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Barney Frank: Regulators shuttered Signature Bank to show 'crypto is toxic'

Quick Take

  • Former Rep. Barney Frank believes regulators closed Signature Bank to show that “crypto is toxic.” 
  • Frank is an architect of the Dodd-Frank Act and a member of the Signature Bank board. 

Crypto panic sparked a deposit run on Signature Bank, former Rep. Barney Frank said, but he argues that the bank had already stabilized before New York state regulators stepped in to close the crypto-friendly institution.

“Crypto panic generated that set of withdrawals,” said Frank, a member of the Signature Bank board and an architect of the Dodd-Frank financial regulatory law. “By Sunday, we had stabilized the situation … But I believe the regulators, especially the New York state regulators, wanted to send the message that crypto is toxic.” 

During a Sunday press conference, New York Department of Financial Services Superintendent Adrienne Harris denied that Signature's crypto business had an influence on the regulator's decision to take control of the bank. 

"Signature Bank had a broad depositor base so the idea it was a crypto bank is not an accurate one,'' Harris said in answer to a question on the bank's crypto exposure. ''This is not about a particular sector in the case of Signature Bank,'' she said.

The NYDFS took control of Signature Bank on Sunday, days after a bank run prompted California regulators to close the tech-friendly Silicon Valley Bank. News of the second-largest bank failure by asset total in American history launched Signature Bank into a deposit frenzy on Friday. Frank insists things had calmed by the end of the weekend. 

“They closed us even though there was no good, compelling reason to do that because they wanted to show that banks shouldn't be involved in crypto,” Frank, a Democrat, said in a telephone interview. “We were the kind of poster child for having been involved in crypto."

The banking debacle sent the crypto mark