FDIC chairman blames crypto exposure for the downfall of the Signature Bank

FDIC chairman blames crypto exposure for the downfall of the Signature Bank

According to Martin Gruenberg from the FDIC, the commitment of the Signature Bank in the digital asset industry was the reason for their downfall.

The chairman also recognized the inadequacies of the FDIC not to act earlier to prevent the crisis from spreading to the entire operation of signature. Grünberg also added that the agency's supervision could have been stronger.

crypto is to blame for signature: FDIC chairman

In a speech in front of the Committee on Financial Services of the House of Representatives, the chairman of the Federal Deposit Insurance Corporation (FDIC) expressly blamed the dependence on signatures of interludes of the crypto industry or its susceptibility to contagation by turbulence in the industry for digital assets at the end of 2023.

He said that the poor corporate management and the inadequate risk management practices of the Signature Bank would have brought the institute into a situation in which it could no longer effectively manage its liquidity in stress times, which means that it was unable to meet very large withdrawal inquiries.

The Signature Bank was not exclusively a crypto bank, but its efforts around the industry became clearer during the bull market in the pandemic era. During this time, the bank based in New York developed into one of the great traditional institutions that introduced cryptocurrencies.

The case of FTX was a big turning point. In order to reduce its commitment in the industry in a turbulent time, the Signature Bank distances itself. The assertion was supported by the chairman and co -founder of the now dissolved bank, Scott Shay, during a prepared session Certificate Monday.

The former managing director announced that the bank had made considerable cuts in the deposits of digital assets due to the increased market volatility and regulatory concerns at the end of the previous year.

blame assignments

In the past few weeks, reports on the collapse of the Signature Bank in March, in addition to possible reasons, also mentioned an engagement in the crypto industry. Many also speculated about the assumption that the bank's connections to crypto -related companies were behind their closure.

The superintendent of the New York State Department of Financial Services (NYDFS) rejected this assumption in an interview and assured that the bank was faced with serious operational difficulties in advance.

The crypto industry reacted violently to the confiscation of signature, thought the step was unnecessary and accused the regulatory authorities of targeting them. The Blockchain Association industry group submitted applications for the Freedom of Information Act (FOIA) to the FDIC and other authorities and pointed out that the government's measures may have contributed "inappropriately" to the mistakes.