US lawmaker suggests Signature’s collapse was tied to instability of crypto


Michael Bennet, a United States senator representing the state of Colorado, has suggested that banks associated with crypto firms did not make “prudentially sound” decisions.

Speaking at a March 16 hearing of the Senate Finance Committee, Bennet brought up the recent closure of the crypto-friendly Signature Bank with lawmakers and Treasury Secretary Janet Yellen in a discussion of U.S. President Joe Biden’s FY 2024 budget. The Colorado senator drew a comparison between the relationship of banks and crypto companies to that of institutions and marijuana dispensaries — a legal service in many U.S. states that is “frozen out of the financial system”.

“Signature Bank failed and almost a fifth of its deposits came from crypto,” said Bennet. “They’re not allowed to do anything with marijuana, but apparently they can lay 20% of this on crypto — a notoriously unstable […] thing that nobody here even understands and where the value of the assets can soar and collapse.”

Senator Michael Bennet addressing the Senate Finance Committee on March 16

According to Bennet, crypto was not “even as stable as the marijuana industry,” implying it may have been a factor in the collapse of Signature Bank. However, Signature board member and former U.S. Representative Barney Frank said there was no issue regarding Signature’s solvency at the time the New York Department of Financial Services took control of the bank on March 12.

Related: California cannabis producer adopts blockchain to track its weed

The failure of Signature Bank, Silicon Valley Bank and Silvergate Bank and their ties to crypto firms have been part of discussions among industry experts, regulators, and lawmakers addressing the potential impact on the U.S. financial system. Many in the crypto and blockchain space have argued that government officials were looking to “de-bank” crypto companies, which could have far-reaching implications.

Articles You May Like

Bitcoin holds $28K due to spot buying, but institutional investors are still selling customer accused of $7M spending spree granted bail
Tim Draper sings a Bitcoin song dedicated to SVB and world governments: PBW 2023
Price analysis 3/24: BTC, ETH, BNB, XRP, ADA, DOGE, MATIC, SOL, DOT, LTC
Coinbase submits petition to SEC explaining that staking is not securities