With the ongoing criticisms of the administration’s “anti-crypto” mentality, the Fed made their stance even louder and clearer during the saga of the Signature Bank crisis. Citing “systemic risk” one among the top-three banks were shut down by the Feds on Sunday to standstill the losses and avoid a major disaster.
According to reports, the Federal Deposit Insurance Corporation (FDIC) of the United States has requested that prospective rescuers of a few bankrupt U.S. banks refrain from supporting any crypto services. With the reports coming on ongoing investigations for lax monitoring that enabled financial fraud, it is getting even tougher for the bank to revive itself.
Banks contemplating to acquire defunct U.S. firms including Silicon Valley Bank and Signature Bank have been urged by the Federal authorities to submit their offers by March17. The regulators hope to sell both SVB and Signature’s whole operations, although proposals for just a portion of the banks may also be taken into account.
Several major figures in the crypto industry which includes Brian Brooks, a former CEO of Binance.US and acting Comptroller of the Currency have shared their doubts on the collapse and the suspension of the three banks as a sign of a planned attempt by authorities to cut off the crypto business from the financial market. The reports claim that the regulator would give preference to conventional lenders over private equity companies and will only consider proposals from institutions with an active bank licence.
Former Democratic congressman, a committee member of Signature Bank and Dodd-Frank Act co-author Barney Frank’s stated that, “I think part of what happened was that regulators wanted to send a very strong anti-crypto message”. He believed that the seizure was motivated by an anti-crypto sentiment while claiming that Signature Bank was stable and that authorities nonetheless interfered to convey their intent.
The announcement comes as the U.S. Congressman Tom Emmer writes to the FDIC expressing worry that the federal government is “weaponizing” problems in the banking sector to target cryptocurrency. Although there are claims about the anti-crypto stance by the regulators, the authorities continue to deny them and are placing all these actions on the lack of trust in the management of the bank.