Ex-congressman Barney Frank has posited that state regulators closed New York-based Signature Bank on Sunday in part to attack the crypto industry.
Speaking with CNBC on Monday, the former House Financial Services Committee Chairman claimed the bank was shut down to send a “strong anti-crypto message”.
Signature Bank – A Target Due To Crypto Ties?
On Sunday, New York state officials shuttered Signature “in order to protect depositors,” making it the third crypto-friendly bank to go under within the past week, following Silvergate Bank’s voluntary liquidation and Silicon Valley Bank’s shutdown on Wednesday and Friday, respectively. Regulators are yet to provide any further explanation for closing the bank.
“I think part of what happened was that regulators wanted to send a very strong anti-crypto message,” former rep. and Signature Bank board member Barney Frank is reported as saying by CNBC. He further suggested that the bank was the “poster boy” for the digital assets industry as it was not insolvent based on fundamentals. To put it simply, regulators closed Signature Bank simply to show that banking institutions should not be involved in crypto.
Frank, who co-authored the Dodd-Frank Act after the 2007-2008 financial meltdown, noted that the only indication of issues at the bank was a deposit run of over $10 billion, which he termed as “purely contagion” from the stunning collapse of Silicon Valley Bank.
Signature Bank gave loans to crypto-native companies. The U.S.’s leading crypto exchange Coinbase said that it held a corporate cash balance of approximately $230 million with the doomed bank, while stablecoin issuer Paxos admitted holding $250 million at Signature.
Signature’s closure comes just months after the bank announced it would be limiting its crypto exposure. Even so, the move by regulators indicates that crypto firms are once again cut off from the legacy banking system in the United States. While banks are not explicitly prohibited from servicing crypto clients, the writing is on the wall.
The current banking chaos and contagion have, however, not stopped the market cap of all cryptocurrencies from going back above $1 trillion.