Michael Bennet, a United States senator representing the state of Colorado, suggested that the banks associated with the crypto companies did not make “prudentially sound” decisions.
Speaking at a March 16 hearing of the Senate Finance Committee, Bennet brought the recent shutdown of crypto-friendly Signature Bank with lawmakers and Treasury Secretary Janet Yellen in a discussion of US President Joe Biden’s fiscal 2024 budget. The Colorado senator made a comparison between the relationship of banks and crypto companies to that of marijuana institutions and dispensaries, a legal service in many US states that is “frozen outside of the financial system.”
“Signature Bank failed and almost a fifth of their deposits came from crypto,” Bennet said. “They are not allowed to do anything with marijuana, but apparently they can deposit 20% of this in cryptocurrency, a notoriously unstable system. […] something that no one here understands and where asset values can skyrocket and crash.”
According to Bennet, cryptocurrencies were “not even as stable as the marijuana industry,” implying that it may have been a factor in Signature Bank’s collapse. However, Signature board member and former US Representative Barney Frank said there was no problem regarding Signature’s solvency at the time the New York Department of Financial Services took the decision. control of the bank on March 12.
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The failure of Signature Bank, Silicon Valley Bank, and Silvergate Bank and their ties to crypto companies have been part of discussions among industry experts, regulators, and lawmakers addressing the potential impact on the US financial system. Many in the The cryptocurrency and blockchain space have argued that government officials were seeking to “unbank” cryptocurrency companies, which could have far-reaching implications.
