Elizabeth Warren and Tina Smith are asking for more investigation.
•U.S. lawmakers have penned a letter pressing Federal Reserve Chairman Jerome Powell for information on American banks’ ties to crypto following the collapse of FTX.
• In a Wednesday letter, Democrat senators Elizabeth Warren of Massachusetts and Tina Smith of Minnesota asked Powell how his agency “assesses the risks to banks and the banking system” after it was made clear “crypto firms may have closer ties to the banking system than previously understood.”
• Warren and Smith also wrote letters to Federal Deposit Insurance Corporation Acting Chair Martin Gruenberg, and Acting Comptroller of the Currency Michael Hsu raising the same concerns.
• The senators referred to Alameda Research’s $11.5 million investment in Washington bank Moonstone in their letter — and noted other U.S
U.S. lawmakers have recently raised concerns about the ties between cryptocurrency firms and banks following news of crypto hedge fund Alameda Research investing $11.5 million in a Washington bank called Moonstone. This news has implications for the banking system, as crypto firms now have closer ties to the banking system than previously understood. Let’s take a closer look at the impact this could have on banks, as well as related letters from Senators Elizabeth Warren and Tina Smith to Federal Reserve Chairman Jerome Powell.
Impact on Banks and the Banking System
The emergence of these close ties between crypto firms and banks has created numerous risks that must be assessed by federal agencies before they can make an informed decision about how best to regulate them. These risks include potential impacts on financial stability and liquidity, money laundering, consumer protection, and cyber security — all of which could potentially put banks at risk if they are not adequately managed or monitored by federal agencies.
In addition, it is important to consider how these close ties could affect the banking system as a whole — especially given that most banks do not currently have policies or procedures in place to identify or manage their relationships with crypto organizations. This lack of oversight could lead to serious implications for not just individual banks but also for the entire banking system if left unchecked.
Senators Elizabeth Warren & Tina Smith
Recently, Senators Elizabeth Warren (D-MA) and Tina Smith (D-MN) sent letters to Federal Reserve Chairman Jerome Powell raising their concerns about American banks’ ties to crypto organizations following news of FTX’s collapse earlier this year. In their letters, they requested information regarding any regulations or guidelines that are in place regarding these types of relationships between crypto firms and banks so that they can better assess any potential risks associated with them. They also asked Powell what steps he is taking to ensure that American banks are properly managing their relationships with crypto organizations in order to protect consumers from any potential harm caused by these relationships.
The recent news of Alameda Research investing $11.5 million in Washington bank Moonstone has highlighted the increasingly close ties between cryptocurrency firms and banks, which carries numerous risks for both individual banks as well as the banking system as a whole if not adequately monitored or managed by federal agencies. Recent letters from Senators Elizabeth Warren (D-MA) and Tina Smith (D-MN) raise further questions about American banks’ ties to crypto organizations, prompting Federal Reserve Chairman Jerome Powell to provide information regarding regulations or guidelines in place regarding these types of relationships between crypto firms and banks so that they can better assess any potential risks associated with them. The answers provided by Powell will undoubtedly shed light on how best to manage these relationships going forward in order to ensure financial stability while also protecting consumers from any potential harm caused by these relationships.
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