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Banking crisis could be opportunity for exchanges, says JPMorgan



The cryptocurrency market ended up benefiting, in some way, from the banking crisis that began in the US this March with the demise of three local banks, Silvergate Bank, Silicon Valley Bank (SVB) and Signature Bank. While some crypto companies, such as USDC’s Circle, had assets in one of these banks, prices for digital currencies surged as uncertainties surrounding the banks grew.

In addition, digital asset exchanges can continue to benefit from this crisis, which, according to JPMorgan (JPM), “will take time” to stabilize. In a report on Wednesday, the bank said that some crypto platforms with diversified banking partners could gain market share.

“The banking crisis may present an opportunity for some exchanges. They can gain market share by offering banking services to crypto-native companies and investors,” the note said.

USDC Suffered and USDT Boomed with Banking Crisis

JPMorgan pointed out that the collapse of the three US banks affected crypto companies in different ways. Circle, for example, which issues the stablecoin USDC, was one of the crypto companies that suffered the most from the SVB collapse.

The company had a significant amount of assets in the bank. And when that came to light, the price of the stable digital currency temporarily lost its parity of a pair one with the dollar. On the other hand, Tether, which issues the largest stablecoin on the market, USDT, has benefited from the crisis. After all, the company managed to expand its market share, according to the analysis.

JPMorgan also highlighted in the report the increasing reliance on stablecoins by crypto investors:

“Meanwhile, crypto market participants and investors appear to have become more dependent on stablecoins to move their money,” the analysts wrote. According to the bank, stablecoin trading volumes increased after March 8, when Silvergate bank said it would voluntarily liquidate and cease operations.

Crypto industry set to replace bank networks

In any case, JPMorgan said that in the long run, it is vital for the crypto industry to replace the banking networks that have been lost. This is so that fiat currencies can be transferred efficiently, “while ensuring the stability of the stablecoin universe.”

Finally, the report underscored that the US regulatory stance could drive players to banking networks in Europe and Asia.