Signature Bank Collapse to be Blamed on Crypto: US Sen. Michael Bennet

Senator Michael Bennet of Colorado stated that Signature Bank did not make decisions that were “prudently sound” in dealing with cryptocurrency.

Several U.S. senators are of the opinion that the Federal Reserve is trying to use cryptocurrency as a scapegoat for its failed banking practices.

Michael Bennet, a senator representing Colorado in the United States Senate, recently discussed the recent closure of the cryptocurrency-friendly Signature Bank, which was brought about by the actions of the Federal Reserve and the Federal Deposit Insurance Corporation.

He claimed that the financial institution that served cryptocurrency customers did not operate in a “prudent” manner while the business was active. On Thursday, March 16, Bennet discussed the closing of Signature Bank with Janet Yellen while he was testifying before the Senate Finance Committee. Yellen was the Secretary of the United States Treasury at the time.

Throughout the course of the conversation, Bennet compared the relationship between banks and crypto businesses and the relationship between institutions and marijuana dispensaries. He said that the two types of relationships are very similar. Bennet said:

“Signature Bank went under, and about one-fifth of the institution’s deposits were made using cryptocurrencies. They are prohibited from engaging in any activity involving cannabis, but it appears that they are permitted to wager 20% of this on cryptocurrency, which is notoriously volatile […] thing that nobody here even understands and in which the value of the assets can both skyrocket and fall.

According to Bennett, the cryptocurrency market was even less stable than the cannabis business, which suggests that it may have been a contributing cause to the failure of Signature Bank.

On the other hand, when it comes to their perspectives on the closing of signature banks in the United States, not all senators are on the same page. Recent comments made by former U.S. Representative Barney Frank indicate that there were no concerns regarding the stability of Signature Bank prior to the intervention of the NYDFS.

 

Using Banks as Weapons for Cryptocurrency

U.S. Congressman Tom Emmer wrote a letter to the FDIC Chairman Gruenberg on Wednesday, March 15, this week, asking some serious questions about several findings that suggest that the bureaus have been militarizing banks to strike down the cryptocurrency industry.

Emmer’s letter was sent early in the week, on March 15.

According to him, such actions might have terrible consequences since they would force these businesses to move into offshore marketplaces that are unregulated, opaque, and hazardous.

Cathie Wood, a representative of Ark Invest, also provided a response to Tom Emmer’s letter, indicating that she, too, believes “regulators are exploiting crypto as a scapegoat for their own shortcomings in the monitoring of traditional banking.” Cathie Wood’s response can be seen here.

She stated that the inability of the banks to match the earnings from securities with the rates offered on deposits was the cause of their failure a week ago. Cathie Wood pointed the finger at the policy of the Fed as the principal agent responsible for this disaster.

Wood continued by explaining:

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