When the three major US banks — Silvergate Bank, Silicon Valley Bank and Signature Bank — all collapsed in the past two weeks, they all experienced massive withdrawals from customers, but each had its own different regulators.
Pretty much the same problem, but with different results for each bank, it’s always been reason bank leader, former manager and US Senator Question the neutrality and judgment of managers.
In fact, the arbitrary exercise of state power in response to banks serving this new industry provides tangible benefits to the value of money and payment networks, which are neutral in their value. Politics – Bitcoin. In the coming years, it will be important that both policymakers and the public are able to distinguish the genuine innovation represented by Bitcoin from its many subsidiaries and imitators, many of which have led to the spread of the cryptocurrency, disrupting the system of governing agents.
Bank Runs and Discrimination
Silvergate Bank, one of the foremost banks serving the crypto industry, has voluntarily ceased operations and is in the process of liquidating its assets following a series of regulatory proceedings by the Department of Justice and other regulators. Lawmakers including Sen. Elizabeth Warren have boosted the ability for banks to get loans. The story raises the question of whether political interference was the reason Silvergate closed.
The Federal Deposit Insurance Corporation (FDIC) is the federal regulator of state-owned banks, take over silicon Valley Bank and transfer all deposits at that bank to “Bridge Bank”. The FDIC has also taken unprecedented steps to secure all Bridge Bank deposits — insured and uninsured, existing and new. As the new CEO of Silicon Valley Bridge Bank, Tim Mayopoulos points outwhich “refers to deposits held in SVB – One of the safest banks or institutions in the country. That treatment has led some observers to favor the neobank over Silvergate. wrote: According to one source, FDIC chairman no Allow private parties to acquire SVB instead of requiring banks to submit to FDIC regulation.
Ultimately, Signature Bank was forced to close by the New York State Department of Financial Services and its assets were seized by the FDIC. However, unlike Silvergate Bank and SVB, Signature Bank remained solvent at the time of the takeover. The closure of solvency banks is also a novelty, suggesting regulators may be picking winners in the banking sector.
The Treasury, Federal Reserve (Fed) and FDIC shut down the Signature payment platform that may be linked to their “Signet” product, citing a “systemic risk exception.”Live Payments – One of the Last Places to Store Crypto After Bank Shutdown in Silvergate Door. Drafted by former U.S. Rep. Barney Frank Dodd-Frank Act Intensified oversight of the banking sector following the 2008 financial crisis and was a member of the signature committee at the time of the takeover. Frank says:
“Regulators want to spread a very strong anti-encryption message. We have become a role model of being able to pay by fundamentals.”
Regulatory failure: more powers for regulators?
The three bank failures have one thing in common: regulatory scrutiny of the cryptocurrency industry has increased following the collapse of several high-profile cryptocurrency exchanges. 2022. Many of these exchanges engage in activities that are reviewed under applicable securities, money transfer, and campaign finance laws. But for regulators, wiping out millions of retail investors doesn’t mean acknowledging their failure to effectively hunt down criminals.In fact, Fed Chairman Jerome Powell blocked language suggesting a potential regulatory failure, sources said. in a joint statement Regarding the SVB rescue plan announced by the Federal Reserve, FDIC and Treasury Department on March 12th.
Instead, regulators have used the past decade of inaction and ineffective action, combined with justification, to further expand their powers today. On January 3, 2023, the Federal Reserve, OCC, and FDIC issued a joint letter discouraging banks from holding Cryptocurrencies or serving customers using cryptocurrencies. As U.S. Representative Tom Emmer stated in a letter After being sent to the FDIC president, the Fed subsequently published the guidance in the Federal Register, rather than following the usual administrative process of requiring public comment.At the same time, the White House issue a statement Praises this “guideline” from “banking authorities” and calls on Congress to “expand the powers of regulators”.
These regulatory actions — without any congressional legislation or public debate — have shaken the industry. Many banks, including Signature Bank, Announce They will significantly reduce or eliminate transactions with crypto assets and clients in the crypto industry. This latest crackdown and its implications are the same as New York state’s passage of a “BitLicense” law in 2015, which caused at least 10 bitcoin companies to leave and discouraged others. boom this.
From rule of law to rule of inconsistency
Many companies operating in the crypto industry actually embody the worst corporate predation. Yet the prescribed response to them is largely ineffective; it alternates between neglect, misunderstanding, and collusion. By allowing years of misconduct to flourish and then taking a sudden, discriminatory strike, the entire state of New York — arguably the most important financial regulatory jurisdiction in the United States — and the U.S. federal government are signaling to global markets that there is little U.S. Consistency in approach to adopting new payment technologies.
Of course, nothing scares markets more than inconsistency and arbitrariness. The recent bank failures show that the US, once a world leader in well-regulated markets and the rule of law, has traded principles for inconsistencies. This will have far-reaching economic and political ramifications for years to come.
bitcoin alternative
Despite an escalating standoff between regulators and some financial service providers, the innovation that originally spawned an army of cryptocurrency copycats, bitcoin, is still faring better. As an open source, global, politically neutral value transfer protocol, Bitcoin can continue to function with or without banks. Bitcoin is built and maintained by volunteers; it has no CEO, board or organization behind it that can be targeted or shut down.
Today, trust in governments, businesses, media and other organizations is increasing at historic lows . One of the most important of all social institutions is money – the language we use to exchange value. Bitcoin is a non-discriminatory institution; anyone can use it to send, store and receive any amount of data. For this reason, Bitcoin can serve as a neutral platform to re-establish trust in institutions so the United States can continue to build on its past economic and political success.
Recent politicization of specific banks by federal and state regulators suggests the government may have overstepped its powers. Here’s the fix – it’s getting users every day.
- Bitcoin nears $27,000 as SVB files for bankruptcy and Fed pumps $300 billion into economy
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board take
According to Forbes
