The collapse of Silvergate, SVB holds some lessons for Indian crypto industry

economictimes.indiatimes.com:

SVB). The collapse of these banks caused widespread concern in financial markets as industry experts still assess the impact on the crypto ecosystem. That said, the banks failed because of their risk-hedging practices rather than their association with crypto. The support from the US Fed has meant that the markets expect them to pivot sooner (i.e., stop increasing interest rates). Bitcoin (BTC) has rallied well this week because of this expectation. We believe there are two important aspects that need to be examined in this context — provision of good banking services to crypto entities and the importance of decentralised finance (DeFi).Banking is a right for compliant platformsSVB was one of the primary lenders for unicorns, startups, and tech companies. Reliable reports suggested that it held $5 billion-worth of assets of prominent crypto firms.

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Crypto and tech companies had an association of convenience with banks like SVB as they offered customized solutions and were more receptive. The bigger US banks often were sceptical of crypto firms, and banking support stayed minimal or difficult to come by. This aspect should have the Indian banking ecosystem also thinking. The RBI, through a circular in 2018, had severed banking support to crypto firms. The rule was overturned by the Supreme Court in 2020 but banking support remained sparse. No major banks wanted to be seen associated with crypto. Even