United States Senator Cynthia Lummis slammed Scott Shay, the former chairman of the now-defunct Signature Bank, for trying to place the blame for the bank’s collapse on digital assets while pocketing millions of dollars in bonuses and stock options.
Crypto has always been an easy target for high-ranking officials and executives to put the blame on when something goes haywire. The brazen attack on digital assets increased multifolds following the collapse of FTX with government authorities and financial regulators launching a blitzkrieg attack on cryptocurrency companies including Coinbase, Kraken, and Bittrex, among many others.
The situation is especially grim in the United States. The US Securities and Exchange Commission (SEC) together with Commodity Futures Trading Commission (CFTC) and other regulatory watchdogs have intensified their war on the digital assets industry.
Blaming Crypto Is Not The Solution
Following the recent collapse of the three high-profile banks in the US, banking executives blamed digital assets instead of admitting the plausible reasons for the banking crisis. For instance, Signature Bank’s Shay mentioned digital assets 10 times in his testimony about the bank’s collapse.
In his testimony, the exec noted the bank began accepting deposits from businesses in the digital asset sector in 2018 and then “significantly” reduced its digital asset deposits in 2022 as the industry experienced volatility.
US Senators Blast Bank Execs
In the wake of these allegations, Senator Lummins criticized Shay noting that he blamed the digital assets sector and regulators for the collapse but did not admit to his fault. On May 16, during a Senate Banking Committee hearing, she questioned the former Signature bank exec how depositors who were in the digital assets sector and who had deposited US Dollars in the bank were responsible for the collapse.
The senator also noted depositors who had nothing to do with digital assets were responsible for the majority of withdrawals, leading to the severe liquidity crunch that resulted in the collapse. Lummins added,
“It looks like there has been a lot of deflection of blame onto those particular depositors that deal in digital assets and onto regulators, but you haven’t accepted any blame yourself.”
Meanwhile, during another part of the hearing, Senator Elizabeth Warren slammed Silicon Valley Bank (SVB) CEO Gregory Pecker along with Shay for allegedly “keeping millions after recklessly crashing banks.”She explained individuals like Shay and Pecker can pay themselves tens of millions of dollars in bonuses and stock options during these banking blow-ups and get to keep all the plain wrong money.
Senator Warren stated the collapsed banks were repeatedly warned of the risks they were taking. However, instead of fixing them, they took more risks to boost their paychecks.
SEC Faces Severe Backlash For War Against Crypto
As US authorities continue to tighten their grip on crypto, many industry figures and officials from the financial industry have come out in support of the digital assets sector. Recently, The Blockchain Association raised concerns against the SEC’s proposed custodial rule as a misleading and transparent attempt of waging war on cryptocurrencies.
Earlier this month, the United States Chamber of Commerce, which happens to be the largest business organization in the world also blasted the SEC for its “haphazard, enforcement-based approach” to regulating the cryptocurrency industry.
#NEW: Chairman @PatrickMcHenry, Subcommittee Chairman @RepFrenchHill, and all members of the Committee's Republican leadership team sent a comment letter slamming @SECGov's disastrous custody proposal and demanding its withdrawal.
👇 Read more 🔗https://t.co/l9rMtwfJUy pic.twitter.com/4rzG5etjON
— Financial Services GOP (@FinancialCmte) May 11, 2023
Furthermore, on May 11, Patrick McHenry, Chair of the House of Representatives Financial Services Committee, along with six other subcommittee chairs, expressed their dissatisfaction with the SEC’s proposed advisory client custody rule.
On April 21, Web3 venture capital firm Paradigm published a policy piece on the problems with SEC. It claimed that SEC Chair Gary Gensler’s “attempt to brute force crypto assets that may not even constitute ‘securities’ into an ill-fitting disclosure framework is bad policy.”
Gensler’s SEC wants to brute force crypto into an ill-fitting disclosure framework
In our latest piece, we show why this is a bad policy that fails to give crypto users and investors the info they need, or provide entrepreneurs w/ a viable path to complyhttps://t.co/jOpxYJSl6U
— Rodrigo (@RSSH273) April 20, 2023
Paradigm pointed out the current disclosure policy of the SEC was developed in the 1930s, long before the internet, claiming current policies are “tailor-made for centralized companies issuing securities” and that crypto markets are fundamentally different. The crypto platform had also petitioned to file another amicus brief, claiming that the SEC’s actions have “crippled a nascent industry.”