The New York Department of Financial Services (NYDFS) emphasized on Tuesday that any crypto-related causes did not drive Signature Bank’s closure and were not intended to send a negative message about the crypto industry.
Regulators Debunk Rumors of Anti-Crypto Actions in Signature Bank Closure
The New York Department of Financial Services (NYDFS) assumed control of Signature Bank over the weekend, transferring its assets to the Federal Deposit Insurance Corporation (FDIC).
Meanwhile, Silvergate Bank announced that it would voluntarily liquidate its holdings during the same week, and California Regulator seized Silicon Valley Bank. All three banks had provided services to numerous clients in the crypto industry.
On Tuesday, an NYDFS representative clarified that Signature Bank’s closure was not related to its dealings with crypto firms but rather due to a bank run that resulted in significant withdrawal requests, causing the bank to be unable to provide accurate and consistent data, thereby leading to a lack of confidence in its management.
However, Barney Frank, a former lawmaker and board member of Signature Bank, alleged that the bank was targeted due to its provision of services to crypto clients. Frank claimed that regulators were attempting to send a negative signal against the crypto industry, regardless of the bank’s financial stability.
Despite the allegations, NYDFS has stated that the bank’s closure was unrelated to its dealings with crypto firms. The Department noted that it had facilitated well-regulated crypto activities for several years and is a national model for regulating the space.
Following the bank’s closure, NYDFS is collaborating with federal regulators and other relevant authorities to investigate the circumstances leading up to the event and hold those responsible accountable.
It is worth noting that the decision to take over the bank and pass it to the FDIC after it became clear that its operations could no longer continue safely and soundly.
Meanwhile, Silvergate Bank’s decision to voluntarily liquidate its assets is a surprise. The bank had long been considered one of the most crypto-friendly banks in the US and was dubbed the “crypto bank” due to its extensive crypto-related services.
There has been no official word from the bank about why it has decided to close its doors, but some rumors have suggested that regulatory pressure played a role.
Final Thoughts
Concerns about regulatory crackdowns have been heightened in the cryptocurrency business in light of recent occurrences involving these institutions. The question of whether or not these happenings will have long-term effects on the business sector remains open.