US Congressman questions FDIC over signature bank shutdown


Signature Bank Closure Letter

US Congressman Tom Emer wrote a letter to the President of the Federal Deposit Insurance Corporation (FDIC) on the 15th. He cast doubt that the FDIC’s recent actions against Signature Bank and others are intended to stifle the cryptocurrency industry.

Emmer referred to remarks by Bernie Frank, who sits on the board of directors of Signature Bank. Mr. Frank is a former legislator who was involved in the drafting of the Dodd-Frank Act, which was enacted in the wake of the Lehman Shock.

The New York State Department of Financial Services (NYDFS) has closed Signature Bank on the 12th to avoid a financial system crisis after the SVB bankruptcy. Signature Bank is known for providing U.S. dollar deposit services to the cryptocurrency industry.

In this regard, Mr. Frank said Signature Bank did not need to shut down because it had sufficient total assets. He speculated that authorities shut down the bank in part to send a warning message that cryptocurrencies are dangerous and should be avoided.

Citing this opinion, Emmer argues:

If this is the case, taking advantage of recent banking sector events to close signature banks would be highly inappropriate and could lead to greater financial instability.

Emmer also pointed out that the instability in the banking sector was also caused in part by government-led interest rate hikes. He continued:

Some say that the closures of Signature Bank and others happened because cryptocurrencies are “dangerous,” but in reality, they appear to be affected more by rising interest rates than by cryptocurrency volatility. .

Has the FDIC provided guidance for financial institutions to manage and mitigate the risk of rising interest rates? If so, what was it like?

As a background, Silicon Valley Bank (SVB) is known to have suffered unrealized losses as the prices of US Treasury bonds and other holdings fell due to the interest rate hike policy of the Federal Reserve Board. Silicon Valley Bank and Signature Bank were also banks used by companies in the cryptocurrency industry.

connection: Signature Bank Director “U.S. Regulators Oppose Virtual Currencies”

Emmer has asked each bank under its supervision to publicly respond whether it has instructed them not to provide services to cryptocurrency companies, and if so, why and for what purpose. He also asked if he suggested that there would be stricter oversight when dealing with clients in the cryptocurrency industry.

What is FDIC?

Its official name is the Federal Deposit Insurance Corporation. An independent agency of the U.S. government that provides deposit insurance services, etc. to protect deposits at insured banks.

▶Cryptocurrency Glossary

Federal Reserve Statement

Emmer also touches on moves by US government agencies other than the FDIC.

In a recent example, the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) jointly issued a warning in February about the risks cryptocurrencies pose to banks. .

Deposits for customers of cryptocurrency companies or deposits for stablecoin reserves carry liquidity risk, although it “does not discourage them from providing banking services to certain types of companies.” and recommends appropriate risk management for such deposits.

Emmer said such notices discourage banks from offering services to customers in the cryptocurrency industry, among other things.

These moves to keep cryptocurrencies out of the U.S. financial system are an inadequate regulatory strategy that stifles innovation and forces U.S. cryptocurrency users toward services in less regulated jurisdictions.

Emmer also pointed out that the failed FTX was an offshore exchange based outside the United States.

connection: U.S. Federal Reserve and others warn banks that handle funds in the virtual currency industry

The post US Congressman questions FDIC over signature bank shutdown appeared first on Our Bitcoin News.


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