NY regulators say Signature Bank closure unrelated to cryptocurrency

The New York State Department of Financial Services (NYDFS) said on March 14 that its closure of Signature Bank was not related to the bank’s crypto industry ties.

NYDFS denies Signature was closed over crypto

Though Signature worked extensively with crypto firms, a representative has denied that the NYDFS’ decision to shut down Signature was related to that activity.

Statements cited by various outlets including Fortune read:

“The decisions made over the weekend had nothing to do with crypto…The decision to take possession of the bank and hand it over to the FDIC was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.”

Previously, Signature board member and former U.S. representative Barney Frank made several statements suggesting that the bank’s closure was crypto-related. Frank alleged in a CNBC interview that Signature Bank was closed to “send a strong anti-crypto message.”

However, statements from the regulator responsible for Signature’s closure clearly refute the notion that willingness to work with crypto clients was an issue.

Signature fallout continues

The NYDFS initially closed Signature on Monday, March 13.

At the time of the bank’s closure, the FDIC took control of all deposits in order to provide customers with access to insured deposits. Later, the Treasury and other agencies announced a Biden administration-led emergency plan that will return all funds ⁠— not just insured funds ⁠— to users. This plan also applies to Silicon Valley Bank customers.

The closure will likely force several firms to find a new banking provider. Coinbase was among the crypto companies known to store funds with the bank, and about 30% of Signature’s deposits were estimated to come from crypto firms.

The closure of Signature Bank follows the collapse of Silicon Valley Bank on March 10 and Silvergate Bank’s decision to halt all operations on March 8.

Edit: An earlier version of this piece claimed that Circle stored funds with Signature Bank. While Circle chose to use Signature for its reserve deposits in 2021, it had no funds with the bank at the time of its closure.

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