Signature Bank’s Closure Is Political And A Strong Anti-Crypto Message, Ex-Congressman

Barney Frank, director of Signature Bank and former congressman who helped develop the Dodd-Frank Act, declared that the creditor is solvent and that there were no “real objective reasons” for closing the bank. He said regulators wanted to send a strong anti-crypto signal.

The real reasons behind Signature Bank’s closure?

New York City Department of Financial Services (NYDFS) vague announcement to close Signature Bank argued the move was made “in order to protect savers”.

Compared to the detailed order issued by the California Department of Financial Protection and Innovation (DFPI) when they acquired Silicon Valley Bank, quoting insufficient liquidity and insolvency, the NYDFS statement regarding Signature Bank is vague and lacks any sort of fact-finding procedure. The DFPI has appointed the US Federal Deposit Insurance Corporation (FDIC) as Silicon Valley Bank (SVB) Governor.

The transfer of SVB assets to the FDIC resulted in the temporary return of crypto assets, including bitcoin. Meanwhile, USDC, the Circle-issued stablecoin that has $3.3 billion stuck in a technology lender, has depegged. But as of March 14, the stablecoin is trading at parity with the US dollar.

Bitcoin price March 14 |  Source: BTCUSDT on Binance, TradingView
Bitcoin price March 14 | Source: BTCUSDT on Binance, TradingView

Industry participants have concluded that Signature Bank was shut down due to its pro-crypto stance and the fact that it facilitated stablecoin liquidity through its Signet network. The government’s action may have been prompted by an opportunity presented over the weekend following the failure of the SVB. This is the third major cryptocurrency-related bank to collapse in less than a month.

Silvergate Bank was closed, then SVB became insolvent. With $110 billion in assets, Signature Bank went broke due to a $10 billion bank run even though it had $88 billion in deposits.

Senator Elizabeth Warren accuses Trump of SEC crackdown on cryptocurrencies

Senator Elizabeth Warren accused the Trump administration for shutting down Silicon Valley Bank (SVB), which it claims was largely due to the repeal of critical parts of the Dodd-Frank Act in 2018. Warren urged Congress, banking regulators and the current administration to reverse these actions as a top priority.

The closure of Signature Bank could be a signal that the industry is under attack. It comes as Bradley Garlinghouse, Chief Executive Officer (CEO) of Ripple, a blockchain company, argues that US law is not conducive to innovation, especially in cryptocurrencies.

Along with other executives, including Christian Larsen, Bradley was sued by the US Securities and Exchange Commission (SEC). The regulator claims that they sold unregistered securities in XRP during their initial coin offering, where they raised over $1 billion.

Article image by Ed Jones / Agence France-Presse – Getty Images, Chart by TradingView

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