The decision to shut down Signature Bank “had nothing to do with cryptocurrency,” said the New York State Department of Financial Services, the regulator that took over the troubled bank on Sunday. The financial watchdog insisted that its decision to place Signature Bank in receivership “was based on the current state of the bank and its ability to conduct business in a safe and sound manner.”
‘Nothing to do with cryptocurrencies’
After the New York State Department of Financial Services (NYDFS) took possession of Signature Bank on Sunday, there has been speculation as to whether the regulatory action was related to cryptocurrency.
Former US Representative Barney Frank, who helped draft the Dodd-Frank Act and has been a Signature Bank board member since 2015, believes the regulator’s move was related to cryptocurrency. He told CNBC on Monday:
I think part of what happened was that the regulators wanted to send a very strong message against cryptocurrencies.
“We became the poster boy because there was no fundamentals-based insolvency,” he opined.
In September of last year, the cryptocurrency sector accounted for almost 25% of Signature Bank’s total deposits. However, the bank said in December that it plans to reduce cryptocurrency-related deposits by $8 billion.
In response to claims that the Signature Bank closure was related to cryptocurrency, a spokesperson for the New York State Department of Financial Services told Fortune:
The decisions made over the weekend had nothing to do with cryptocurrencies. The decision to take possession of the bank and turn it over to the FDIC (Federal Deposit Insurance Corporation) was based on the current state of the bank and its ability to do business safely and soundly on Monday.
The NYDFS spokesperson further shared that withdrawal requests spiked over the weekend, but Signature Bank did not provide reliable and consistent data.
Regarding cryptocurrencies, the spokesperson stated that the NYDFS “has been facilitating well-regulated crypto activities for several years and is a national model for regulating the space.”
Frank expressed surprise at the New York state regulator’s statement that his decision to take over Signature Bank was unrelated to cryptocurrency. Stating that, to his knowledge, bank executives were working to provide data to regulators, he insisted:
I think (crypto) was a factor… I’m baffled as to why (Signature Bank) was closed.
“What we heard from our executives is that the deposit situation had stabilized and they would be taking the capital out of the discount window and I remain convinced that if we had opened on Monday given the announcements of those two policies, we would have been in a state reasonably good and certainly functional,” said the former congressman.
Do you think the closure of Signature Bank has something to do with cryptocurrencies? Let us know in the comments section.
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