New York Regulator Dismisses Theories of Signature Bank Closure Being Connected to Crypto – Crypto Regulation Update


Adrienne A. Harris, superintendent of the New York Department of Financial Services, has labeled as “ludicrous” the claims that the closure of Signature Bank was linked to its crypto operations. Harris stated that the bank’s “high percentage of uninsured deposits” and lack of funds were two reasons it was shut down.

Insufficient Liquidity of Signature Bank

Adrienne A. Harris, Head of the New York State’s Department of Financial Services (DFS), has once again denied any connection between the closure of Signature Bank and its crypto banking services. According to Harris, the decision to close the bank was made by the regulator, and had nothing to do with the bank’s financial obligations. “A high percentage of uninsured deposits”, along with a lack of liquidity to meet withdrawal requests, were cited as the main reasons.

At the recent event organized by blockchain analysis company Chainalysis, Harris also disregarded ideas that her department’s action against Signature Bank was part of a wider plan to damage the crypto industry.

“The notion that the taking possession of Signature was about crypto and this is ‘Choke Point 2.0’ is really ludicrous”, Harris commented.

As reported earlier by News, DFS had announced its intention to close Signature Bank. Former U.S. lawmaker Barney Frank, a board member at the bank, had then suggested that DFS’s decision was driven by an unfavorable attitude towards crypto. Frank, co-sponsor of the 2010 Dodd-Frank Act, argued that there was no “insolvency based on the fundamentals”.

In spite of Frank’s claims being promptly challenged by the DFS, rumors that the regulator’s action against Signature Bank was part of a campaign against the crypto sector persisted. To support their claims, critics of the regulator’s move to place Signature Bank under receivership highlighted the bank’s function as the go-to institution for crypto companies.

Crypto Industry’s Compliance Programs

In her latest response to critics, Harris asserted that compliance programs in the crypto industry are still in their early stages. She explained:

There is still some lack of maturity when it comes to Bank Secrecy Act-anti-money-laundering [compliance] programs. We’re looking forward to the day when those systems are as robust and advanced as the business side does.

According to a Wall Street Journal report, DFS revealed that regulations for the crypto industry are currently under development. The report states that DFS will be able to use its regulation of the insurance and banking sector to bring in sync its regulation for the crypto industry. The report quotes Harris, who noted that such fees as company examination costs will be added to DFS’ resources.

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Terence Zimwara

Terence Zimwara is a Zimbabwean award-winning journalist and author. He has written extensively about economic problems in some African countries and how digital currencies and paper money can provide Africans with an escape route.

Image Credits: Shutterstock, Pixabay, Wiki Commons

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