Nellie Liang, U.S. Treasury Undersecretary for Domestic Finance, said the crypto industry is not responsible for the runs on Silicon Valley Bank (SVB) and Signature Bank.
Liang made the statement during a hearing before the House Financial Services Committee on Wednesday, saying she does not believe cryptocurrencies played a direct role in the collapse of the two banks. Asked whether digital assets were an indirect factor, she pointed to Signature Bank being particularly active in the space, without providing further details.
Earlier, Martin Grunberg, chairman of the U.S. Federal Deposit Insurance Corporation (FDIC), said that by the end of 2022, about one-fifth of Signature Bank’s deposits will be related to cryptocurrency customers.
Liang’s comments come as regulators and lawmakers are increasingly scrutinizing the cryptocurrency industry for potential risks to financial stability.
Recent bank runs at SVB and Signature Bank have raised concerns about banks’ exposure to the crypto industry, which is known for its volatility and lack of regulation.
However, Liang’s remarks suggest that the crypto industry should not be solely blamed for the bank run. Instead, regulators and the banks themselves should take a closer look at their own risk management practices to ensure they are adequately prepared for any potential disruption in financial markets.
Representatives of the cryptocurrency industry welcomed Liang’s comments, saying they had a more nuanced understanding of the role of digital assets in the financial system. They also stressed the industry’s commitment to working with regulators to address any concerns about financial stability.