Arthur Hayes: If You’re Still in Traditional Banking System, Be Prepared to ‘Take an L’

The original crypto bad boy, Arthur Hayes, still has his work cut out for him with what he calls the “broken banking system.”

Hayes, the founder of cryptocurrency exchange BitMEX, said he sees crypto as an important asset for consumers to own as a hedge against the risks of the traditional banking system.

“I don’t care if you’re a capitalist or a communist. Everyone got into a lot of debt. We’re past the point where this debt becomes useful,” Hayes said during an interview for a recent episode of gm. Decrypt podcast. “And so everyone is going to take an ‘L’ unless they’re getting crypto or gold, a hard asset that’s outside of the traditional banking system.”

Hayes founded BitMEX in 2014 and reaped the rewards for being so early in the industry. But in 2021, the Justice Department charged him with violating US bank secrecy law for failing to comply with anti-money laundering programs at BitMEX. He pleaded guilty and after serving two years of probation and six months of house arrest, he moved to Singapore.

Meanwhile, Hayes continued to write detailed essays on cryptocurrency and blockchain adoption. He says his motivations are to educate people on how crypto works and why it is valuable as an alternative to traditional financial institutions.

According to Hayes, it has become too politically damaging to allow institutions to fail in the traditional banking system. Instead, he said, politicians and regulators tried to get things done by racking up mounting amounts of debt.

He referenced the collapse of Silicon Valley Bank, where consumers rushed to withdraw their funds and sparked a huge bank run. In the end, California state banking regulators had to place SVB in receivership and the Federal Reserve had to implement emergency measures. ready.

Recent bank meltdowns have also increased interest in alternative assets, such as Bitcoin, according to Hayes. He said people were worried about not being able to fully access their assets, a big concern, especially for institutions with large volumes of capital, and this caused people to consider cryptocurrency as an alternative.

While financial institutions have suffered heavy losses this year, cryptocurrencies have conversely seen increased volume and entries.

“If we want crypto to be another financial system, people really need to understand what we’re trying to replace or improve,” he said. “The unfortunate fact is that a lot of people don’t get any kind of education about how money works, how the banking system works, how asset markets actually work.”

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