Senator Michael Bennet of Colorado said Signature Bank did not make “prudentially sound” decisions when dealing with crypto. Other US lawmakers believe that cryptocurrencies are becoming a scapegoat for the Federal Reserve’s failed banking policies.
Michael Bennet, the United States Senator from Colorado, recently spoke about the closure of Signature Bank, which supports crypto, with the intervention of the Fed and FDIC.
He said the bank with crypto clients did not make “prudentially sound” decisions while it was in operation. Speaking before the Senate Finance Committee on Thursday, March 16, Bennet discussed the closure of Signature Bank in a conversation with US Treasury Secretary Janet Yellen.
During their discussion, Bennet made a comparison between the relationship between banks and crypto companies similar to that between institutions and marijuana dispensaries. Bennett said:
“Signature Bank failed and almost a fifth of their deposits came from crypto. They are not allowed to do anything with marijuana, but apparently they can deposit 20% of this into crypto, a notoriously unstable system. […] something that no one here understands and where asset values can skyrocket and crash.”
According to Bennet, crypto wasn’t even as stable as the marijuana industry, implying that it may have been a factor in Signature Bank’s collapse.
However, not all US lawmakers are on the same platform when it comes to their views on the Signature Bank closure. Former US representative Barney Frank recently noted that there was no problem with Signature Bank’s solvency before the NYDFS took over.
Using banks to weaponize cryptocurrencies
Earlier this week, on Wednesday, March 15, US Congressman Tom Emmer wrote a letter to FDIC Chairman Gruenberg asking some tough questions about various reports suggesting agencies have been arming banks. to kill off the cryptocurrency industry.
He said such measures could have a disastrous effect, as they would push these companies into offshore, unregulated, opaque and insecure markets.
Today, I sent a letter to FDIC Chairman Gruenberg regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the US. pic.twitter.com/fDmaA0XGWv
— Tom Emmer (@GOPMajorityWhip) March 15, 2023
Ark Invest’s Cathie Wood also responded to Tom Emmer’s letter stating that she too believes that “regulators are using crypto as a scapegoat for their own mistakes in oversight of traditional banking.”
He said the bankruptcy of banks last week was due to an inability to match the gains on securities and deposit rates. Cathie Wood blamed Fed policy as the main culprit for this collapse. further wood explained:
“Crypto did not force SVB and Signature into bankruptcy. In my opinion, Fed policy was the main culprit. Due to a drought in VC funds and higher returns in money market funds, deposits left the US banking system. In our opinion, crypto is a solution to the central points of failure, opacity and regulatory errors in the traditional financial system. Made the scapegoat for policy mistakes, cryptocurrencies will move abroad, depriving the US of one of the most important innovations in history.”
Read other business news on Coinspeaker.
next
Bhushan is a FinTech enthusiast and has a good knack for understanding financial markets. His interest in economics and finance draws his attention to the new emerging markets of Blockchain technology and cryptocurrencies. He is continuously in a learning process and stays motivated by sharing the knowledge he has acquired. In his spare time, he reads thrillers and sometimes explores his culinary skills.
