U.S. Regulators “Don’t Want Banks Doing Crypto”

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  • Barney Frank has doubled down on his assertion that Signature Bank was shuttered to send a message to banks using cryptocurrency
  • Signature board member Frank has already claimed this week that there was no need to shutter the crypto-friendly bank
  • The Department of Financial Services said the bank was shut down due to an issue with obtaining data

Former U.S. Congressman Barney Frank has doubled down on his assertion that Signature Bank was shuttered because of regulators’ desire to stop banks having anything to do with crypto. In an interview with New York Times’ Intelligencer, Signature Bank board member Frank says that the Department of Financial Services (DFS), which closed the bank abruptly on Sunday, could have avoided a bank run if it had done everything it needed to do the Friday before, which would have resulted in the bank staying open, but this was never its intention.

Frank Doesn’t Buy Data Argument

Frank has already opined this week that Signature Bank was not insolvent and that the U.S. government wanted to send a “very strong anti-crypto message”, which the DFS has denied. Frank doesn’t buy the rationale that the bank “failed to provide reliable and consistent data” to the regulator, saying that at no point has the regulator said that the bank was insolvent:

They said, well, they had a problem, because they couldn’t get sufficient data. I mean, I was disappointed when they closed it, and sort of vindicated — they have not argued that we were insolvent. And I think it’s very clear if we had the benefit of those two announcements, we’d still be an ongoing bank.

Frank went on to offer his opinion on why that happened:

Now, the question is, why did they react so harshly to what they said was our inability to give them the sufficient data? I believe it was probably to send the message that even though we were doing crypto stuff responsibly, they don’t want banks doing crypto. They denied that in their statement, but I don’t fully believe that.

“Worrisome” That Government Can Seize a Bank

Frank added that, while the data from the bank was problematic, it was “getting better” and certainly wasn’t enough to shutter the bank. He added that it was “worrisome” that the government could just take over a bank like that, and suggested that legal action might be forthcoming.

The co-author of the Dodd-Frank Act, which was rolled back by the Trump administration and which has allowed banks to take on more risk, summarized his stance by saying that the DFS used Signature Bank as a “poster child to say “stay away from crypto””, an effort that has undeniably been gathering pace this year.

Frank’s claims have been given weight thanks to news from Reuters that any potential buyers of the equally shuttered Silicon Valley Bank must agree to give up all the crypto business at the bank.