Credits: Cryptoslate

Top US Treasury officials said crypto had no direct role in bank failures

Recently, Nellie Liang, one of the Top US Treasury officials, said crypto had no direct role in bank failures. She also told the House lawmakers that the crypto market was not a central factor in the wipeouts of major banks, which includes Signature Bank and Silicon Valley Bank.

Crypto has no direct role in bank failures, says Nellie Lang

Recently, the United States Treasury Department’s undersecretary for domestic finance, Nellie Liang, stated that she does not believe that the crypto market or digital assets sector should not be blamed for the failure of SVB and Signature Bank.

During a House Financial Services Committee hearing on Wednesday, Liang said, “I don’t believe that crypto played a direct role in either of the failures”. And when she was asked whether the crypto industry played an indirect role, she noted that Signature was active in this sector.

FDIC, also known as Federal Deposit Insurance Corporation, Chairman Martin Gruenberg had earlier told the House lawmakers that about ⅕ of Signature Bank’s deposit base was tied to crypto investors at the end of 2022. However, the relationship between the crypto industry and two of its favourite banks have sought a lot of attention from the Senate Members and the House of Representatives in the last two days of hearing while examining the banks’ failure.

As per the regulators, the two regional lenders and a smaller institution, Silvergate Bank, that sparked the recent blaze that led to the US banking crisis, took business risks that undermined their resilience. US Fed Reserve Vice Chairman for Supervision Michael Barr stated that trouble with Silvergate Bank was rooted in its classic interest rate risk management.

To be more precise, these banks held large sums of uninsured deposits from different crypto companies. The volatility of the crypto market and its rapid withdrawal of funds as the digital assets sector struggled with recent hardships led to their failure.

Lawmakers are tensed for banks management system

As you know, Nellie Liang, one of the Top US Treasury officials, said crypto had no direct role in bank failures. However, in two days-long congressional hearings, the house lawmakers showed little interest in focusing on the crypto-related questions.

The hearings revealed that the primary concern of lawmakers and regulators was problems in the banks’ management system and potential failures under the supervision of the FDIC and Fed.

What are your views on Nellie Liang’s statement? Do you think the crypto market played a direct role in the failures of SVB and Signature Bank? Let us know in the comments below. And if you found our content informative, share it with your family and friends.

Also Read: Bitcoin hits $29k despite multiple multiple regulatory troubles.