• The New York State Department of Financial Services has denied any crypto-related reasons behind the closure of Signature Bank.
• Former US representative Barney Frank had suggested that the bank’s closure was crypto-related, but this has been debunked.
• The Treasury Department plans to devise an emergency plan to return all customer funds of Signature Bank and Silicon Valley Bank, which also recently shut down.
Signature Bank Shut Down
The New York State Department of Financial Services (NYDFS) recently announced that they were shutting down Signature Bank on March 13th, 2021. This comes as a surprise to many since the bank had extensive ties with numerous cryptocurrency firms, with about 30 percent of its deposits estimated to originate from crypto.
Crypto Connection Denied
The NYDFS has since denied any connection between the decision and the bank’s involvement in cryptocurrencies. According to a spokesperson for the department, „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.“ This stands contrary to former United States Representative Barney Frank’s claims that this may have been done in order to send an anti-crypto message.
Relocation of Customers‘ Funds
Nevertheless, customers can be assured that their deposits will be returned safely thanks to the Federal Deposit Insurance Corporation taking control over them. In addition, The Treasury Department is planning an emergency plan for not just insured deposits but also for those without insurance coverage so that all customers receive their funds back safely.
Other Banks Closing Down
Signature Bank isn’t alone in closing down either; Silicon Valley Bank, known as one of startups‘ go-to banks, had closed shop on March 10th while Silvergate Bank also announced its closure on March 8th following months of struggling due FTX related issues.
Overall, this marks another instance where financial institutions are experiencing difficulty due various external factors such as cryptocurrency regulation or other market issues like FTX. Although customers may worry about their funds being lost when such banks close down, rest assured that organizations like FDIC and Treasury Department are working hard towards ensuring everyone gets back their money safely and securely regardless if it is insured or not