Crypto blamed unfairly for Signature Bank’s liquidity crisis, says NY regulator News โธ Bankruptcy
Crypto blamed unfairly for Signature Bank’s liquidity crisis, says NY regulator
Signature bank's liquidity crisis was sparked by a range of depositors withdrawing their funds, said Harris.
1 min read
Updated: Apr. 19, 2023 at 11:11 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
The Superintendent of the New York State Department of Financial Services (NYDFS), Adrienne Harris, has refuted allegations that cryptocurrency depositors were responsible for the collapse of Signature Bank.ย
At a hearing about stablecoins held by the House Financial Services Committee on April 18, Harris stated that the liquidity crisis that led to Signature Bank’s collapse was not caused solely by cryptocurrency depositors, but by various depositors withdrawing their funds from the bank, Bloomberg reported.
Harris reiterated her stance on cryptocurrencies during the hearing, dismissing the notion that they were responsible for the bank’s failure and calling it a “misnomer.”
This is in line with her earlier comments at the Links NYC conference, where she defended cryptocurrencies and expressed skepticism toward government officials who criticized them.
Signature’s crypto clients
Superintendent Harris stated that only 20% of depositors at Signature Bank were cryptocurrency clients, and 20% of all depositors withdrew their assets, which led to the bank’s liquidity crisis.
“The outflow of crypto deposits were in exact proportion to the representation in the depositor base overall.”
Signature Bank’s depositors who withdrew their funds and contributed to the bank’s liquidity crisis came from various sectors, including the crypto industry, food vendors, fiduciaries, trusts, and law firms, according to Superintendent Harris.
The bank had previously stated plans to reduce services for the crypto industry due to regulatory pressure and challenges within the digital asset sector. Regulators took control of the bank after outflows reached billions of dollars during a massive bank run.
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Arnold Kirimi
Arnold is a seasoned reporter & writer of all things crypto. A Bitcoin enthusiast since '17, and a tech geek with a penchant for AI & crypto books. A decentralization advocate and a Manchester United buff.
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Signature Bank
Signature Bankยฎ (NASDAQ: SBNY) is a New York-based full-service commercial bank with private client offices throughout the New York Metropolitan area, Connecticut, North Carolina and California.