The US seized Signature Bank because of the hatred of cryptocurrencies
US seizes New York’s Signature Bank out of hatred for crypto. At least that’s what board member Barney Frank believes, who can’t see any objective reasons for the company’s closure on Sunday. The banking house was set to plug important holes in the crypto industry previously created by the liquidation of fiat onramp Silvergate.
US seizes Signature Bank out of hatred for crypto
The collapse of the Silicon Valley Bank (SVB) late last week caused unrest in the US. The event aroused suspicion among many people, thus causing mass withdrawals of money.
The crypto-friendly Signature Bank was also affected by this development. Signature Bank was to be a haven for many crypto exchanges that previously partnered with the insolvent Silvergate Bank .
Silvergate handled exchanges between crypto and fiat currencies. Former partners often switched to Signature Bank. However, the New York-based Signature Bank may no longer be able to fulfill this task.
Reason for this: The tax authorities of the USA take over the administration of the Signature Bank and in the course of this confiscate all of their assets, according to a report by CNBC . Most recently, the bank managed assets of $110.36 billion.
According to board member Barney Frank, the US authorities’ action came suddenly and without warning. Before the bank storm that took place on Friday, Signature Bank also had no financial difficulties.
There were no signs of trouble until late Friday when a bank run purely attributable to the SVB began.
Explains Frank. Nevertheless, the Signature Bank will be closed by US authorities on Sunday. In a press release , the authorities explain this measure with a “systemic risk” emanating from the Signature Bank.
I think part of what’s happening is that regulators wanted to send a very strong message against crypto.
Guess Frank. According to him, there are no objectively comprehensible circumstances that have allowed a confiscation. There was no bankruptcy.
Crypto industry withdraws for fear of US authorities
More and more companies are withdrawing from the crypto industry because they are afraid of intervention by the US authorities. These have been following a tight course against cryptocurrencies since February and have recently been attacking crypto exchanges in particular.
Silvergate has had systemic importance for the crypto industry. The liquidation of the bank means that many crypto exchanges have to find a new partner in order to allow their users to make deposits with fiat currencies such as the Swiss franc or the US dollar at all.
Transactions with crypto companies have always been a risk for banks. According to insiders, these decisions mostly led to conflicts with the authorities. The hole created by Silvergate’s stop should primarily be filled by Signature. The liquidation of the bank thus exacerbates the scarcity of an already small supply.
Cryptocurrencies thrive during banking crisis
Despite possible bottlenecks in choosing fiat on- and offramps, cryptocurrencies are thriving during the current banking crisis. On the one hand, Binance fueled rising prices with an investment of one billion US dollars. The money was previously stored in the abandoned stablecoin BUSD.
On the other hand, confidence in banks has recently fallen. Cryptocurrencies allow users to escape from the banking system and easily store digital money themselves . Many users can always use the offer of the Swiss provider Mt Pelerin to switch between crypto and fiat.