Barney Frank, the director of Signature bank and a former congressman who helped draft the Dodd-Frank Act, has stated that the lender is solvent and that there was “no real objective reason” for the bank to be closed. He said regulators wanted to send a strong anti-crypto message.
The Real Reasons Behind Signature Bank’s Closure?
The vague statement issued by the New York Department of Financial Services (NYDFS) on the closure of Signature Bank claimed the move was “in order to protect depositors.”
Compared to the detailed order passed by the California Department of Financial Protection and Innovation (DFPI) when they took over Silicon Valley Bank, citing inadequate liquidity and insolvency, the NYDFS statement regarding Signature Bank is vague and lacks any fact-finding order. The DFPI appointed the United States Federal Deposit Insurance Corporation (FDIC) as the receiver of Silicon Valley Bank (SVB).
The transfer of SVB’s assets to the FDIC led to a temporary retracement of crypto assets, including Bitcoin. Meanwhile, USDC, the stablecoin issued by Circle, which had $3.3 billion stuck in the tech lender, de-pegged. But as of March 14, the stablecoin is trading at parity with the USD.
Industry participants have concluded that Signature Bank was shut down because of its pro-crypto stance and the fact that it was facilitating stablecoin liquidity using its Signet network. The government’s actions may have been prompted by the opportunity over the weekend from SVB’s failure. This is the third major bank with ties to crypto to collapse in less than a month.
Silvergate bank was shut down, then SVB went insolvent. With $110 billion in assets, Signature Bank went under due to a $10 billion bank run, though it had $88 billion deposits filing.
https://twitter.com/twobitidiot/status/1635314474260512770
Senator Elizabeth Warren Blames Trump As SEC Cracks Down On Crypto
Senator Elizabeth Warren has blamed the Trump administration for the closure of Silicon Valley Bank (SVB), which she claims was largely due to the rollback of critical parts of the Dodd-Frank Act in 2018. Warren has called for Congress, banking regulators, and the current administration to reverse these actions as an immediate priority.
The closure of Signature Bank might be a message that the industry is targeted. This comes when Bradley Garlinghouse, the Chief Executive Officer (CEO) of Ripple, a blockchain company, maintains that United States regulations don’t favor innovation, especially in crypto.
The headwinds keep growing – with the SEC declaring war on crypto, Chair Gensler continues to harp that firms simply need to come in and register, but the truth is there’s no infrastructure in place for a “registered token” to trade nor any clarity as to what these tokens are.
— Brad Garlinghouse (@bgarlinghouse) March 7, 2023
Together with other executives, including Christian Larsen, Bradley was sued by the United States Securities and Exchange Commission (SEC). The regulator claims they sold unregistered securities in XRP during their initial coin offering where they raised over $1 billion.