Signature Financial institution Closure Has Nothing to Do With Crypto, Says RegulatorMarch 15, 2023
The choice to shut down Signature Financial institution had “nothing to do with crypto,” mentioned the New York State Division of Monetary Providers, the regulator that took possession of the troubled financial institution on Sunday. The monetary watchdog insisted that its choice to place Signature Financial institution in receivership “was based mostly on the present standing of the financial institution and its means to do enterprise in a secure and sound method.”
‘Nothing to Do With Crypto’
After the New York State Division of Monetary Providers (NYDFS) took possession of Signature Financial institution on Sunday, there have been speculations relating to whether or not the regulatory motion was linked to cryptocurrency.
Former U.S. Consultant Barney Frank, who was concerned within the drafting of the Dodd-Frank Act and had been a member of Signature Financial institution’s board since 2015, believes that the regulator’s transfer was associated to cryptocurrency. He advised CNBC Monday:
I believe a part of what occurred was that regulators wished to ship a really robust anti-crypto message.
“We turned the poster boy as a result of there was no insolvency based mostly on the basics,” he opined.
In September final 12 months, the cryptocurrency sector accounted for almost 25% of Signature Financial institution’s whole deposits. Nevertheless, the financial institution mentioned in December that it plans to scale back crypto-related deposits by $8 billion.
Responding to claims that the closure of Signature Financial institution was crypto-related, a spokesperson for the New York State Division of Monetary Providers advised Fortune:
The selections revamped the weekend had nothing to do with crypto. The choice to take possession of the financial institution and hand it over to the FDIC [Federal Deposit Insurance Corporation] was based mostly on the present standing of the financial institution and its means to do enterprise in a secure and sound method on Monday.
The NYDFS spokesperson additional shared that withdrawal requests ballooned over the weekend however Signature Financial institution failed to offer dependable and constant knowledge.
Concerning crypto, the spokesperson said that the NYDFS “has been facilitating well-regulated crypto actions for a number of years, and is a nationwide mannequin for regulating the area.”
Frank expressed shock on the New York state regulator’s assertion that its choice to take possession of Signature Financial institution was unrelated to cryptocurrency. Claiming that to his data, the financial institution’s executives had been working to offer knowledge to regulators, he insisted:
I believe that [crypto] was an element … I’m puzzled as to why it [Signature Bank] was closed.
“What we heard from our executives is that the deposit scenario had stabilized and they’d be getting the capital from the low cost window and I proceed to be satisfied that if we had opened on Monday given the bulletins of these two insurance policies, we might have been in a fairly fine condition and definitely purposeful,” the previous congressman claimed.
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