Thread by @shuamp

I’m don't post often on social media, but I can’t help but say something about the bank failures this week of #SVB and #Silvergate (yes I consider that a failure as well) and why regulators' focus on bank exposure to #Bitcoin and #Crypto misses the mark. A thread...
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Others have discussed the risk management failures that led to these collapses, but what I think is worth pointing out is the incongruence of the federal and state banking regulators’ guidance and regulatory priorities.
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It’s no secret that I am a former regulator. I also work for a #Bitcoin company. @unchainedcap take our responsibility to our clients seriously: never taking custody of our clients’ bitcoin, no rehypothecation, no lending client funds to others to chase yields.
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This is an effective way to manage our concentration risk. Yet #Bitcoin companies have been subject to intense scrutiny from the same regulators that supervise these failed banks because they decided that assets like bitcoin are inconsistent with safe and sound banking.
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This is not the case and a huge distraction. Banking regulators should have focused on the systemic risk of banks’ balance sheets in a rising rate environment rather than the systemic risk of #Bitcoin or “crypto.”
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Instead the agencies focused on raising the alarm about "crypto contagion,” spending countless hours chasing a red herring and making it incredibly difficult for well-managed companies to obtain banking services.
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This includes, by the way, denying a fully-reserved Wyoming chartered financial institution Fed membership because that company was involved in crypto (hello @custodiabank and @CaitlinLong_).
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The real story has nothing to do with #Bitcoin or crypto. It’s not even fintech or tech in general. It's concentrations. And we've seen this repeated in every financial crisis and bank failure.
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I have huge respect for the unsung work that bank examiners perform, but I’ve seen firsthand how hollowed out and poorly staffed the regulatory agencies have become, not to mention the political nature of some of these recent policies.
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That regulators and policymakers, including the ones that supervised these failed banks, continue to miss the point on concentration risk management just boggles my mind. This is why we push for sensible, risk-based approaches for all financial services!
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