Former House Rep blames outsiders for associating crypto with bank bankruptcy

Barney Frank, a former member of the United States House of Representatives and a board member of Signature Bank, pointed fingers at some members of the public in the wake of the bank’s collapse.

In a May 30 hearing before the New York State Senate, Frank said he had “no small amount of guilt” regarding the signature failure, claiming that the bank’s dealings with crypto were “secure” before regulators intervened. and healthy”. The former US lawmaker suggested the bank was acting as a facilitator for crypto rather than investing directly in digital assets and that some people didn’t make the distinction.

Frank said of Signature’s collapse, “It wasn’t the people in the digital business themselves who were scared, it was other people who didn’t understand the business but were scared of it.” “Unfortunately, many uninsured depositors were hostile to crypto and made the wrong mistake of associating us and Silicon Valley.”

The New York Department of Financial Services took control of Signature Bank in March, despite claims by many, including Frank, that the company was not insolvent at the time. The bank collapse followed the bankruptcy of Silicon Valley Bank and the closure of Silvergate Bank, both linked to crypto companies.

Frank added:

“The day we closed – I believe prematurely – our assets were fine, our capital was fine, our loan portfolio was fine. The only problem we had was crypto fear of wrongful withdrawals.”

Connected: NYDFS chief says it’s ‘ridiculous’ to think Signature Bank collapse was crypto-related

The New York Senate hearing was the first at the state level to investigate the failure of a crypto-friendly bank. Federal lawmakers met in March to discuss the events leading up to the collapse of Silicon Valley Bank and Signature Bank. Digital assets may emerge as a policy stance ahead of the 2024 United States primaries and elections.

New York’s financial regulators are often at the forefront of policies that define the crypto industry, due to the capital available and companies establishing themselves in the state. Former FTX CEO Sam Bankman-Fried has been facing his criminal trial in New York since October, and the state’s Department of Financial Services has been behind investigations and enforcement actions against several crypto companies since the implementation of the BitLicense regime in 2015.

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