
Peter Schiff’s bank closure highlights why Bitcoin is crucial for financial freedom, as the nascent asset class has already helped nearly 4 million unbanked in El Salvador to gain banking facilities.
Since the closure of his bank in Puerto Rico, Peter Schiff has been at the receiving end of Bitcoin (BTC) proponents, reminding him this wouldn’t have happened if he was using BTC.
The latest to taunt the gold proponent is none other than El Salvador President Nayib Bukele, who has had a fair share of interactions with Schiff ever since El Salvador adopted BTC as a legal tender last year.
Bukele responded to one of the tweets made by Schiff in January this year criticizing BTC and predicting that the likes of MicroStrategy CEO Michael Saylor and Bukele himself would eventually have to sell their BTC holdings as price drops. The President responded to the tweet by asking about his bank.
The exchange between the two critics comes when the global financial markets are in ruins. On the one hand, the crypto market has lost more than 60% of its market cap from the top, and on the other, the equity market is at an all-time low.
How’s your bank going?
— Nayib Bukele (@nayibbukele) July 6, 2022
Schiff has been quite vocal about his bank closure and has blamed the corrupt local government for it. He has said that the government is illegally trying to extort him for criticizing them.
The IRS and J5 targeted my bank due to my outspoken criticism of excess government taxation and regulation. Their illegal efforts to punish free speech, deprive me of property without due process, and needlessly put thousands of customers at risk, actually justifies my criticism.
— Peter Schiff (@PeterSchiff) July 6, 2022
While Schiff claims the bank was closed due to his criticism of the government, it highlights how centralized financial institutions such as banks often curtail financial freedom. The price of BTC might fluctuate over time, but the owner is in full control of their funds if they haven’t put them on a centralized exchange.
Related: Deutsche Bank analysts see Bitcoin recovering to $28K by December
Critics often highlight the volatility in the crypto market. Still, the traditional financial market is in no better state either, with inflation touching decade highs and several top stocks registering more significant losses than BTC in 2022.
BTC has been crucial in offering financial freedom to nearly 70% of the unbanked population of El Salvador. Although the price of BTC has dipped more than 60% from its top and critics often like to point out the decline in the number of BTC purchases by the Central American nation, the country has onboarded 4 million unbanked using their national Bitcoin wallet.
El Salvador’s remittance network has been enhanced by the BTC adoption, accounting for millions in cross-border transactions with minimal fees. The country has proven that Bitcoin can offer financial freedom to the unbanked.
Puerto Rico regulators closed down Schiff’s bank for not maintaining the net minimum capital requirements. As a result, customers lost access to their accounts following a subsequent freeze.
Prominent economist Peter Schiff, who is well-known in the community for his anti-crypto sentiments, had his bank shut down by Puerto Rico regulators. The revelation, however, led to Crypto Twitter pointing out the “irony” as Schiff’s prediction for Bitcoin (BTC) came true for his own traditional bank.
Puerto Rico regulators closed down Schiff’s bank for not maintaining the net minimum capital requirements, which further impacted the customers as they lost access to their accounts following a subsequent freeze.
Despite no evidence of crimes, Puerto Rico regulators closed my bank anyway for net capital issues, rather than allow a sale to a highly qualified buyer promising to inject capital far in excess of regulatory minimums. As a result accounts are frozen and customers may lose money.
— Peter Schiff (@PeterSchiff) July 3, 2022
While acknowledging that “customers may lose money,” Schiff stated that he was unaware of the regulatory minimums and was not presented with any form of legal notice prior to the abrupt closure. He added:
“It costs a fortune to run a small bank. That's why I never really made any money. The compliance costs are outrageous.”
As a witness to what many consider an epic plot twist, the crypto community took the opportunity to explain the importance of Bitcoin in reinventing the core of traditional finance.
The irony of this is so hilarious!@PeterSchiff you do realize that if you had been using Bitcoin this would not have been possible!
— Coach K (30% Crypto, 70% USDC) (@Coachkcrypto) July 4, 2022
You should be loving decentralization https://t.co/cDCOWdMowL
Bitcoin podcaster Stephan Livera, too, chimed in on the development as he said, “He's (Schiff) been a #bitcoin skeptic since $17.50 (it's currently $19,100).” The sudden closure of Schiff’s bank in Puerto Rico reignited the discussions around Bitcoin’s resistance to judicial supremacy.
“The irony here is priceless,” added @HodlMagoo while others rhetorically helped Schiff find a promising alternative to traditional finance, asking “Do you understand why you need bitcoin now?"
On the other end of the spectrum, Puerto Rico has been receptive to crypto acceptance in the region. On April 20, Puerto Rico authorities became the fourth jurisdiction in America to award a money transmitter license to Binance.US, a United States-based subsidiary of crypto exchange Binance.
While the crypto community empathizes with Schiff and the bank’s customers for their losses, the episode further cements Bitcoin’s position as the ultimate replacement of traditional finance.
Related: Deutsche Bank analysts see Bitcoin recovering to $28K by December
Analysts from Deutsche Bank forecasted BTC prices to rebound back to $28,000 by the end of the year despite an ongoing bear market.
Analysts Marion Laboure and Galina Pozdnyakova envisioned the Standard and Poor (S&P) to rebound back to its January levels, which in turn, could result in a 30% increase in Bitcoin’s value from current levels midway through 2022 — bringing up its price to the $28,000 mark.