On Tuesday, the New York Department of Financial Services (NYDFS) rejected claims that Signature Bank’s closure was due to crypto-related reasons and clarified that the bank was not shut down as an “anti-crypto message.”
The NYDFS took over Signature Bank at the weekend and transferred its assets to the Federal Deposit Insurance Corporation (FDIC). In addition, the California Regulator seized Silicon Valley Bank last Friday, and Silvergate Bank announced that it would voluntarily liquidate its assets in the same week. Both banks provided services to several crypto clients.
In a statement released on Tuesday, a representative from New York State’s Department of Financial Services (NYDFS) emphasized that the bank’s closure was unrelated to its dealings with cryptocurrency companies.
“The decisions made over the weekend were not crypto-related. Signature was a traditional commercial bank with a wide range of activities and customers, including small businesses like food vendors at Hunt’s Point, residential mortgage banking, and commercial real estate, to name a few. In addition, DFS has facilitated well-regulated crypto activities for several years and is a national model for regulating the space.”NYDFS representative
Barney Frank, a Signature Bank board member and former lawmaker whose name is featured on the 2010 Dodd-Frank Act and who endorsed a 2018 amendment to the law, said In an interview with news outlets that regulators closed down Signature due to its servicing of crypto clients. “I believe they were trying to send a strong signal against crypto. So we became the target, despite our financial stability.”
NYDFS released a statement saying the bank had still encountered “significant withdrawal requests” over the weekend following a deposit run on Friday. Brian Frank acknowledged that depositors had withdrawn more than $10 billion on the same day. However, the Department of Financial Services added that the bank failed to provide accurate and consistent data, leading to a severe lack of confidence in its management.
Ultimately, DFS took possession of the bank and passed it to the FDIC, as it was clear that operations could no longer continue in a safe and sound manner on Monday. The Department is collaborating with federal regulators and other relevant officials to investigate the events that occurred and hold those responsible accountable.