Summary:
- Serving crypto clients and holding crypto deposits was not the undoing of U.S. bank Signature Bank, New York’s financial watchdog said.
- “It is a misnomer,” the New York Department of Financial Services Superintendent Adrienne Harris said regarding the notion that crypto exposure crippled the U.S. bank.
- Crypto speculators suggested the bank’s seizure was part of the supposed “Choke Point 2.0”, a joint initiative between U.S. regulators like Gary Gensler’s SEC, the FDIC, and the NYDFS to name a few.
Serving crypto clients and holding crypto deposits was not the undoing of U.S. bank Signature Bank, New York’s financial watchdog said Wednesday during a House House Financial Services Committee hearing on stablecoins.
Adrienne Harris, the New York State Department of Financial Services Superintendent, said the failure of Signature Bank was not caused by its business relationship with the crypto industry. “It is a misnomer,” said Superintendent Harris when dispelling speculations that crypto crashed a U.S. bank, per Bloomberg.
The regulator pointed to a bank run powered by withdrawals from a plethora of industries, not exclusively crypto. According to Superintendent Harris, 20% of depositors lost faith in the bank and pulled out their assets. Only 20% of depositors were crypto clients.
The outflow of crypto deposits were in exact proportion to the representation in the depositor base overall.
Signature’s fleeing depositors included crypto businesses and users, food vendors, fiduciaries, trusts, and law firms. The bank had announced plans to scale back bank services to the crypto industry amid regulatory pressure and failures in the digital asset industry.
New York’s DFS seized the bank roughly a week after outflows soared into billions in a massive bank run.
Signature Bank Collateral Damage In U.S. Crypto Crackdown
Crypto speculators suggested the bank’s seizure was part of the supposed “Choke Point 2.0”, a joint initiative between U.S. regulators like Gary Gensler’s SEC, the FDIC, and the NYDFS to name a few.
The Blockchain Association said it was looking into claims of a campaign designed to wall off blockchain and cryptocurrencies from the U.S. traditional banking system.