Ark Investment Management CEO Cathie Wood said regulators are “using crypto as a scapegoat” for their own lapses in oversight of traditional banking.
What Happened: Wood on Wednesday responded to a letter sent by Congressman Tom Emmer (R-Minn.) to the Federal Deposit Insurance Corporation. In the letter, Emmer questioned the FDIC's potential abuse of power in “purg[ing] legal digital asset entities and opportunities from the United States”.
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Wood said FDIC and others will prevent the U.S. from participating in the most important phase of the internet revolution. “In our view, crypto is a solution to the central points of failure, the opacity, and the regulatory mistakes in the traditional financial system. Made the scapegoat for policy mistakes, crypto will move offshore, depriving the US of one of the most important innovations in history,” she said.
This debacle would not have been possible in the decentralized, transparent, auditable, and over-collateralized crypto asset ecosystem. Indeed, during the last week, crypt assets behaved like safe havens: along with gold, their prices appreciated.
— Cathie Wood (@CathieDWood) March 16, 2023
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What The Letter Said: Emmer asked the FDIC to provide clarification on whether it had issued any instructions to banks not to offer banking services to cryptocurrency firms, and whether any such instructions would lead to harsher 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, citing recent comments by 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. Because of a VC funding drought and higher yields 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 dominating 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.
(Illustration: Gonzalo Lanzilotta on Benzinga)