The collapse of three major banks in the United States, the Signature Bank, the Silicon Valley Bank, and the Silvergate Bank shocked the whole crypto community. On 12 March, the Signature Bank which was considered crypto-friendly shut down because of systematic risk by regulators.
Speculations have started floating that the possible reason behind the collapse was its crypto-focused nature. However, the Superintendent of the New York State Department of Financial Services (NYDFS), Adrienne Harris clarified that crypto was not the reason behind the collapse of the Signature bank. During a crypto industry conference on 5 March, Harris ruled out the possibility of a crypto factor in the collapse.
On 12 March, the NYDFS Superintendent, Adrienne Harris informed that the Signature Bank was shut down by regulators to protect depositors’ interests. The New York-based bank had approximately $110.36 billion and total deposits of approximately $88.59 billion as of December 31, 2022. After the collapse of back-to-back three major banks in the United States, chaos was created among their clients, especially in the mind of Signature Bank customers. Mainstream media cited the reports that crypto was the main reason behind the collapse of the Signature Bank, but the recent statement of Adrienne Harris slammed these reports.
According to the reports, the main reason behind the collapse was “liquidity” not a crypto-friendly nature. Adrienne Harris during his statement said, “The idea that the taking possession of Signature was about crypto and this is ‘Choke Point 2.0’ is ludicrous,”. Additionally, she called the incident a new-fashioned run under which banks have large numbers of uninsured funds and don’t have liquidity management protocols.
After the collapse of the crypto-friendly bank, Signature Bank, various reports called this incident a planned step of Washington to destroy crypto by shutting down crypto-friendly banks. Some people called it “Operation Choke Point 2.0”, Operation Choke Point, which began in 2013, sought to marginalize some industries by exerting pressure through the banking system. However, Harris completely denied these reports and called them ludicrous.
The collapse of the Signature Bank alarmed the clients to invest their funds wisely. On 19 March, the Federal Deposit Insurance Corporation (FDIC) announced that 40 branches of collapsed will start working under Flagstar Bank. However, worth $4 billion digital assets were not included in the transfer of branches. On 28 March, FDIC issued a warning to customers to transfer their funds to another bank otherwise accounts will be closed by 5 April.
