• Loss of trust in centralised finance drives demand for decentralised assets
• Bitcoin price rallies in the wake of bank failures
• Bitcoin emerges as “best use case” for blockchain technology for DeFi

Back-to-back banking crises sent shockwaves throughout the global financial community in March with the $3.3 billion takeover of Credit Suisse by competitor UBS in Switzerland, hot on the heels of the collapse of three small- to-mid-sized banks in the United States (US). 

Well before the UBS rescue, Credit Suisse—Switzerland’s largest bank—had already been mired in scandal and failed investments. 

In the US, the unfolding banking crisis began with the winding down of crypto bank Silvergate on 8 March. Over the next four days, Silicon Valley Bank (SVB) and Signature Bank joined the casualty list. 

SVB, then the 16th largest bank in the US, sold its bond portfolio for a huge loss, triggering a bank run by depositor companies concerned over its liquidity. SBV’s treasury bond holdings had lost significant value after the Federal Reserve hiked interest rates to fight off inflation. 

In this conversation with Emmanuel Daniel, Stojanovic says the loss of trust in centralised financial institutions will drive the demand for decentralised assets and platforms. 

Specifically, Stojanovic says, the three strong drivers of decentralisation in the near future will be: self-custody, decentralised finance (DeFi) and Bitcoin. Bitcoin prices jumped from $19,000 to $27,0000 as investors in dire straits looked towards alternative assets.

Dusan said: “There was a clear flight to the best decentralised use case that we have out there, where it’s clear and predictable, where nobody can interfere and there is no risk of being too large to fail.” 

Dusan said the sustained uncertainty over the crash of large cryptocurrency platforms like Terra Luna and FTX last year are also driving the use of self-custody wallets, which gives crypto users ownership of their private keys instead of entrusting them to third parties. 

He said: “The need for self-custody is very correlated to the need for gold, which is an alternative asset that is especially needed when trust is lost in centralised organisations.” 

Session Host:

Foo Boon Ping

President and
Managing Editor,
The Asian Banker

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About The Asian Banker RadioFinance:

The Asian Banker RadioFinance aims to enhance understanding of the finance industry globally by bringing together thought leaders, industry experts, practitioners and futurists to examine current, critical issues through discussions facilitated by visual and web-based platforms. Through the use of interactive technology, participants do not have to take time out from their busy schedules or leave the comfort of their own desks.