Democratic Presidential Candidate Blames “War on Crypto” for Recent Bank Failures

A Democratic presidential candidate is pushing against the growing anti-crypto sentiment within his party by blaming regulatory agencies’ “war on crypto” for various bank failures that transpired in March. 

In recent days, environmental lawyer Robert Kennedy Jr. has spoken out against the Biden administration’s general handling of the ongoing banking crisis, opposing the bailout approach used by financial agencies. 

The War on Crypto

In a tweet on Tuesday, Kennedy backed an article written by Ellen Brown titled “How the War on Crypto Triggered a Banking Crisis.” The article outlined how actions taken by the Federal Deposit Insurance Corporation (FDIC) and Securities and Exchange Commission (SEC) contributed to the downfall of Silicon Valley Bank (SVB), Signature Bank, and Silvergate Bank in March

“FDIC and SEC have no authority to wage an extra-legal war on crypto that leaves major banks as collateral damage,” said Kennedy. 

Crypto industry leaders have been up in arms in recent months about a suspected government conspiracy colloquially termed “Operation Chokepoint 2.0” – a subtle effort to dissuade the banking sector from servicing crypto companies and scare blockchain businesses offshore with unclear and arbitrary enforcement actions. 

Caitlin Long, CEO of the crypto-friendly Custodia Bank, claimed last April that the SEC is punishing crypto firms attempting to be compliant with a deliberate signal to “stay the fuck away.” Coinbase CEO Brian Armstrong has also suggested that Coinbase could seek to relocate its headquarters outside the United States if local regulatory challenges persist.

Even Barney Frank – a former US congressman and Signature Bank board member at the time of its closure –  claimed that the crypto-friendly bank’s closure was unnecessary, and specifically meant to send an “anti-crypto message” to other banks.

While some crypto-supportive politicians have called attention to the SEC’s “regulation by enforcement” approach, most have come from the Republican isle. Congressional Democrats, by contrast, are showing weariness around the crypto sector and beginning to question whether it even has a legitimate use case. 

On Tuesday, the White House published guidance to Congress encouraging policymakers to pass a 30% excise tax on Bitcoin mining as part of the federal budget to make miners pay for the “economic and environmental costs” they impose. 

Kennedy’s Crypto Support

A respondent to Kennedy’s tweet criticized the presidential candidate for defending crypto, questioning his claims of environmentalism given the “enormous amounts of energy” used by the technology. In response, the lawyer assured that this criticism was a “misunderstanding,” and promised to write about the issue this week. 

Kenedy has also stood against Central Bank Digital Currencies (CBDCs) – a government-backed form of money that traditional crypto proponents frequently blast as an invasion of privacy.

“A CBDC tied to digital ID and social credit score will allow the government to freeze your assets or limit your spending to approved vendors if you fail to comply with arbitrary diktats,” argued Kennedy in a tweet last month. 

The candidate’s comments were in specific reference to the central bank’s new FedNow payments service, which the Federal Reserve clarified days later is “not related to a digital currency. 

Feature Image Courtesy of People Magazine.