Why Tokenized Assets Are Safer During a Banking Crisis


30 Jun 2023 1:51 PM

Recent U.S. bank failures exposed a strange truth: depositing your money on-chain is safer than trusting banks to make good on your holdings, argues Copper’s Fadi Aboualfa....

  • The author, Fadi Aboualfa, shares his personal experiences with banking crises in Greece, Cyprus, and Lebanon.
  • He highlights that these crises were not predicted and discusses the failed risk governance of banks.
  • The author mentions the recent failures of banks in the U.S. and the intervention of the Federal Reserve through the Bank Term Funding Program (BTFP).
  • Circle, the issuer of USDC stablecoin, faced de-pegging due to the loss of banking services.
  • The author suggests that holding a de-pegged USDC or other digital assets during a banking crisis may be safer than cash deposits with limited insurance coverage.
  • He mentions the development of options like tokenized bonds and money market funds on blockchain markets.

The overall sentiment of the article is negative, as the author discusses the negative impact of banking crises and the risks associated with traditional cash deposits.

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You May Ask

What are some examples of banking crises mentioned in the article?How did the Federal Reserve intervene in response to the recent failures of banks in the U.S.?Why did Circle's stablecoin, USDC, briefly de-peg?According to the author, why might holding a de-pegged USDC be safer than having a cash deposit during a banking crisis?What are some alternative options developing on blockchain markets for individuals and businesses during banking crises?

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