Crypto Community Buzzes as US Government Seizes Republic First Bank

April 27, 2024

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The shutdown of the Republic First Bank of Philadelphia by the federal regulator has entered history as the first setback experienced by the US banking sector in 2024.

The Pennsylvania Department of Banking and Securities stepped in and seized the bank on April 26. Federal Deposit Insurance Corporation (FDIC) will be managing nearly all of the bank’s $4 billion in deposits and its $6 billion in total assets.

After the closure, the 32 branches of the Republic First Bank in New Jersey, Pennsylvania, and New York reopened as branches of Fulton Bank starting on April 27. With the interest rates going up and the commercial real estate market being a bit unpredictable, this transformation is part of a bigger plan to make the regional bank more stable.

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Failure of traditional banks a wake-up call to crypto assets?

The failure of the Philadelphia based bank has caused quite a stir not only in the banking community but also in the cryptocurrency world.

Crypto enthusiasts, Marius Martocsan, the CEO of Zesh, Pillage Capital, a crypto trader and, Crypto commentator Randi Hipper shared the same thoughts about the current situation and their sentiments is gearing people to see the bank’s failure as a big opportunity for digital currencies.

It’s quite interesting to note the timing of the Philadelphia-based bank collapse, as other regional lenders like Silicon Valley Bank, Silvergate Bank, had also struggled with similar challenges in the past which has put the struggles of the sector on a spotlight. It is said to believe that the pandemic has had a significant impact, causing commercial real estate vacancy rates to rise and making loan refinancing more difficult.

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Will Bank failure spark crypto surge?

While it has been a tough time for the banking industry, the cryptocurrency market has given a mixed reaction after the disclosure of the event.

According to CoinMarketCap, Bitcoin dipped by 1.16%, trading at $62,715, and Ethereum dropped by 0.58%, trading at $3,095. Altcoins like Dogecoin and Solana experienced slightly steeper declines, with decreases of 2.88% and 1.79% respectively.

This bank failure is a big test for the FDIC’s insurance fund, costing $667 million. It highlights vulnerabilities in certain sectors of the banking industry. Also, FDIC’s quick response and acquisition by Fulton Bank show a strong regulatory framework. Some in the crypto community think repeated failures in traditional banking could drive interest in cryptocurrencies.