Information about the new Federal Reserve (Fed) emergency loan program provides additional funding for banks amid the ongoing banking crisis. This can create effects and motivating factors in the crypto war, however, determining the exact correlation and impact of these factors is a complex and multi-faceted process. afternoon.
The banking crisis and funding surge could generate interest and demand looking for crypto solutions like Bitcoin or stablecoins to ensure stability and safety in storage and conversion. asset value. However, this process also depends on many other factors such as user awareness and trust, regulation and legal rights, as well as the level of access to and use of cryptocurrency technology.
Banking crisis continues
The Bank’s Term Funding Program (BTFP) was launched in March 2023 with the aim of providing additional funding to qualified depository institutions. This program is intended to ensure that banks are able to meet the needs of their depositors. It can be seen as a bailout package aimed at supporting bank-level operations in a difficult situation and ensuring the stability of the banking system.
There are observations that banks are using funding schemes to increase the value of their assets. This can happen when banks take advantage of the fund supply to boost the value of the assets they own. However, this may cause an imbalance or deviation between the actual and market-recognized values of these assets.
According to financial analyst Nick Timiraos, the Fed’s lending through the Emergency Bank Term Funding (BTFP) program has reached a new high and continued to increase for several consecutive weeks. This represents a large increase in the size and frequency of this grant.
Frog Capital, a financial analyst, noted that the BTFP program was originally created with a goal of not exceeding $25 billion, but has now surpassed this level and has reached over $100 billion. This represents a significant increase in the size of the program and reinforces concerns about potential risks in the banking system.
While providing initial support to the banking industry, the significant increase of the BTFP program also means that the crisis situation in the banking system is still widespread and potentially unexpected risks. Experts and observers need to continue to monitor the situation to assess the impact of support and response measures as the crisis continues.
The reason behind the crypto war
It is true that major banks and Wall Street hold great influence over federal regulators, which could create a rigor for cryptocurrencies. However, this has many complex factors and cannot be fully explained by a simple point of view.
Bitcoin really came into being in the wake of the 2008 financial crisis, when traditional financial mechanisms and banking systems were threatened. It was created as a decentralized cryptocurrency technology to provide a secure and independent payment method from the control of traditional financial institutions.
The relationship between cryptocurrencies and regulators is not simply one of rigor. In fact, regulators are making efforts to define and regulate crypto activities to protect users and maintain financial stability. Despite caution and regulation on the part of these authorities, the development of cryptocurrencies continues and provides new benefits and opportunities for users.
There is some view that cryptocurrencies are becoming a threat to the traditional banking system, however, this approach is not shared by all banks and their partners.
Some banks and their partners have taken a negative stance towards cryptocurrencies and are under pressure from regulations and compliance requirements related to working with crypto exchanges. This may lead to some restrictions or suspension of USD deposits as in the case of Binance.US.
Not all banks and their partners are vehemently against cryptocurrencies. There are a number of banks and financial institutions that are already aware of the potential and benefits of cryptocurrency technology and are conducting research and testing of crypto and blockchain related solutions.
The relationship between cryptocurrencies and the traditional banking system is still in progress and has not yet reached a complete consensus. Consideration and ongoing discussion is required to shape a reliable and sustainable financial environment in the crypto age.
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