United States senator Michael Bennet has criticized banks associated with crypto firms for making “prudentially unsound” decisions.
During a hearing of the Senate Finance Committee on March 16, Bennet referred to the recent closure of the crypto-friendly Signature Bank and compared the relationship between banks and crypto firms to that of institutions and marijuana dispensaries.
Bennet stated that a legal service in many U.S. states, marijuana dispensaries, is “frozen out of the financial system” while Signature Bank failed, with almost a fifth of its deposits coming from crypto.
Bennet implied that crypto may have been a factor in the bank’s collapse as it is a notoriously unstable asset, and not even as stable as the marijuana industry.
Bennet’s comments highlight the concerns regarding the relationship between banks and crypto firms, particularly in the wake of the recent closures of Signature Bank, Silicon Valley Bank, and Silvergate Bank. Industry experts, regulators, and lawmakers have been discussing the potential impact of these closures on the U.S. financial system.
While Bennet’s comments are not without controversy, they reflect a growing concern among lawmakers and regulators regarding the potential risks associated with crypto and its impact on the traditional financial system.
As the crypto market continues to evolve, it is likely that discussions on this topic will intensify, with a focus on how to strike a balance between innovation and stability.