The banking sector in the United States of America underwent a major financial upheaval recently which culminated in the closure of California’s First Republic Bank. Arthur Hayes, the American entrepreneur and co-founder of the crypto exchange BitMEX shared his perspective on the matter by addressing the Twitter community. He began by noting that the move was a result of the “political paralysis” of the Federal Deposit Insurance Corporation (FDIC) and that the authority had effectively nationalized the eight TBTF (Too Big To Fail) banks.

Furthermore, Hayes pointed out that these banks are supported by the government and hence their deposits hold the authority’s guarantee; this puts them in a position where they wouldn’t be pushed to complete failure regardless of the authority’s decision. He further added that the depositors’ holdings are safe as long as they are in a non-TBTF bank.

At the same time, he stated that the crypto community is still unsure of the actual losers of the banking debacle as the government has been introducing “contorted solutions” in order to create confusion. Hayes added that the “politics surrounding banking, credit and debt are toxic” and this is ultimately creating chaos and disruption in the industry.

Clearly, the recent banking debacle has exposed several issues of the traditional banking industry, including the inadequate safety measures for smaller banks and lack of transparency. It has also put forth some grave implications for the general finances, particularly in cases of FDIC-backed deposits. As the crypto community continues to brace itself for further consequences of the banking fiasco, only time will tell how the industry will fare in the long run.



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