Market Analysis Report (06 Apr 2023)

Adrienne Harris, the head of the New York Department of Financial Services (NYDFS), said it was “ludicrous” to think that Signature Bank’s closure last month had anything to do with “Operation Choke Point 2.0.”

Speaking to Chainalysis’ Links conference attendees in New York, Harris said her office’s intervention to shut down Signature had nothing to do with crypto, but rather came after a “new-fashioned bank run.”

Harris added that when banks have a “high percentage of uninsured deposits” while lacking “liquidity management protocols” they end up in a situation where they have to be shut down. Signature was shuttered two days after the collapse of Silicon Valley Bank, and four days after Silvergate Bank announced its closure.

All three banks had ties to the crypto industry. The banks’ shutdown, and the Fed’s rejection of a membership request from crypto-friendly Custodia Bank, fueled theories suggesting U.S. regulators were working together to stop crypto from using the banking system. They called this Operation Choke Point 2.0, after an old program that did the same thing to legal but shady businesses.

Harris argued that the NYDFS’ guidance necessitates that virtual asset companies have a strong banking partnership with well-regulated banks, which to her means that “the idea that we don’t want those banks to exist just doesn’t make any logical sense.”

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• Source: https://www.cryptocompare.com/email-updates/daily/2023/apr/06/