Animoca’s Yat Siu Says Crypto Is Becoming A ‘Safety Net’ Amid Banking Crisis

Yat Siu, chairman of Asia’s largest blockchain investor Animoca Brands, thinks volatile cryptocurrencies are a relatively safe investment as the traditional financial world is rocked by the Credit Suisse turmoil and the failure of a string of U.S. banks.

“If you take a look what happened recently with the whole development with Silicon Valley Bank, which was obviously shocking, and with Credit Suisse being taken over by UBS…actually the narrative was played out quite differently for crypto,” Siu said via a video link on Monday at the Web3 Investment Summit in Hong Kong. “It started to actually bifurcate as some people had predicted, which is that sort of future, let’s say, safety net.”

To be sure, cryptocurrencies are risky investments. The largely unregulated market saw roughly 60% of its value evaporate from its peak in November 2021, according to CoinGecko as of Monday. It comes after a series of corporate disasters, including the bankruptcy of Sam Bankman-Fried’s FTX cryptocurrency exchange.

Siu said the “safety net” turned out to be bitcoin and ether, the two largest cryptocurrencies by market cap, rather than stablecoins, which was perceived safe due to their claims to peg with fiat currencies. Bitcoin reached a nine-month high of about $28,200 on Monday evening Hong Kong time, while ether rose to a seven-month high of almost $1,800, CoinGecko data shows. However, USDC, the second largest stablecoin, briefly lost its U.S. dollar peg in mid-March after its issuer Circle admitted that it had $3.3 billion banked with the now-failed Silicon Valley Bank.

Meanwhile, investors have been dumping Credit Suisse shares after rival UBS agreed to take over the 167-year-old bank for $3 billion on Sunday. The Swiss banking behemoth saw its stock price plummet nearly 60% on Monday. It comes hot on the heels of the collapse of crypto-friendly U.S. banks Silvergate Bank and Signature Bank, as well as Silicon Valley Bank, a major lender to startups and venture capital firms.

“In light of that, crypto and specifically bitcoin and ether become attractive alternative ways to store value without those particular traditional banking risks,” said Siu in a written response to Forbes. “These cryptocurrencies have made notable gains just as the banking crisis rose to prominence. It’s not a coincidence. I think what we’re seeing now is a flight of regular money to some cryptocurrencies.”

Even though Hong Kong-based Animoca was not “directly impacted” by the banking crisis, some of the more than 380 companies in its investment portfolio “would be affected,” said Siu. The Animoca cofounder said the deposits of those companies are safe and that “the problem is not critical.” The company has previously informed its investors that it hasn’t banked with Silvergate or Silicon Valley Bank.

Animoca, which counts Singaporean sovereign wealth fund Temasek, Sequoia Capital and others as its investors, has been hit by the ongoing crypto winter. Most of the crypto tokens of its blockchain games, including flagship title the Sandbox, have nosedived more than 90% from its peak during the crypto boom in 2021.