Michael Bennet, a United States senator from the state of Colorado, suggested that banks associated with crypto firms were not making “prudently sound” decisions.
Bennet at a Senate Finance Committee hearing on March 16 brought with lawmakers and Treasury Secretary Janet Yellen commenting on US President Joe Biden’s 2024 budget debate over the recent closure of cryptocurrency-friendly Signature Bank. The Colorado senator drew a comparison between the relationship between banks and crypto companies with that of institutions and marijuana dispensaries, a legal service in many US states that is “frozen out of the financial system.”
“The signature bank failed and almost a fifth of its deposits were from cryptocurrencies,” Bennet said. “They’re not allowed to do anything with marijuana, but apparently they can put 20% of it into crypto—notoriously unstable […] a thing that nobody here even understands and where asset values can go up and down.”
According to Bennett, cryptocurrency was “not nearly as stable as the marijuana industry,” suggesting that may have been a factor in Signature Bank’s collapse. However, the signature of board member and former US representative Barney Frank he said no problem about Signature’s solvency when the New York Department of Financial Services took 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 firms have been part of discussions among industry experts, regulators and lawmakers regarding the potential impact on the US financial system. Many in the crypto and blockchain space have they claimed that government officials they sought to “debank” crypto companies, which could have far-reaching consequences.
