On March 6, White House Press Secretary Karine Jean-Pierre was pressed on whether the President was monitoring the evolving situation around the stressed crypto-friendly bank Silvergate.
“We won’t comment on Silvergate specifically, but it is obviously only the latest company in the cryptocurrency field to experience significant issues,” the press secretary said.
“In recent weeks, banking regulators have released guidelines on how banks should protect themselves from risks associated with crypto. As you know, this is a president that has repeatedly called on Congress to take action to protect everyday Americans from the risk posted by digital assets.”
“And he will continue to do so. So won’t speak to this particular company as we have not on other cryptocurrency companies. But we’re going to continue monitoring the reports and clearly we’re aware of the situation.”
FTX’s Collapse Leads to Silvergate’s Asset Liquidation
In November of last year, FTX, a popular cryptocurrency exchange, collapsed, leaving outstanding debts of billions to its creditors. One of those creditors was Silvergate, a bank that provided services to FTX. As a result of FTX’s collapse and the subsequent withdrawal of customer deposits, Silvergate was forced to liquidate assets valued at $5.2 billion at the beginning of 2023.
White House’s Stance on Cryptocurrency and Financial Regulation
The White House has been closely monitoring the cryptocurrency industry and its impact on the financial markets. In recent months, there have been calls for increased regulation of cryptocurrencies to prevent events like the collapse of FTX and the resulting fallout for companies like Silvergate.
President Biden’s administration has proposed new regulations that would require cryptocurrency exchanges to report transactions over $10,000 to the Internal Revenue Service (IRS) and impose stricter Know Your Customer (KYC) requirements to prevent money laundering and other illegal activities.
The proposed regulations have been met with both support and opposition from the cryptocurrency community. While some believe increased regulation is necessary to protect consumers and prevent fraud, others argue that it could stifle innovation and harm the growth of the industry.
In September 2022, the White House released the framework for cryptocurrency regulation based on the earlier executive order from President Biden.
The executive order highlights apprehensions regarding digital assets from the Biden administration and their interdependence with the conventional financial market, potentially causing economic instability through contagion effects.
According to the framework:
“The President will evaluate whether to call upon Congress to amend the Bank Secrecy Act, anti-tip-off statutes, and laws against unlicensed money transmitting to apply explicitly to digital asset service providers — including digital asset exchanges and nonfungible token (NFT) platforms.”