SBNY - Crypto clients are not to blame for Signature Bank collapse NYDFS head says

2023-04-19 16:41:28 ET

Banks runs by depositors across sectors led to the collapse of shuttered Signature Bank ( OTC:SBNY ), not just cryptocurrency clients, the head of New York state's financial regulator said at a House hearing on stablecoins on Wednesday.

Clients including wholesale food vendors, law firms and trust accounts rushed to pull out deposits from the bank last month, New York State Department of Financial Services Superintendent Adrienne Harris told the House Financial Services Committee.

"It is a misnomer that the failure of Signature ( OTC:SBNY ) was related to crypto," she said. "The outflow of crypto deposits was in exact proportion to the representation in the depositor base overall."

In the bank run following the failure of Silicon Valley Bank, ~20% of the deposits left Signature ( OTC:SBNY ). Of these, 20% were by crypto clients, Bloomberg quoted Harris as saying. Signature ( OTC:SBNY ) was taken over by the FDIC soon after.

Harris highlighted that Signature ( OTC:SBNY ) was already limiting its crypto deposit exposure prior to the bank run.

Many in the crypto industry believe a concerted effort by U.S. authorities led to the closing of Signature ( OTC:SBNY ). The Blockchain Association, which has members including Circle and Genesis' parent Digital Currency Group, has submitted requests to authorities to investigate the possible de-banking of crypto firms.

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