Senator Michael Bennet said crypto was not “even as stable as the marijuana industry,” questioning Signature Bank’s ability to service digital asset firms but not dispensaries.
Michael Bennet, a United States Senator representing the state of Colorado, has suggested that banks that 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.”
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 solvency at the time 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 addressing the potential impact on the U.S. financial system. Many in the crypto and blockchain space have suggested that government officials were looking to ‘de-bank’ crypto companies, which could have far-reaching implications.