Crypto blamed unfairly for Signature Bank’s liquidity crisis, says NY regulator

New York’s financial regulator has said that the recent liquidity crisis at Signature Bank cannot be solely blamed on the bank’s cryptocurrency clients. The regulator believes that crypto has been unfairly blamed and that factors such as changing interest rates and the bank’s loan growth strategy played a bigger role in the crisis. Signature Bank faced a massive sell-off in the first week of January, which led to a temporary freeze on new crypto deposits. However, the bank has since resumed crypto deposits and maintains that it has ample liquidity to meet customer demand.

NYDFS Superintendent Adrienne Harris Refutes Allegations that Cryptocurrency Depositors Caused Signature Bank’s Collapse

Adrienne Harris, the Superintendent of the New York State Department of Financial Services (NYDFS), has denied claims that cryptocurrency depositors were solely responsible for the collapse of Signature Bank. She made this statement during a hearing about stablecoins held by the House Financial Services Committee on April 18. Harris clarified that the liquidity crisis that led to the bank’s failure was not caused by cryptocurrency depositors alone. According to her statement, various depositors, including those from the crypto industry, food vendors, fiduciaries, trusts, and law firms, withdrew their funds from the bank, leading to its liquidity crisis.

Harris reiterated her defense of cryptocurrencies during the hearing, dismissing the notion that they played a significant role in the bank’s failure, labeling such claims a “misnomer.” According to her, only 20% of Signature Bank’s depositors were cryptocurrency clients, and the outflow of crypto deposits was proportional to the depositor base overall.

This aligns with Harris’ earlier comments at the Links NYC conference, where she actively defended cryptocurrencies and expressed skepticism towards government officials who had criticized them.

It is worth noting that Signature Bank had earlier stated plans to reduce its services to the crypto industry due to regulatory pressure and challenges within the digital asset sector. Regulators took control of the bank after billions of dollars in outflows during a massive bank run.

In conclusion, while cryptocurrency depositors may have contributed to the bank’s liquidity crisis, they were not the sole cause of its collapse. The claims that cryptocurrencies were responsible for Signature Bank’s failure have been disproven, and the industry remains a critical part of the financial sector that regulators must adequately monitor to safeguard depositors’ interests.

#Title 1: NYDFS Superintendent Adrienne Harris Refutes Allegations of Cryptocurrency Depositors Involvement in Signature Bank Collapse

#Title 2: NYDFS Superintendent: Cryptocurrencies Were Not the Sole Cause of Signature Bank’s Collapse

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