It has been a tumultuous week for the US banking industry, with three banks closing their doors due to poor management, mismanagement of risk, and poor regulation. However, many articles have attempted to pin the blame for these bank failures on cryptocurrency, despite the fact that none of the banks held any cryptocurrency in their balance sheets.
Barney Frank, the former Congressman who was instrumental in the establishment of the Dodd-Frank Act, was one of the most prominent figures blaming cryptocurrency for the bank failures. Frank argued that cryptocurrency was a “common element” in the bank failures, a claim that is simply not true.
Risky bets on cryptocurrency were also blamed for the closure of Signature Bank, as well as a bank that was focused on crypto. However, the real culprit was the banks’ mismanagement of their treasury portfolios, not their investments in cryptocurrency.
The Wall Street Journal also weighed in with an article titled “Crypto Crypto”, which continued to blame the bank closures on cryptocurrency. The reality is that cryptocurrency has nothing to do with the bank failures, and that the banks were shuttered due to their mismanagement of their treasury portfolios and the poor regulation that allowed a run on these banks.
It is clear that cryptocurrency is currently the biggest scapegoat for the banking industry’s woes, and the current administration is taking full advantage of this scapegoat to deflect attention away from their own mismanagement and regulation of the banking sector. The truth is that bank closures are the result of poor management and regulation, not cryptocurrency investments.