Cathie Wood: Cryptocurrencies Acted as Safe Haven During US Banking Crisis

ARK Invest CEO Criticizes Fed for Failure to Prevent Banking Crisis and Blames Asset-Liability Mismatch for Depletion of Equity Accounts

Cryptocurrencies have acted as a safe haven during the US banking crisis, Cathie Wood, CEO of asset management firm ARK Invest, pointed out, while describing the recent collapse of Silicon Valley Bank (SVB) and Signature as a failure of the Fed.

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In those days the prices of cryptocurrencies, notably Bitcoin and Ethereum, had touched new record highs in recent months.

She’s throwing them at the Fed

In a post on Twitter, Cathie Wood criticized the Fed for failing to prevent the banking crisis, despite the signs of it.

She also noted that banks and regulators failed to convince the Fed that disaster was imminent.

She argued that Fed policy is the main culprit for the ongoing banking crisis because of the drought in venture capital funding.

Asset-liability mismatch

She noted the asset-liability mismatch that is a given at most banks, with deposits leaving the banking system for the first time since the 1930s.

Securities gains for banks were only 1%-2% compared to deposit gains of 3%-5%. Like the SVB, some banks were forced to sell “held-to-maturity” securities, which resulted in losses that depleted their equity accounts.

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Cryptocurrencies as a scapegoat

Wood also pointed out that the ongoing crisis was not caused by cryptocurrencies, as the ecosystem was heavily scrutinized after the FTX crash that led to a regulatory crackdown.

Further, she pointed out that regulators are using cryptocurrencies as a scapegoat for their own mistakes in overseeing traditional banks.

It wouldn’t happen in the decentralized world

Wood is a well-known advocate of cryptocurrencies, which is often reflected in her company’s investments. She meaningfully stated that the current banking crisis “would not happen in the decentralized, transparent, regulated and overly secured cryptocurrency asset ecosystem.”

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Cryptocurrencies are the solution

She did not hesitate to put forward cryptocurrencies as the solution to the central points of failure, opacity and regulatory mistakes in the traditional financial system.

Indeed, she argued that as a “scapegoat for policy mistakes, cryptocurrencies will move outside the US, depriving the country of one of the most important innovations in history.”

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