FDIC cites cryptocurrencies as a factor in Signature Bank’s collapse

The Federal Deposit Insurance Corporation (FDIC) completed its investigation into the causes of the crypto-industry-friendly Signature Bank’s collapse.

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According to the agency’s head, Martin Gruenberg, risks tied to digital assets contributed to it.

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According to the regulator’s statement, “root of the problems” was poor management of the financial institution. Regulators shut Signature in March 2023 following Silicon Valley Bank. Subsequently, the U.S. Treasury, ФРС and the FDIC announced the bailout of the institutions.

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“Signature could not assess the risks of crypto deposits and its dependence on them, as well as its vulnerability to shocks in the industry during 2022 and 2023. Inadequate risk management led to the bank’s inability to manage its liquidity during the stress period,” the report said.

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The FDIC estimated the loss from Signature’s collapse at $2.4 billion. Agency officials also noted that 67% of deposits were uninsured.

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Some agencies hold the opposite view. New York state banking regulator Adrienne Harris disputed the suggestion that Signature Bank’s collapse was due to its ties to the crypto industry. According to her, the collapse of the institution was the result of panic among clients sparked by the fall of Silicon Valley Bank.

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In March, the FDIC provided crypto clients of Signature with a week to withdraw funds and close accounts.

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In the same month, NYCB’s subsidiary Flagstar Bank acquired a portion of the failed institution for $38.4 billion. Deposits of digital assets were not included in this deal.