ARK Investment Management CEO Cathie Wood believes regulators should have focussed on the opaque failure points of the traditional banking system rather than blocking decentralized financial platforms "that do not have any central points of failure."
Wood's comments come at a time when the U.S. banking system is witnessing a crisis following the closure of Silicon Valley Bank and Signature Bank that sparked fears of contagion. However, cryptocurrencies have relatively done way better in the last five days of panic, with Bitcoin (CRYPTO: BTC) rising over 23% and Ethereum (CRYPTO: ETH) gaining over 20%.
While the U.S. banking system was seizing up in response to bank runs threatening regional banks, Bitcoin, Ethereum, and other crypto networks didn't skip a beat. Instability in the banking system threatened stablecoins, the on-ramps to DeFi, in stark contrast to regulator rhetoric," Wood said in her tweet.
Regulator's Role: She cited ARK researcher Frank Downing's tweet that said despite the USD Coin (CRYPTO: USDC) de-pegging from the dollar, "the Maker protocol remained over-collateralized and fully operational through the weekend."
"DAI in circulation is up $1 billion (+25%). Demand for more transparent, more auditable, and more decentralized financial services has never been higher," Downing tweeted.
Wood asserted that the regulators should have been all over the crisis that was looming in plain sight. "...asset and liability duration mismatches as short rates soared 19-fold in less than a year and deposits in the banking system were falling on a year-over-year basis for the first time since the 1920s!" she said.
Musk's View: Tesla Chief Elon Musk voiced his opinion on Wood's take on the crisis. Musk agreed, saying there were a lot of similarities between the current year and 1929 when the Great Depression started.
Lot of current year similarities to 1929
— Elon Musk (@elonmusk) March 15, 2023