Crypto Is Not Involved In the Collapse of Signature Bank
Once a major financial institution of the world, Signature Bank, is destined to collapse very soon. The situation has become very dire for the banking firm and it seems that it is not going to come out of it.
However, Signature Bank’s control has been taken over by New York’s financial regulator i.e. New York State Department of Financial Services (NYDFS).
When the news regarding the inevitable collapse of Signature Bank surfaced initially, Government officials in the US started to blame the crypto industry.
It was propagated that cryptocurrencies were behind Signature Bank’s fall as they were in the cases of FTX, Silvergate Bank, etc. The regulator is aggressively handling any entity that is linked with the crypto firms.
If an entity is found to be facilitating or supporting the crypto firms, the regulators are going after it. However, they are doing this in a manner that it is portraying a positive impact on the crypto firms.
However, when NYDFS took over the control, it was rumored that the taking over was due to the bank’s involvement with cryptocurrencies.
It was assumed as if NYDFS had taken enforcement action against the bank based on this reason.
Signature Bank’s Director’s Viewpoint on The Takeover
Now a viewpoint on the matter has been issued by Barney Frank, an ex-high-profile representative of the US Government.
Frank was the man behind introducing a legislature called ‘Dodd-Frank Act’. Since 2015, he is also serving as one of the directors on the Board of Signature Bank.
Frank believes that NYDFS’s taking over of the bank is linked to the bank’s active involvement in cryptocurrencies.
He explained to CNBC in an interview that the takeover is in fact a ‘loud and clear message’ sent by the regulator to all concerned. According to him, NYDFS’s message contained an ‘anti-crypto’ element in it.
He stated that ‘fundamentally speaking the bank wasn’t in a state where the takeover was necessary’.
Signature Bank’s Involvement in Crypto
It is on record that Signature Bank was actively involved and associated with the crypto industry. By September 2021, over 25% of the bank’s total deposits were based on digital currencies.
At that time, the bank also made a statement that its crypto deposits are getting bigger every day which needs to be restricted to an extent.
Thereafter, the bank adopted a policy that involved the reduction of crypto deposits to an extent of $8 Billion only.
NYDFS’s Response to Frank’s Viewpoint
NYDFS was however quick in responding to the claim raised by Signature Bank’s Director, Frank Barney.
One of the key officials from NYDFS informed ‘Fortune’ that regulator’s decision of overtaking Signature Bank cannot be attributed to crypto.
The official further clarified that the control of the bank has been entrusted to Federal Deposit Insurance Corporation (FDIC).
He also clarified that the takeover was undertaken because the bank’s financial condition was non-reliant.
He stated that the bank had lost its ability to carry on business in an efficient manner and as per the banking standards.
The official further apprised that prior to the taking over, the bank had received piles of withdrawal requests from the customers. However, the bank failed in complying with the requests without giving any reason.
Rumors of Crypto Connection With Signature Bank’s Collapse
NYDFS’s office also denied and rejected the rumors of crypto involvement which led to the collapse of Signature Bank.
He suggested that the regulator had been supervising crypto-related activities of various banks and found no anomalies.
However, NYDFS’s clarification was not appreciated by Frank. Instead, he responded in surprise with regard to what was suggested by the official of NYDFS.
Frank reiterated that he found no basis in what has been suggested by NYDFS in the official statement.
He stated that based on his knowledge NYDFS had specifically asked the officials of Signature to supply data pertaining to crypto.