Speaking at a hearing on Wednesday, April 20th, New York State Department of Financial Services (NYDFS) Superintendent Adrienne Harris stated that Signature Bank’s crypto clients didn’t cause the company to collapse. According to Harris, Signature serviced a “healthy” portion of digital assets clients and was critically destabilized by a broader bank run from most of its customer base.

Signature Bank Wasn’t Crashed by Crypto

Considering the dramatic events that preceded the collapse of Signature Bank in early March, many have speculated that the regulators’ decision to close it was motivated by the fact the company was servicing clients from the cryptocurrency industry. One of Singature’s board members and former congressman, Barney Frank even suggested that the closing was a part of a broader attack on crypto several days after the fact.

Already on March 14th, the NYDFS came out and denied the rumors stating that Signature was instead closed due to “a significant crisis of confidence in the bank’s leadership”. According to a report from this Wednesday, the regulator also believes that despite the fact that Signature was one of the largest crypto-friendly banks in the US, cryptocurrency clients didn’t play a disproportionate role in its downfall.

The watchdog’s Superintendent, Adrienne Harris, stated that “it is a misnomer that the failure of Signature Bank was related to crypto,” and added that the bank had a “healthy proportion of crypto customers” even planning to reduce exposure. Harris claims, instead, that the crisis was broader and far more affected by Signature’s other clients’ decision to abandon the bank.

The Early March Crisis of US Banks

The first weeks of March proved very shocking for the US banking sector. The crisis that led to American banks borrowing more and faster from the FED than has been since 2008 began in earnest with the announcement of the closing of Silvergate.  The bank, well-known for its close ties to the cryptocurrency industry, started suffering from multiple issues soon after one of its major partners, FTX, filed for bankruptcy.

Already in January, an $8 billion worth bank run from Silvergate was revealed and a month later, it became one of the most-shorted stocks in the US. The pressure from these events, as well as from a DoJ investigation, finally caused the bank to close its doors on March 8th. This sent shockwaves throughout the sector and led to the authorities stepping in and closing Silicon Valley Bank, a once-important part of California’s startup ecosystem, just two days later.

While the bank closings ultimately ended with the fall of Signature, for a time it appeared as though another company, First Republic Bank, would also collapse. Unexpected winners of the crisis were cryptocurrency-related companies and the cryptocurrencies themselves as bank uncertainty led to significant price rallies and a notable increase in crypto app downloads.

This article originally appeared on The Tokenist

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