Ark Investment Management CEO Cathie Wood said regulators are “using crypto as a scapegoat” for their own lapses in the oversight of traditional banking.
What happened: Wood responded Wednesday to a letter sent by the congressman Tom Emmer (R-Minn.) to Federal Deposit Insurance Corporation. In the letter, Emmer questioned the FDIC’s potential abuse of power in “purg[ing] legal digital assets and opportunities from the United States”.
Wood said the FDIC and others will prevent the United States from participating in the most important phase of the Internet revolution. “In our view, crypto is a solution to the central flaws, opacity, and regulatory failures of the traditional financial system. Made the scapegoat for policy failures, crypto will move offshore, depriving the United States of one of the most important innovations in history,” she said.
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This debacle would not have been possible in the decentralized, transparent, auditable and over-secured crypto-asset ecosystem. In fact, during the last week, crypto-assets behaved like safe havens: together with gold, their prices appreciated.
— Cathie Wood (@CathieDWood) March 16, 2023
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What the letter said: Emmer asked the FDIC to clarify whether it had given any instructions to banks not to provide banking services to cryptocurrency firms, and whether such instructions would lead to stricter scrutiny of banks taking on new crypto-related clients.
“If this is the case, these actions to weaponize recent instability in the banking sector — catalyzed by catastrophic government spending and unprecedented interest rate hikes — are deeply inappropriate and could lead to broader financial instability,” Emmer wrote, referring to recent comments by the former congressman. Barney Franks, co-author of the Dodd-Frank Act.
Why it matters: Wood noted that crypto did not force SVB and Signature into bankruptcy. “In my view, Fed policy was the primary culprit. Due to a drought in VC funding and higher returns on money market funds, deposits left the US banking system.”
Last week, Ark Invest released its “Bitcoin Monthly” report, which revealed that Bitcoin (CRYPTO: BTC) bulls have been on a dominant streak in 2023.
Price action: At the time of writing, BTC was trading at $24,358, down 1.90% in the last 24 hours, according to Benzinga Pro.
Read more: Bitcoin, Ethereum, Dogecoin Slide Amid Credit Suisse Concerns: Analyst Sees ‘Textbook Perfect’ Apex Crypto Moves to $100K
(Illustration: Gonzalo Lanzilotta at Benzinga)