Signature Bank shut down due to liquidity concerns, not crypto, says top New York financial regulator: report

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The high-profile shutdown of Signature Bank last month happened due to liquidity concerns rather than a regulatory agenda against crypto, according to New York State Department of Financial Services Superintendent Adrienne A. Harris (NYDFS).

Harris spoke at the Chainalysis Links conference this week and told viewers it was a “really ridiculous” idea that the NYDFS took ownership of Signature due to the bank’s association with crypto, a reported the Wall Street Journal.

The state regulator shut down the crypto-enabled financial institution earlier in March after customers withdrew $10 billion in deposits in a single day. The NYDFS then appointed the Federal Deposit Insurance Corporate (FDIC) to operate a bridge bank holding all of Signatures’ assets until it could be sold.

Signature Bank board member Barney Frank, a former Democratic congressman from Massachusetts, told CNBC at the time that he believed the bank shutdowns were part of a regulatory crackdown on crypto.

Later that month, the FDIC entered into a buy-and-take agreement with Flagstar Bank, a subsidiary of New York Community Bancorp.

The press release announcing the deal said it was worth $38.4 billion, which includes nearly all of the failed bank’s deposits and some loan portfolios.

The terms, however, did not include Signatures, about $4 billion in deposits tied to its digital asset banking business. The FDIC said it would provide the deposits directly to those customers.

Prior to the deal, Reuters reported that the FDIC had asked all banks interested in acquiring Signature to agree to relinquish all crypto-related business with the company.

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