The New York State Department of Financial Services has ruled on the role of cryptocurrencies in Signature Bank's downfall. Contrary to the current wave of attacks on the industry in the United States, it's not all bad news.
Speaking at a cryptocurrency industry conference on March 5, NYDFS Superintendent Adrienne Harris confirmed that cryptocurrencies were not the cause of the shutdown.
Federal regulators shut down Signature Bank in mid-March, citing concerns about systemic risks posed by the cryptocurrency-focused bank. However, the mainstream media blamed cryptocurrencies in their usual flurry of FUD after the events.
Harris confirmed that the action was due to the bank's liquidity, not because it had digital asset customers.
In addition, he described the events leading up to the bankruptcy as "a new run on the bank." Signature had a high percentage of uninsured deposits and lacked liquidity management protocols to honor withdrawal requests, he said.
Signature Bank had about $4 billion in deposits related to its crypto banking business, according to the Federal Deposit Insurance Corporation (FDIC).
Don't Blame Crypto for Signature Bank
US regulators have been very focused on cryptocurrencies this year following the FTX crash in November. Decentralized forms of money pose a threat to the traditional banking system, and financial regulators are trying to protect that institution.
However, Harris is one of the few who does not see crypto as the root of all evil. According to the wsjshe said:
"The idea that the Signature takeover was about crypto and this is 'Choke Point 2.0' is really ridiculous."
"Operation Chokepoint 2.0โ, refers to the notion that regulators are conspiring to kill off cryptocurrencies and isolate them from the banking system.
Harris had a more positive outlook towards cryptocurrencies than other heads of regulatory agencies. However, he said that the sector lacks maturity.
โThere is still a lack of maturity around the Bank Secrecy Law-against money laundering [compliance] and cybersecurity. We look forward to the day when those systems mature and scale like the business side does.โ
On March 5, BeInCrypto reported that there was there were no links between stablecoins editor Tie and the fall of Signature Bank.
Crypto Market Insights
Markets are down slightly today, with total market capitalization down 1.3%. As a result, the figure currently stands at $1.19 trillion.
Bitcoin (BTC) is down 1.5% on a dip to $28,132, while Ethereal (ETH) is marginally down to just under $1,900.
However, the weekly outlook remains range-bound.
Disclaimer
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