Cryptocurrencies, blockchain, NFT and new trends

NYDFS pushes back against claim that Signature Bank takeover was crypto related

Policy • March 14, 2023, 3:47PM EDT

Quick Take

  • A New York Department of Financial Services spokesperson said the decision to take over Signature Bank on Sunday was not related to the bank’s crypto business. 
  • Former congressman Barney Frank, one of the bank’s board members, criticized the state regulator’s decision and claimed they “wanted to send the message that crypto is toxic.” 

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A New York regulator rebuffed criticism from former congressman Barney Frank and said its decision to take over Signature Bank was not related to the bank’s work with digital asset businesses.  

“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,” a spokesperson said in an emailed statement.

The NYDFS spokesperson said it worked with executives at Signature Bank to evaluate its financial position, the ability to meet withdrawal requests and whether it could continue normal operations on Monday. The bank did not provide “reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership,” according to the spokesperson.  

Barney Frank, a member of the Signature Bank board and an architect of the Dodd-Frank financial regulatory law, told The Block on Monday that he thought regulators had closed the bank because “they wanted to show that banks shouldn’t be involved in crypto.” 

‘Wide range of activities’

NYDFS characterized Signature as a bank with much more significant operations than just its digital asset business, which was a fraction of the bank’s overall activity. 

“Signature was a traditional commercial bank with a wide range of activities and customers, including small businesses like food vendors at Hunt’s Point, residential mortgage banking, commercial real estate, to name a few,” the spokesperson said.  

The NYDFS took control of Signature Bank on Sunday after it experienced a withdrawal frenzy similar to the one that occurred with the tech-friendly Silicon Valley Bank two days before. SVB was the second-largest bank failure by asset total in the U.S.

Last week, Silvergate Bank, which counted FTX and other digital asset firms among its clients, said it would wind down operations “in light of recent industry and regulatory developments,” fueling concerns that appear to have contributed the run on Silicon Valley.   

NYDFS Superintendent Adrienne Harris canceled her scheduled appearance at the SXSW conference in Austin, Texas on Tuesday.