Treasury Undersecretary Nellie Liang informed members of the House of Representatives that the crypto industry was not a primary component in the failures of Silicon Valley Bank and Signature Bank.
The American Nellie Lian, The undersecretary for domestic finance at the United States Department of the Treasury, argues that the digital assets industry is not to blame for the rapid failure of Silicon Valley Bank (SVB) and Signature Bank earlier this month.
Liang testified before the House Financial Services Committee on Wednesday, saying, “I don’t believe that crypto played a direct role in either of the failures.”
In response to a question about the possible secondary role of digital assets, she said that Signature was “particularly active in the sector,” but she didn’t elaborate. FDIC Chairman Martin Gruenberg had previously informed the legislators that by the end of 2022, cryptocurrency clients would account for roughly 20% of Singature’s bank base.
The two regional lenders and a smaller organization, Silvergate Bank, took business risks, which may have been the flare that set fire to the rest of the U.S. financial system.
Sure, the banks had huge amounts of unsecured accounts from crypto firms. The industry’s instability contributed to the fast removal of funds as the digital assets sector faced recent difficulties.
Despite the long two days of legislative proceedings, legislators needed more interest in concentrating on crypto issues.
It was clear from the proceedings that the Federal Reserve and the FDIC’s oversight of the banking industry was a significant source of worry for legislators and officials. Questions about the financial industry’s capital and cash reserves were the focus of the conversation about new regulation legislation rather than any possible laws dealing with crypto supervision.
The sudden disappearance of three top crypto-friendly banks has recently left many virtual-assets clients. For instance, the FDIC reported on Tuesday that it is still dealing with about $4 billion in crypto-tied assets from Signature, and it is urging the bank’s former clients to withdraw their money by April 5 or receive it in a check.
Disclaimer: The information provided in this article is for informational purposes only and should not be construed as financial or investment advice. Cryptocurrency investments are subject to market risks, and individuals should seek professional advice before making any investment decisions.