- Barney Frank commented that cryptocurrency is an entity that regulators failed to reckon with in 2008.
- The former congressman’s comment was rooted in the recent failures of the commercial banking giants.
- Frank added that the financial system of 2023 is less vulnerable than that of 2008.
The American politician and former United States Representative Barney Frank commented on Sunday, during an interview, that cryptocurrency is an entity that the regulators and the authorities failed to reckon with, back in 2008 when the first cryptocurrency was incepted.
Significantly, Frank stated that cryptocurrency is a “potentially destabilizing” element, elaborating:
Digital currency was the new element entered into our system. A new and destabilizing – potentially destabilizing – element is introduced into the financial system. What we get are three failures.
Notably, Frank has been known for the Dodd-Farnk Wall Street Reform and Consumer Protection Act, better known as Dodd-Frank Act, which was introduced to reduce the excessive risks related to the financial sector preventing the global financial crisis.
Interestingly, his current proclamation is rooted in the recent shocking collapse of the three commercial banking giants. On March 10, Adrienne A. Harris, the superintendent of the New York Department of Financial Services (NYDFS) announced that the New-York based Signature Bank has been taken over by the department.
It is noteworthy that the closure of the Signature Bank was subsequent to the failure of its crypto-friendly companion, Silvergate Capital, and the seizure of the banking company Silicon Valley Bank (SVB).
Nonetheless, Frank added that as time passes, everything has changed to an extent; the financial system of 2023 is less vulnerable than that of 2008. Further, he posited that though the crypto sector highly impacts the banking industry, they aren’t mutually destructible, adding:
The negative consequences of that have been unfortunate for some people, but are not systemically problematic.
Frank, being a board member at Signature Bank, reiterated that the clients of the financial institution might have overestimated the bank’s exposure to crypto.