the US dollar. As a result, many investors have switched to Tether USD (USDT), which currently has a market capitalization of more than 82 billion US dollars or the equivalent of IDR 1.2 quadrillion.