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New York's chief banking regulator, Superintendent Adrienne Harris, refuted the claim that Signature Capital Corp.'s (NYSE:SI)(Signature Bank) failure was due to its involvement in the cryptocurrency sector during her appearance before a U.S. Congressional committee on Wednesday.
Harris stated, "It is a misnomer that the failure of Signature Bank was related to crypto," according to a report by The Block.
Testifying before the House Financial Services Committee's panel on digital assets, financial technology and inclusion, she explained that customers from various sectors, such as fiduciary trusts and wholesale food vendors, withdrew funds from the bank during a panic last month after the collapse of Silicon Valley Bank.
Harris emphasized that Signature Bank's failure was not related to its exposure to cryptocurrencies.
Maxine Waters, the leading Democrat on the House Financial Services Committee, questioned Harris on her assertion that cryptocurrency played no role in the regional bank's sudden downfall.
Harris responded by clarifying that around 20% of Signature's deposits were withdrawn following Silicon Valley Bank's failure, but only "20% of that 20%" were crypto-related deposits.
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"The rest were normal commercial customers with uninsured deposits that were leaving the bank, and so we did not see the collapse as a result of crypto deposits and their instability," Harris added.
Harris' statements were made during a hearing concerning legislation aimed at establishing a U.S. regulatory framework tailored to stablecoins.
The New York regulator declared the closure of Signature Bank two days after Silicon Valley Bank's failure to facilitate the Federal Deposit Insurance Corp.'s (FDIC) continuation of operations.
Apart from holding deposits from digital asset-related firms, Signature Bank also operated a crypto-focused payment network called Signet.
FDIC Chair Martin Gruenberg revealed last month that the agency was attempting to sell this network as part of the bank's wind-down process.
The regulator has also been working to transfer all deposits to other banks to prevent customer disruptions, although Gruenberg acknowledged last month that the FDIC had not yet found a buyer for the crypto-related aspects of the business.
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Photo: Shutterstock
Posted In: SI
