Changpeng Zhao (CZ), the CEO of Binance, has stated that the success of the cryptocurrency industry should not be based on the failures of traditional banking systems. During a Twitter AMA, CZ responded to a question regarding whether banking collapses could benefit Bitcoin. He explained that both banking and crypto can coexist and that it is not a zero-sum game. CZ also dismissed the idea that banking success or failure has any meaningful impact on Bitcoin. He made it clear that cryptocurrency is just one of many options to park money outside of banks, such as real estate, stocks, or gold.
Recently, regulators seized First Republic Bank, which became the second-largest collapse in US banking history after Washington Mutual in 2008. Despite warning signs of an industry under pressure, banking experts have stated that this was a delayed reaction to the turmoil in March, rather than an intensification of the situation. CZ implied that more bank collapses could occur, as the banking industry is long-established and prone to inefficiencies. Companies operating in this space are incentivized to take on risk due to being privy to bailouts.
CZ stated that the growth of cryptocurrency comes from improving its use and utility, rather than relying on the demise of traditional banks. He emphasized that this can be achieved by being better than banks, such as providing faster and more cost-effective transactions. The rise of Bitcoin above $20,000, reaching a peak of $31,000 four weeks later, was attributed mainly to shifting investor sentiment toward hard assets. CZ downplayed the correlation, saying that different people prefer different types of assets. He doesn’t see crypto as the only choice for those looking to de-risk from banks, given the range of other options available.
In conclusion, CZ stated that the success of cryptocurrency should not depend on the failure of traditional banking systems. Instead, the crypto industry should focus on improving its use and utility, providing faster and more cost-effective transactions. While more bank collapses could occur, the cryptocurrency industry should not rely on them to succeed. Both banking and crypto can coexist and are not a zero-sum game.