Economist Nouriel Roubini predicts the extinction of crypto exchanges after the collapse of SVB
In his opinion, trading platforms face the same problems as traditional financial institutions
13.03.2023 - 12:45
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What’s new? Popular American economist and bitcoin skeptic Nouriel Roubini, who predicted the 2008 global financial crisis, published a tweet in which he claimed the crypto industry’s impending systemic collapse amid the bankruptcy of Silicon Valley Bank (SVB). “Extinction ahead,” Roubini said, referring to the massive problems of the crypto ecosystem.
If a bank like SVB can go bust in 1 day ANY exchange or financial scheme in the crypto space can go bust faster. They are like banks- massive maturity mismatch & shoddy assets- & don’t have the liquidity/capital, deposit insurance & LOLR option of real banks. Extinction ahead! — Nouriel Roubini (@Nouriel) March 11, 2023
What is the economist’s prediction based on? According to Roubini, if a bank like SVB can go bankrupt in just one day, any exchange or financial scheme in the crypto industry would do it faster. The economist believes that trading platforms have the same problems as ordinary banks: massive maturity mismatches, shoddy assets, lack of liquidity and capital, deposit insurance, and lenders of last resort.
“So crypto system in on its way to systemic meltdown,” Roubini concluded.
Robert Kiyosaki predicts a massive crash of the crypto market in February
In this, the entrepreneur expects the BTC rate to rise to $500 000 by 2025
Situation in the banking sector. In March, two major banks at once, SVB and Signature Bank, declared bankruptcy. Later, the US regulators developed a plan to recover their depositors’ funds, with no provision for rescuing the institutions themselves.
Circle (the issuer of the USDC stablecoin) kept about $3,3 billion in SVB. As a result of the bank’s bankruptcy, USDC lost its peg to the dollar, and investors began exchanging the asset for other stablecoins. One user mistakenly exchanged over 2 million USDC for just 0,05 USDT.
On March 13, Circle CEO Jeremy Allaire said that 100% of USDC reserves are secure and the company will complete the transfer of the remaining SVB funds to BNY Mellon Bank.
After the bankruptcy of the FTX exchange, Roubini called cryptocurrencies the main Ponzi scheme and hinted that if the largest crypto exchange, Binance, has problems it will have no one to turn to for help. The economist also said that bitcoin could not become a real currency and states would switch en masse to central bank digital currencies (CBDCs).
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