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According to the regulatory body, the latest shutdown of the Signature Bank is not related to its cryptocurrency dealings.
NYDFS Denies Crypto Connection
On March 14, the regulator responsible for the Signature Bank’s closure, i.e., the New York State Department of Financial Services (NYDFS), announced that the decision was not influenced by the bank’s ties with the cryptocurrency industry. The bank was known to work extensively with multiple crypto firms, with about 30% of its deposits estimated to originate from crypto. However, a spokesperson from the regulatory department categorically denied any crypto-related reasons behind the closure of this financial institution.
A statement claims,
“The decisions made over the weekend had nothing to do with crypto…The decision to take possession of the bank and hand it over to the FDIC was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”
There have been inclinations in the market to point fingers at the bank’s crypto associations, especially after Signature board member and former United States representative Barney Frank suggested that the bank’s closure was crypto-related. In fact, he even claimed that the bank was closed by the authorities in order to “send a strong anti-crypto message.”
The NYDFS’s denial would defeat the purpose of the “anti-crypto message,” if there was any. However, it can not be denied that the closure of the bank will force several firms, including many crypto firms, to find a new banking services provider. For example, Coinbase was one of the major crypto clients of the bank.
The Treasury’s Plan
The bank was initially shut down by the NYDFS on March 13, with the Federal Deposit Insurance Corporation (FDIC) taking control over all deposits in order to ensure customers receive insured deposits back. Furthermore, the Treasury Department revealed that the Biden administration would devise an emergency plan to return all customer funds, not just insured ones. The government also plans to apply this same plan to the customers of the Silicon Valley Bank, which was also shut down recently.
The shutdown of the Signature Bank is the latest in a series of banks closing down recently. The Silicon Valley Bank, which is also known as the go-to bank for startups, had to close shop on March 10. Prior to that, the Silvergate Bank had to announce its closure on March 8 after months of struggling in the aftermath of the FTX debacle.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.