The chair of the Securities and Exchange Commission, Gary Gensler, was questioned by the Republicans in the House over his agency’s treatment of digital assets, including the lack of clarity around whether or not ether is a security, the regulations regarding stablecoins, and the agency’s treatment of FTX. However, while speaking on Silicon Valley bank’s abrupt collapse, the SEC chief pointed fingers at crypto, blaming it being the primary reason why the financial behemoth was forced to declare bankruptcy.
Gensler Links Banking Crisis To Crypto
When asked about his stance on the banking crisis faced by the country and the SEC’s incompetence in mishandling the crisis prior to happening, Gensler linked the banking debacle with their client partnerships involved in the crypto industry. In addition, he claimed that the banks suffering the meltdown had exceptionally high exposure to cryptocurrencies, either through client funds or facilitating payments for crypto firms such as digital asset exchanges.
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Gensler had previously highlighted SVB’s dramatic implosion as “a reminder of the importance of these resiliency projects for everyday Americans”, hitting at crypto firms allegedly being non-compliant and failing to register with the agency.
The U.S. Banking Fiasco
SVB, which was the 16th-largest bank in the country, was shut down after failing to fully insure against the rising interest rates. The turning point for the company occurred when SVB revealed that it had sold $21 billion worth of its securities at a loss of around $1.8 billion and that it needed to raise an additional $2.25 billion to fulfill the withdrawal needs of customers.
This announcement led to a surge of withdrawals from venture capitalists and other depositors, which sparked a panic-induced downward spiral for the stock price. Within a single day, shares of SVB fell by nearly 70% and contributed to a loss of more than eighty billion dollars in bank shares around the world.
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