By Alexander Grayson
Two major crypto banks, Silvergate and Silicon Valley went down last week. This week started with another top crypto-friendly commercial bank going down due to New York regulations. Crypto users of the bank have been particularly alarmed due to the series of closures in under a week.
Signature bank closed in order “to protect depositors,” New York Department of Financial Services (DFS) Commissioner Adrianne Harris said in a statement. The Federal Reserve, FDIC, and U.S. Treasury Department have however assured that the bank is protected by the FDIC and depositors will be compensated.
No Cause To Worry
Although the sudden closure of the bank has caused panic among its customers, Harris has assured that customers will not suffer loss since the bank is insured by the FDIC, which will ensure that all customers are duly compensated.
“Signature Bank is a New York state-chartered commercial bank and is FDIC-insured, with total assets of approximately $110.36 billion and total deposits of approximately $88.59 billion as of December 31, 2022,” she said in a statement.
Also read:She added that the DFS is working with other regulators and regulated establishments to monitor market trends and “protect consumers, ensure the health of the entities we regulate, and preserve the stability of the global financial system.”
Experts say there’s no need to worry because about the closure of the tree crypto-related banks. Wall Street Journal banking reporter Andrew Ackerman says they’re just isolated cases and “there is no underlying systemic problem”. He added that the banking sector is still strong and risks associated with assets like crypto are well understood.
Regulators May Intensify Surveillance
Although there’s no cause to worry at the moment, regulators may tighten the ropes on financial services providers, especially in the crypto space. New York in particular has been very strict about consumer protection in the crypto space in recent times.
It filed a suit against Sychelles-based crypto exchange KuCoin just last week, alleging that the exchange was illegally operating in New York without proper licensing. The NYAG is seeking to stop the exchange’s operations in the state. The crypto market has experienced a drop generally, which may be connected to these events.
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