- The New York Department of Financial Services has denied that its takeover of Signature Bank on Sunday was intended to send a message about crypto
- The regulator had been accused of sending an “anti crypto message” by a Signature Bank board member
- The DFS said that the decision was made purely to protect account holders
The New York Department of Financial Services (DFS) has denied that its takeover of Signature Bank on Sunday was intended to send a message about crypto, following accusations from a board member and former congressman. Barney Frank said that the bank was not insolvent and that the U.S. government wanted to send a “very strong anti-crypto message”, but the agency has denied this, saying the decision was made purely to protect account holders.
Frank Suggested that Anti-crypto Stance was Behind Closure
There were already suggestions that DFS’s seizure of Signature Bank on Sunday had anti-cryptio undertones, with rumors circulating that the bank had been seized due to its pro-crypto stance and its Signet payment platform, which is a widely-used tool in the blockchain industry.
Frank added to the speculation by suggesting in several interviews on Monday that the bank’s operations were sound and that New York regulators had only intervened to send a message that cryptocurrency is risky and to use Signature Bank as an example.
DFS has pushed back against these claims however, with a spokesperson explaining the decision to Fortune:
The decisions made over the weekend had nothing to do with crypto. The decision to take possession of the bank and hand it over to the FDIC was based on the current status of the bank and its ability to do business in a safe and sound manner on Monday.
DFS Didn’t Get Bank Exec Cooperation
The spokesperson went on to explain that the DFS “worked with bank executives to fully evaluate their financial position and their ability to meet withdrawal requests and continue operations on Monday” but that the bank “failed to provide reliable and consistent data, creating a significant crisis of confidence in the bank’s leadership.”
Austin Campbell, the former chief risk officer at Paxos and an adjunct professor at Columbia Business School, also told Fortune that, whatever its intentions, the sudden closure of Signature Bank “was taken extremely negatively by the crypto community, and it will negatively impact trust in the DFS long term.”