Following the recent collapse of financial institutions in the United States, lawmakers have expressed their concern about cryptocurrencies. In a recent discussion, senators discussed their stances on the issue.
In the Senate Finance Committee hearing that took place on Thursday, U.S. Senator Michael Bennet had a bone to pick with banks that forge ties with crypto while the marijuana industry remains mostly shut out of the financial system.
The Colorado Democrat raised these concerns to Treasury Secretary Janet Yellen as she geared to answer questions from lawmakers on topics such as taxes, interest rates, and bank failures.
According to Barron’s, Signature Bank, Silicon Valley Bank, and Silvergate Bank have all collapsed over the past week. Barron’s is an American weekly magazine/newspaper published by Dow Jones & Company and is a sister publication to The Wall Street Journal, Barron’s covers U.S. financial information, market developments, and relevant statistics. Additionally, crypto companies made up about 20 percent of deposits at Signature Bank.
Bennet in the session commented on the situation and compared it to the situation of marijuana in the country. The Senator clearly expressed his criticism for crypto and thought marijuana is rather more stable. In his words:
“Last weekend, Signature Bank failed and almost a fifth of its deposits came from crypto — like they’re not allowed to do anything with marijuana, but apparently they can lay 20 percent of this on crypto — a notoriously unstable, you know, a thing that nobody here even understands.”
Sources reveal that marijuana is legal in thirty-seven states of the US although the possession, distribution, or sale of it is still illegal on the federal level. Bennet asked for Yellen’s thoughts on whether Signature was doing right by depositors by investing in crypto, which “isn’t even as stable as the marijuana industry.”
To this, Yellen responded:
As you pointed out, in the case of marijuana, it is against federal law and that’s a barrier unfortunately to appropriate banking services for the industry and it’s something the regulators have been looking for solutions to.
The involvement of the banks in the US with the crypto sector has been a topic of talk for lawmakers and regulators for a while. According to the FDIC, a significant number of banks in the US under it are exploring the crypto space and intend to offer different services amid rising consumer demand.
Data reveals that as of January 2023, about 136 banks were already involved or are planning to be involved in various crypto-related initiatives. The regulator in its report revealed its skepticism that the industry poses risks to the traditional financial system.