- The SEC chairman, Gary Gensler, blames the cryptocurrency sector for the failure of SVB.
- Legislators raised concerns about the SEC’s approach to digital assets.
- Gensler draws a correlation between the banking crisis in the U.S.
The chairman of the Securities and Exchange Commission (SEC), Gary Gensler, was questioned by House Republicans on the SEC’s stance on digital assets at a recent hearing. Legislators raised issues with the SEC’s approach to FTX and the lack of clarity around whether ether is a security.
Gensler, while describing the abrupt failure of Silicon Valley Bank, pinned the blame on the cryptocurrency sector, saying that it was the main factor in the bank’s failure.
SEC Chair Gary Gensler is speaking to Congress and blaming the Silicon Valley Bank collapse on Crypto.
These regulators/politicians using their own failures to blame the collapse of poorly operated banks on crypto is pathetic.
This had absolutely nothing to do with Crypto. pic.twitter.com/B1hFaVV6Vv
— WhaleWire (@WhaleWire) April 18, 2023
Consequently, Gensler was asked about his perspective on the ongoing banking-crisis in the United States and SEC’s handling the matter. However, he drew a correlation between the failure of the banking system and the partnerships that the financial institutions had with clients in the crypto sector.
Moreover, he pointed out that these affected institutions had an abnormally high level of exposure to cryptocurrencies. It is either through customer investments or by facilitating payments for digital asset exchanges and other crypto companies.
SVB and Signature Bank Collapse
In March of this year, SVB suffered a collapse and subsequent failure, causing significant concern within the financial banking sector. This event was ranked as the second-largest failure of a financial institution in the history of the United States. Significantly, the failure of several other banks followed the collapse of Silicon Valley Bank. Among those that experienced failure was Signature Bank, a New York-based institution with significant involvement in the cryptocurrency industry.
Many in the cryptocurrency community have argued that increased regulation is not the answer. Besides, they believe that the key to preventing incidents like the SVB collapse is to encourage innovations in the financial-sector.
Gensler recently ignited controversy by referring to Bittrex as a securities exchange. He tweeted that “today’s action demonstrates once again that the crypto markets are plagued by a deficiency in regulatory compliance, rather than a lack of regulatory clarity.” The SEC accused Bittrex for running an unregistered securities exchange, acting as a broker, and operating a clearing agency without registration.
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