The recent spate of banking failures, especially of crypto-friendly banks, has been seen as a worrying sign of the beginning of the end of the crypto industry. Luckily, the space bucked the trend and prices bounced back.
There are still issues that need to be addressed. One of which is the banking sector’s dependence on government bailouts everytime something goes bad.
We rached out to Borck Pierce, the Chairman at the Bitcoin Foundation for his thoughts on critical issues. Here’s what he had to say.
Brock Pierce, Chairman, Bitcoin Foundation
E-Crypto News:
Why do you think the banks are failing? Is this a crypto problem? Are there other underlying issues?
The banks are failing because they didn’t manage risk appropriately. Take a look at Silicon Valley Bank, for example. It didn’t have a chief risk officer for the last eight months. They were focused on their marketing. There are a lot of banks that have not been managing their risks appropriately. And there’s potentially a reckoning occurring right now.
Related: Crypto Industry Problems Intensify As More Banks Shut Down
E-Crypto News:
How do you think other bank failures will affect the cryptocurrency space?
Well, I mean, the market has obviously responded positively to this banking crisis. When people are losing faith, and confidence or trust in the banking or financial institutions, where do you go if you don’t think your money is safe at a bank? You know, you buy gold, or you buy digital gold. You buy Bitcoin or cryptocurrency. The market has responded positively because people are losing faith in our financial institutions because they haven’t done their jobs well. And it’s becoming visible now. People are becoming aware of the fact that banks are not as safe as they thought.
E-Crypto News:
Do you think the United States economy is facing a recession?
Yes, it could even end up being a depression.
E-Crypto News:
How do you think the government should respond?
Well, it’s there’s no easy answer. And like we did in 2008, again, which is what government will most likely do, is to print another couple of trillion dollars to further reinsure the FDIC and protect the banking system from failing. So do we protect ourselves today, or do we hold the bad banks and the bad management and the bad boards of directors and fiduciaries accountable? And I can’t tell you what the right thing is. There’s no good one. It is we either deal with the problem now and allow the bad actors to fail and wipe them out.
Just not what we did in 2008, or we kick the can down the road and make the problem greater in the future. And what does the government do? Probably the same thing that it did previously by printing a trillion dollars.
E-Crypto News:
What are your thoughts on the recent regulatory clampdowns in the crypto space? Is this a good thing or a bad thing for the industry?
I mean, regulation, in theory, is a good thing. Right? It’s the intention of regulation is to stop bad things from happening, protect the public interest, and protect the people. And so if it’s sensible regulation. If it’s good regulation, that’s probably a good thing.
The question is, are we going to get sensible regulation? Or are we going to get bad regulation? When things are done politically, it’s probably bad. When it’s done in response to something is often going to be harsh or overreached. The question is, what kind of regulation?
Are the legislators adequately informed or sufficiently knowledgeable? Do they understand the thing that they’re regulating? They understand the interest. I hope that our regulators and our legislators are educated and understand technology’s role in our future so that America and the American people benefit from it. The thing that terrifies me is that regulators or legislators don’t understand the future, and they cause America to miss out.
E-Crypto News:
What are your thoughts on the Fed’s renewed interest in a CBDC?
Well, I mean, central bank digital currencies are a long conversation to get into, but again, this is where technology lies. And I mean, here. Who would operate it? Will the Fed operate it? And if the Fed would operate it, then what do we need banks for?
If the Fed is issuing a digital dollar directly like its other instruments, why do you need a bank?
Well, then, you know, you may not need banks anymore. So I don’t think the banks are going to let that happen unless they own it or control it.
And there are also a number of issues. For example, is it going to be a system from a privacy perspective that protects people? In a country like the United States of America, are we going to hand over our property rights? These are very important conversations. And so, I hope it doesn’t happen quickly. Because I doubt that our people and our elected officials fully comprehend the fact of the decisions that they’re making.
That’s why I spend some time doing what I do, to make sure that everyone is informed so they can make the best decisions regarding our collective future. Because the future depends on doing the right thing.
Related: What Role Do CBDCs Play in Cryptocurrency Adoption? We Talk to the Experts
E-Crypto News:
Are the recent fears of America losing its leadership position in the crypto space valid? What do you think is causing these fears? And what do you think must be done to ensure the US maintains its position?
I don’t think the US is losing its position. But it could happen, and there are certain people that aren’t encouraging and would like to see America stop taking part in the future because they’re likely ill-informed. They don’t understand how important technology is. They’re probably not experts in these things and don’t quite understand how important the future is.
E-Crypto News:
How do you think cryptocurrency companies will help shape the banking and financial industries in the future?
Well, I mean, it already is and has. I co-founded or created the USDT stablecoin. I mean, the whole conversation of CBDCs things are happening as a result of this. We’re talking about how stocks and bonds and things will be in the future. It’s already happening. There are already green bonds issued on blockchains. You know, it’s already happening. We’re seeing a world where people have been moved to have more control over their assets. Their assets are more secure if they know what they’re doing. You know, we’re seeing the technology driving efficiency in the world. We’re watching that. We’re watching the evolution of the financial system.
E-Crypto News:
Do you think other bank failures will occur? And what are your reasons for your point of view?
Will other banks fail? I mean, of course, other banks will fail. I mean, how many fail depends on what the response of the industry is and what the response of governments are, and central banks. So I mean, how many banks fail will be decided by the response? Have the banks overextended themselves? over-leveraged themselves? not have enough underlying assets? Yes. We know this. We’ve known this since 2008. We didn’t learn our lessons.
E-Crypto News:
Is there hope for the crypto space? How do you think crypto winter will end?
Well, I don’t want the failure of banks because it’s not good for society. These are the consequences of mismanagement and poor risk management. And cryptocurrency will be one of the beneficiaries of that. This is one of the shortcomings of the old system. It is not good for the world.
So I think there’s a pretty good chance that governments will bail out the banks at the expense of the people in the future.
