Speaking before the US House Financial Services Committee on Wednesday, New York State Department of Financial Services Superintendent Adrienne Harris denied that cryptocurrency depositors caused Signature Bank to fail. On the contrary, Harris argued, depositors within numerous asset and business categories pulled out. This sparked a fatal liquidity crisis at the troubled bank. Blaming cryptocurrency is a bad mistake.
“It is a misnomer that the failure of Signature Bank was related to crypto,” Harris testified, according to a Bloomberg report.
Harris’s comments reiterated points that she had made at a Links NYC conference on April 5. At that event, Harris came across as a defender of crypto. And a skeptic of those in the government who impugn its legitimacy. Harris denied that regulators’ hostility to cryptocurrency led to the collapse. She called the event a “new-fashioned bank run,” according to the Wall Street Journal.
It was not just those customers with a reported total of $4 billion in crypto who wanted out. Rather, a broad cross-section of Signature customers panicked and the number of withdrawals overwhelmed the bank.
Despite these documented facts, enemies of crypto have tried to use Signature’s failure as a club to bash the industry. On March 12, a New York Times story by Matthew Goldstein and Emily Flitter blamed crypto. The article called Signature an outlier in this regard.
“Signature was one of the few financial institutions that had opened its doors to taking deposits of crypto assets, a business it entered into in 2018,” Goldstein and Flitter wrote.
“That ended up being a fateful decision because the bottom fell out of crypto assets after the fall of FTX and an ensuing criminal investigation. Another cryptocurrency-focused bank, Silvergate Bank, was forced to voluntarily close last week,” Goldstein and Flitter added.
Harris’s comments on Wednesday reiterated points made at the Links NYC event. But this time she made them to lawmakers with oversight of the economy. Moreover, Harris heads a department claiming oversight of some 3,000 financial institutions with $8.8 trillion in assets.
Time will tell whether Harris succeeds in correcting negative perceptions stoked by articles like the New York Times piece.
BeInCrypto has reached out to Harris’s office for comment.
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