US senators are putting increasing pressure on financial regulators to clear up the FTX affair. They want clear answers to the many concerns raised by the crypto exchange meltdown. On December 7, Senators Elizabeth Warren and Tina Smith headed in that direction. In fact, they sent a letter to the financial regulators to file a special application.
Banks may have backed crypto companies
Senators Elizabeth Warren and Tina Smith suspect close ties between the banking system and the crypto industry. To that end they have sent a letter to all major US regulators. This to ask that investigations are carried out on the subject. The letter was specifically sent to Jerome Powell, Chairman of the Federal Reserve (Fed).
” The banking system was spared from the FTX-induced turmoil. Despite industry efforts to gain access to the banking system […]Cryptocurrencies are not yet deeply integrated into the traditional banking system‘ we read in the letter.
After that the senators said:Still, it looks like crypto firms have tighter ties to the banking system than previously thought. According to a report by the New York Times, Alameda […] invested $11.5 million in Washington“.
Several small banks were dependent on crypto units
In their letter, the senators cited a statement by the former president of the Independent Community Bankers of America. It said that state regulators and the Fed should have been alerted by “the fact that an offshore hedge fund that was essentially a crypto company bought a stake in a small bank“. The bank in question would be moonstone bank.
They emphasized the fact that moonstone is not that only Bank associated with crypto entities. There would also be Deltec Banks, Provident Bancorp Inc, Silvergate Capital Corp, Metropolitan Commercial Bank, etc.
“Many of these smaller banks rely heavily on their crypto customers.You are now experiencing increased volatility‘ the senators specified. Next, they listed a series of questions for regulators to answer.by December 21, 2022 at the latest“.
Senators Elizabeth Warren and Tina Smith would like regulators to describe how their agencies “Assess banks’ relationships with crypto companies and engage in crypto-related activities“.
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Far from dampening my enthusiasm, an unsuccessful cryptocurrency investment in 2017 only heightened my enthusiasm. I therefore decided to study and understand the blockchain and its many uses and use my pen to share information related to this ecosystem.