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- Two U.S. Senators respond to the collapse of Silvergate bank, hinting that regulatory policies might be stricter in the near term.
- Prominent crypto personalities believe that U.S. regulators are mistaken about crypto.
It appears that the collapse of Silvergate bank might have a more drastic impact on digital currencies. Recent comments from Senator Elizabeth Warren have heightened market worries.
As seen in a recent tweet made by the senator, the crash of Silvergate bank is disheartening she says. However, the Senator maintains that the downfall of the bank was expected. She noted that she had previously signaled how risky the bank was, and how it went against regulatory policies.
Warran expresses concern for the customers who are at the receiving end of Silvergate’s collapse. She believes that regulatory bodies should tighten up and contain the dangers in the crypto industry. she tweeted.
As the bank of choice for crypto, Silvergate Bank’s failure is disappointing, but predictable. I warned of Silvergate’s risky, if not illegal, activity—and identified severe due diligence failures. Now, customers must be made whole & regulators should step up against crypto risk”
Warren‘s comment was met with a lot of opposition from prominent Cryptocurrency figures. They insist that her take on the cryptocurrency industry was inaccurate.
As the bank of choice for crypto, Silvergate Bank's failure is disappointing, but predictable. I warned of Silvergate's risky, if not illegal, activity—and identified severe due diligence failures. Now, customers must be made whole & regulators should step up against crypto risk.
— Elizabeth Warren (@SenWarren) March 8, 2023
Popular crypto trader Scott melker, pushed back on Warren’s comments. He claims that Silvergate’s collapse had nothing to do with crypto. Silvergate collapsed solely due to the fact that they had frictionless reserves than every other bank, he remarked.
Will policy makers tighten crypto policies?
Like Senator Warren, Senator Sherrod Brown, the Chairman of the Senate Banking, Housing, Urban Affairs Committee, is not pleased with the ongoing events in the cryptocurrency market. His comments imply that regulatory rules for crypto might intensify in the coming months and years ahead.
Senator Brown recognized the impact of the FTX crash and maintained that with Silvergate taking a hit, the reliance for banks on cryptocurrency poses a lot of risks. He added.
I have been concerned that when banks get involved in crypto, It spreads risk across the financial system and it will be task payers and consumers who will pay the price. That’s why I am continuing to work with my colleagues in Congress and financial regulators to establish strong safeguards for our financial system from the risks for crypto
Caitlin Long, the founder and CEO of Custodian bank has responded to Senator Brown’s statement. Long clarified that crypto didn’t trigger Silvergate’s downfall. She explains that depositors only being able to withdraw $1.4 billion out of $13.3 billion in demand deposits played a huge factor in the matter. “Had $SI held $13.3bn of cash, the bank run wouldn’t have impaired its capital. Not a crypto prob.” She asserted.
Other prominent crypto personalities like John Deaton are concerned that policy makers will reference the crash of FTX and Silvergate bank, as reasons to push policies that hinder the crypto market.
FTX & Silvergate will 💯 be conflated by @GaryGensler @ewarren & others to push their anti-crypto agenda. Warren has already made a despicable comment regarding Silvergate and she isn’t letting the truth get in the way of her narrative. Standby to 🤮 as they ⛽️ 💡 the 🇺🇸 people. https://t.co/7464apuyN7
— John E Deaton (@JohnEDeaton1) March 9, 2023
