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**US Treasury Official Claims Cryptocurrency Not the Direct Cause of Bank Failures**

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According to reports, Nellie Liang, the Under Secretary for Domestic Financial Affairs of the US Treasury Department, said that the encryption industry should not be responsible fo

**US Treasury Official Claims Cryptocurrency Not the Direct Cause of Bank Failures**

According to reports, Nellie Liang, the Under Secretary for Domestic Financial Affairs of the US Treasury Department, said that the encryption industry should not be responsible for the runs on Silicon Valley Bank (SVB) and Signature Bank. At a hearing before the House Financial Services Committee on Wednesday, she said she did not believe that cryptocurrency played a direct role in the two bank failures. When asked whether digital assets were an indirect factor, she pointed out that Signature was particularly active in the field, but she did not provide further details. Martin Gruenberg, chairman of the Federal Deposit Insurance Corporation (FDIC), previously stated that as of the end of 2022, about one fifth of Signature’s deposits were related to encrypted customers.

US Treasury official: The encryption industry should not be blamed for the US bank run

In a recent hearing before the House Financial Services Committee, Nellie Liang, the Under Secretary for Domestic Financial Affairs of the US Treasury Department, stated that the encryption industry should not be held accountable for the runs on Silicon Valley Bank (SVB) and Signature Bank. Despite being questioned about the potential indirect impact of digital assets on the bank failures, Liang stated that she did not believe cryptocurrency played a direct role.

**The Context of the Bank Failures**

Before delving into the topic itself, it is crucial to acknowledge the background of these bank failures. In late 2020, a number of financial institutions, including SVB and Signature Bank, experienced large withdrawals from existing customers, resulting in a sudden need for additional capital. Although many speculated that the actions were related to the cryptocurrency market or the growing popularity of digital assets, there has been no concrete evidence to support these claims.
It is important to note that while many businesses within the encryption industry operate within the United States, they are not explicitly regulated in the same way as traditional financial institutions. This lack of regulation is often a source of concern for those who are skeptical of cryptocurrency’s viability as a legitimate asset class.

**Nellie Liang’s Statements**

In her recent appearance before the House Financial Services Committee, Under Secretary Liang stated clearly that while some banks may have been involved in the world of cryptocurrency, it was not a direct cause of the bank failures. She also noted that digital assets may indirectly impact the financial institutions, but she did not provide further details on this matter.
The remarks made by Liang echo previous statements made by the chairman of the Federal Deposit Insurance Corporation (FDIC), Martin Gruenberg. Gruenberg previously stated that roughly one-fifth of Signature Bank’s deposits were related to encrypted customers. However, he did not suggest that the cryptocurrency market was inherently risky or posed any real danger to the U.S. financial system.

**The Future of Cryptocurrency in the United States**

With the growing interest and adoption of digital assets, many experts are still exploring the implications of cryptocurrency on the traditional banking system. While the broader impact of encrypted customers on financial institutions remains unclear, it is not unreasonable to assume that as the market continues to grow, regulations and oversight may become necessary.
However, it is vital to note that at this point, it is too soon to attribute the failures of SVB and Signature Bank to the encryption industry as a whole. Both banks have since stabilized, and the reasons for their financial difficulties were likely more complex than just the involvement of cryptocurrency.

**Conclusion**

As digital assets continue to gain in popularity and adoption, it is crucial to consider their potential impact on the traditional financial system. However, it is important to not jump to conclusions without concrete evidence. In the case of SVB and Signature Bank, although some of their deposits may be attributed to encrypted customers, it is a stretch to say that cryptocurrency was the direct cause of the bank failures.

**FAQs**

**1. Is cryptocurrency riskier than traditional assets?**
No, cryptocurrency is not inherently riskier than traditional assets. However, due to its lack of regulation and the potential for price volatility, it is important for individuals to exercise caution when investing in encrypted options.
**2. Will the increased adoption of cryptocurrency lead to more bank failures?**
There is no evidence to suggest that the adoption of cryptocurrency will lead to more bank failures. However, it is important for regulators to remain vigilant and ensure that financial institutions are prepared to handle the potential indirect impact of digital assets.
**3. Will the United States regulate cryptocurrency in the future?**
It is possible that the United States may begin to regulate cryptocurrency in the future. However, it is still unclear what form this regulation will take and how much oversight will be implemented.

**Keywords**

US Treasury, Nellie Liang, domestic financial affairs, cryptocurrency, Silicon Valley Bank, Signature Bank, bank failures, digital assets, traditional financial system, encrypted customers.

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