Can crypto contagion infect mainstream finance?
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Federal Reserve sees limited bank exposure to crypto markets, according to Fed officials. European Central Bank’s top banking supervisor said there were ‘still very limited’ connections between crypto and banks. Smaller US lenders have ploughed more deeply into crypto, courting digital asset customers. In absence of banks, dedicated crypto lenders have stepped in for lending in the absence of them. Banks have missed out on more than 95 per cent of the $4bn-$5bn in estimated revenues for corporate and institutional clients generated in 2021 through digital assets, a report by Morgan Stanley and Oliver Wyman. Little direct exposure to banks would make it less likely for them to act as a transmission channel for financial stress from the crypto crash as they did in 2008. Source