After being shut down by US regulators on Sunday, crypto-friendly Signature Bank director and former Congressman Barney Frank claimed there were “no indications of trouble.” He suggested the bank’s closure was a “strong anti-crypto message” from regulators.
After the comments of the director of Signature, the Department of Financial Services (DFS) stated that the resolution of the bank “has nothing to do with crypto,” according to a report by Fortune Magazine. A spokesperson for the Department of Financial Services told Fortune:
The decision to take over the bank and hand it over to the Federal Deposit Insurance Corp (FDIC) was based on the current status of the bank and its ability to conduct business safely and soundly as of Monday.
Regulators Target Crypto Banks?
Despite the statements of the director of Signature Bank Barney Frank, DFS told Fortune that with large withdrawal requests looming and increasing, the Department of Financial Services is working with board members and executives to evaluate the financial position of the pro-crypto bank. The regulator is also assessing the bank’s ability to meet withdrawal requests from customers.
According to the banking regulator, DFS stated that the closure of the bank was related to its inability to provide “reliable and consistent data,” which caused a significant crisis of confidence in its leadership.
Commenting on the case, Austin Campbell, former chief risk officer at blockchain infrastructure platform Paxos, warned that even if Signature’s acquisition had nothing to do with the bank’s crypto activities, DFS’ actions would “damage” its reputation with the crypto industry. He added:
Regardless of what the purpose of DFS is, it is taken very negatively by the crypto community, and will have a negative impact on DFS long term.
With more than 20 years in the market, Signature Bank became the third regional bank to collapse in a week, following the collapse of crypto-friendly banks such as Silvergate and Silicon Valley Bank.
Former partner of the fall bank and US-based exchange Gemini stated if the company has zero customer funds and zero Gemini dollars (GUSD) in Signature. In addition, the company stated that all Gemini customer dollars are held at JPMorgan, Goldman Sachs, and State Street Bank. They conclude:
We continue to actively monitor counterparty risk due to our banking partnership to prevent any impact on Gemini customers.
The collapse of Silicon Valley and Signature Bank has created a domino effect on the banking sector in the US, pushing other regional banks in the country to the brink of collapse and affecting the stock market and European banks.
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