• Signature Bank was recently shut down by the New York State Department of Financial Services (NYDFS).
• The NYDFS has denied any involvement of cryptocurrency dealings in the closure.
• The Biden administration is devising an emergency plan to return all customer funds, including those from Silicon Valley Bank and Silvergate Bank.
Signature Bank Shutdown
The New York State Department of Financial Services (NYDFS) recently announced the shutdown of the Signature Bank for unknown reasons.
Crypto Connection Denied
Despite the bank’s extensive crypto ties, with about 30% of its deposits estimated to originate from crypto, a spokesperson from NYDFS denied any crypto-related reasons behind the closure. They stated that “the decisions made over the weekend had nothing to do with crypto”. However, former United States representative Barney Frank suggested that this was done in order to “send a strong anti-crypto message”.
Biden Administration Plan
The Federal Deposit Insurance Corporation (FDIC) took control over all deposits in order to ensure customers receive insured deposits back. Furthermore, the Treasury Department revealed that the Biden administration would devise an emergency plan to return all customer funds, not just insured ones. This same plan will be applied to customers of Silicon Valley Bank and Silvergate Bank which have also been closed recently.
The closure of Signature Bank will force several firms, including many crypto firms, to find a new banking services provider. Coinbase was one of the major crypto clients at this bank before it closed shop on March 13th 2021.
The recent string of bank closures has raised eyebrows in terms of their connections with cryptocurrency industry and whether these were motivated by anti-crypto sentiment or not. These events are particularly disconcerting as they can disrupt service providers who rely on these banks for financial services and products essential for their operations