Martin Gruenberg, chairman of the FDIC, blamed Signature Bank&rsquo;s involvement in the crypto industry for its ultimate collapse. 
In a recent speech before the House Committee on Financial Services, the Federal Deposit Insurance Corporation (FDIC) chairman blamed Signature Bank&rsquo;s reliance on uninsured deposits from the crypto industry and its exposure to the events that took place in 2022 for its demise.
Martin Gruenberg acknowledged the FDIC&rsquo;s bank supervision could have been more substantial. He conceded the agency did not act fast enough to prevent crisis from spreading through Signature&rsquo;s operations.
Chairman Gruenberg added that Signature&rsquo;s lack of risk management procedures and poor governance put the bank in a position where it could not manage liquidity in a crisis, making it unable to meet large withdrawal requests. Withdrawals were triggered by fears about Signature Bank&rsquo;s solvency and involvement in the volatile crypto sector.
Some bank executives tried to blame rising interest rates as the reason for its collapse, but Gruenberg argued that no bank could survive a run of such speed and magnitude.
Signature&rsquo;s Closure Unrelated to Crypto: NYDFS
In March, the New York State Department of Financial Services (NYDFS) announced that its decision to shut down the bank was not influenced by its involvement in the crypto industry. Signature worked extensively with several crypto firms, with an estimated 30% of its deposits originating from the industry.
Signature came under scrutiny during the collapse of the crypto exchange FTX when it emerged the exchange held accounts with the bank. At the time, Signature said these accounts represented less than 0.1% of its overall deposits, adding that it planned to reduce around $10 billion in deposits emanating from digital asset clients.
The bank said by reducing its ties with digital asset clients; it would bring its crypto-related deposits down to between 15-20% of its total.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.&nbsp;

Signature Bank’s Demise Due to Crypto Exposure: FDIC Chair

Crypto Daily™

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