• The FDIC Chairman blamed Signature Bank’s reliance on uninsured deposits from the crypto industry and its exposure to events in 2022 for its ultimate collapse.
• The NYDFS stated that their decision to close Signature was not influenced by its involvement in the crypto industry.
• Signature had estimated 30% of its deposits coming from the crypto industry, which they planned to reduce down to 15-20%.

Signature Bank Collapse

Martin Gruenberg, chairman of the FDIC, blamed Signature Bank’s involvement in the crypto industry for its ultimate collapse. In a recent speech before Congress, he acknowledged that bank supervision could have been more substantial. Chairman Gruenberg argued that no bank could survive a run of such speed and magnitude triggered by fears about Signature Bank’s solvency and involvement in the volatile crypto sector.

NYDFS Statement

In March, the New York State Department of Financial Services (NYDFS) announced that their decision to shut down Signature was not influenced by its involvement in the crypto industry. They added that accounts held with Signature represented less than 0.1% of overall deposits at the time of closure.

Crypto Exposure

Signature worked extensively with several crypto firms, with an estimated 30% of its deposits originating from the industry. At this time, they planned to reduce around $10 billion in deposits emanating from digital asset clients bringing it down to between 15-20%.

Risk Management & Governance

Gruenberg also highlighted lack of risk management procedures and poor governance put the bank in a position where it couldn’t manage liquidity during a crisis or meet large withdrawal requests.

Disclaimer

This article is provided for informational purposes only and is not intended to be used as legal, tax, investment, financial or other advice.