Closing Signature Bank part of major attack on crypto?

This morning you could already read that the next domino has fallen within the traditional financial world. The banking drama continues after the US government closed Signature Bank, a New York-based bank with more than $100 billion in assets under management, last night.

Earlier you could read in the crypto news that Silvergate and Silicon Valley Bank (SVB) had gone under. Despite this mess, bitcoin (BTC), and with it the entire crypto market, manages to skyrocket. At the time of writing, BTC is trading at $24,230, almost 14% higher than 24 hours ago.

Signature is the next victim

On Friday, Signature Bank clients, shaken by SVB’s sudden collapse, took out more than $10 billion in deposits. This bank run quickly led to the third largest bank failure in US history. Supervisors announced announced on Sunday evening that Signature was acquired to protect depositors and the stability of the US financial system.

Board member and former US representative Barney Frank said executives at the New York-based bank were very shocked by this sudden move. According to Frank, there was no indication of trouble until the bank run, which caused the collapse of SVB, happened.

Closure came unexpectedly

According to Frank, Signature executives explored all options to strengthen the situation after Friday, including finding more capital and gauging interest from potential buyers. On Sunday, the bank seemed to get a better grip on the situation, so that the closure came as an even bigger blow.

For his part, Frank, who helped draft the landmark Dodd-Frank Act after the 2008 financial crisis, said there was “no real objective reason” Signature should be seized:

“I think part of what happened was that regulators wanted to send a very strong anti-crypto message. We became the posterboy because there was no insolvency based on the fundamentals.”

Signature and crypto

Signature Bank was founded in 2002 as a more business-friendly alternative to big banks. It expanded to the west coast and then opened up to the world of crypto in 2018. This move has accelerated the growth of deposits in recent years. The bank created a 24/7 payment network for crypto customers and had $16.5 billion in deposits from crypto-related customers.

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