The founder muses on what he calls the “broken banking system,” and what needs to be improved on.

Arthur Hayes, founder of crypto exchange BitMEX says that he views crypto as an important asset for consumers to own as a hedge against the risks from the “broken”, traditional banking system.

“I don’t care if you’re capitalist or a communist. Everybody put on a lot of debt. We’ve passed the point where that debt is becoming useful,” said Hayes during a recent interview. “And therefore everyone is going to take an ‘L’ unless they get some crypto or some gold—some hard asset that’s outside of the traditional banking system.”

Arthur Hayes founded BitMEX in 2014, being amongst the earliest in the industry. But in 2021, the US  Department of Justice charged Hayes with a violation of the U.S. Bank Secrecy Act, pleading guilty to comply with anti-money laundering programs at BitMEX. Hayes then served probation for two years, went through six months of home detention, and has since relocated to Singapore.

In his new home, Hayes continues to write long-form essays on cryptocurrency and blockchain adoption with a vision: to educate people on how crypto works, and why it’s a worthy alternative to traditional financial institutions.

Are we too far down the traditional rabbit hole?

As Hayes sees it, politicians and regulators have tried too hard to keep the traditional banking system running, piling on debt that is increasing by the second. Therefore, it’s now become too politically damaging to let institutions and big banks fail. Everyone has to stay afloat, no matter what.

This isn’t by any means an abstract claim from Hayes. March’s collapse of Silicon Valley Bank (SVB) began as their customers rushed to withdraw their funds. As this event triggered a massive bank run, California state banking regulators ended up having to protect SVB by placing them into their receivership, with the Federal Reserve implementing measures for emergency lending.

As events like SVB’s collapse creates a lapse in trust in the traditional banking system, consumers are looking at alternative assets for ways to use and protect their finances in more meaningful ways. Queue in the increased interest in Bitcoin.

According to Hayes, people fear that events like SVB’s bank run will prompt them to lose full access to their assets. This sort of issue is a large concern for institutions with large amounts of capital, making people consider cryptocurrency as an alternative.

Right after SVB’s collapse, Bitcoin prices soared 30%. If people are putting this much trust into crypto immediately a crisis, then that means something is worth looking into. But then, it may be a little too early to just fully depend on crypto.

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