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- Insider asked crypto execs and experts where the industry will go after critical partners failed.
- Markets are at risk of more volatility and less liquidity in the near term, one cofounder said.
- Others see a bull case for decentralized finance and parking assets in non-custodial wallets.
Crypto is facing a banking problem, with three of the industry's crucial financial partners shuttering in the past week.
Silicon Valley Bank, Silvergate Capital, and Signature all closed, and each had distinct ties to the trillion-dollar market.
Crypto-friendly venture capital funds and digital asset firms held cash with SVB, which is now the second-largest bank failure in history. Circle, the company behind the number 2 stablecoin USDC, holds $3.3 billion in cash reserves with the now-fallen bank.
Silvergate, which served crypto clients like Coinbase and Kraken, also closed after a prolonged drop in customer deposits that began last year, along with a slew of other financial issues. And on Sunday, Signature was seized by regulators after concerns that the banking crisis would spread.
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"The Fed's policies have brought into focus the shortcomings of the banking system and made the case for the self-custody that decentralized cryptocurrencies were designed to provide," Andrei Grachev, managing partner at digital asset market maker and investment firm DWF Labs, told Insider.
And a blockchain gaming exec said the relationship between traditional banks and crypto has also taken another massive hit, which could impact the US lead on crypto innovation as well.