The New York State Department of Financial Services (NYDFS) said on March 14 that its closure of Signature Bank was not related to the bank’s crypto industry ties.
NYDFS denies Signature was closed over crypto
Though Signature worked extensively with crypto firms, a representative has denied that the NYDFS decision to shut down Signature was related to that activity.
Statements cited by various outlets including Fortune read:
“The decisions made over the weekend had nothing to do with crypto…The decision to take possession of the bank and hand it over to the FDIC was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”
Previously, Signature board member and former U.S. representative Barney Frank made several statements suggesting that the bank’s closure was crypto-related.
Frank alleged in a CNBC interview that Signature Bank was closed to “send a strong anti-crypto message.” He also told the Associated Press that the shutdown was a way to discourage people from “dealing with crypto.” Elsewhere, he suggested the company was an “unfortunate victim of the panic” among regulators following the collapse of FTX.
However, statements from the regulator responsible for Signature’s closure clearly refute the notion that willingness to work with crypto clients was an issue.
Silvergate fallout continues
The NYDFS initially closed Signature on Monday, March 13.
At the time of its closure, the FDIC took control of all deposits in order to provide customers with access to insured deposits. Later, the Treasury and other regulators, announced a Biden-led emergency plan that would restore all funds — not just insured funds — to users. This plan also applied to Silicon Valley Bank customers.
Signature Bank and its executives now face a class action suit, as the company claimed it was financially stable shortly before its closure. The bank does not appear to face any impending charges from regulators at present.
The closure will likely force several firms to find a new banking provider. Coinbase and Circle were among the high-profile crypto companies known to store funds with the bank, and various reports suggest that at least 30% of Signature’s deposits originated from crypto firms.
The closure of Signature Bank follows the collapse of Silicon Valley Bank on March 10 and Silvergate Bank’s decision to halt all operations on March 8.