On March 5, NYDFS Superintendent Adrienne Harris revealed at a crypto industry conference that crypto was not the reason of the shutdown. Signature Bank was closed down by federal regulators in mid-March, citing worries about the crypto-focused bank’s systemic risks. However, in its customary flurry of FUD in the aftermath of the events, mainstream media blamed crypto.
Harris said that the decision was taken due to the bank’s liquidity, not because it had clients who owned digital assets. She also referred to the circumstances leading up to the disaster as “a new-fashioned bank run.” She said that Signature had a significant proportion of uninsured accounts and lacked liquidity management processes to accommodate withdrawal demands.
According to the Federal Deposit Insurance Corporation, Signature Bank has around $4 billion in deposits tied to its crypto asset banking operation. (FDIC). Following the collapse of FTX in November, US regulators have focused significantly on crypto this year. Decentralized forms of money represent a challenge to the established banking system, which financial regulators are attempting to safeguard.
However, Harris is one of the few who does not believe that cryptocurrency is the root of all evil. “The idea that taking possession of Signature was about crypto and this is ‘Choke Point 2.0’ is really ludicrous,” she added, according to the WSJ.
The term “Operation Choke Point 2.0” alludes to the idea that regulators are planning to eliminate cryptocurrency and shut it off from the financial system. Harris was more optimistic about cryptocurrency than previous regulatory agency heads. However, she stated that the industry is immature.
“There is still a lack of maturity in anti-money-laundering and cybersecurity compliance under the Bank Secrecy Act.” We’re looking forward to the day when those systems develop and scale in tandem with the business.” BeInCrypto claimed on March 5 that there were no ties between stablecoin issuer Tether and Signature Bank’s demise.
Today’s market has fallen modestly, with a 1.3% drop in total market capitalization. As a result, the current amount is $1.19 trillion. Bitcoin (BTC) is down 1.5% to $28,132, while Ethereum (ETH) is down slightly to little under $1,900.
