The “Big Scandal” Behind Pro-Cryptocurrency Signature Bank Shutdown By Regulators

On Sunday, regulators shut down Signature Bank, another major crypto-friendly institution. The New York financial institution, which has a large lending business in the crypto industry, was caught in the “crossfire” of regulators trying to stop the banking crisis from spreading. 

The Federal Reserve Bank of the United States (Fed) stated yesterday that keeping the bank open could “threaten the stability of the entire financial system.” Regulators stated that the crypto-friendly Signature Bank would have full access to their deposits, similar to what was done to ensure depositors at the failed Silicon Valley Bank (SVB). According to the Fed, following the sudden collapse of Silicon Valley Bank, the third largest bank failure in US history, former Congressman and current director and board member of Signature Bank, Barney Frank, sees recent regulatory moves against pro-crypto bank Signature as an “anti-crypto message.” 

Regulators Shutdown Signature To Attack Pro-Crypto Allies?

According to CNBC, the abrupt move by US regulators “shocked” Signature Bank executives. For bank director Barney Frank, there was “no indication of problems” until the deposit run they received on Friday, following the fall of Silicon Valley Bank, which he claimed was “pure contagion” from the SVB fall.

Frank co-sponsored the landmark Dodd-Frank Act, which was enacted to rein in the financial sector’s risky activities following the 2008 financial crisis. Concerning the current state of affairs, the former government official added: 

Did The Signature Bank Held Crypto Deposits?

Regulators, for their part, are reportedly conducting a sale process for the crypto-friendly bank while ensuring customers’ continued access to deposits and services. Signature executives, according to Frank, have been exploring “all options” to address the problems, including raising capital and gauging interest from potential acquirers. 

The bank also claimed that its customer deposits for digital assets totaled $16.52 billion, making it one of the few financial institutions to accept crypto asset deposits since entering the industry in 2018. Furthermore, Whalen Global Advisors’ Christopher Whalen told the New York Times that this story has more to do with cryptocurrency, calling it “a huge miscalculation by veteran bankers.”

The global cryptocurrency market capitalization has risen far above the psychological threshold of $1 trillion. As a result of serving as a “safe haven” for investors and restoring confidence in digital assets, all major cryptocurrencies are thriving and regaining previously lost levels. 

Buy and sell crypto in minutes with 0.20% trading fees at Bitdenex Exchange.