Adrienne A. Harris, the head of New York State’s Department of Financial Services (DFS), has denied that the closure of Signature Bank had anything to do with its crypto banking business. Harris, who is a superintendent with the regulatory body, explained that the decision to close the bank was taken because the bank had a high percentage of uninsured deposits and lacked liquidity to meet withdrawal requests. Speaking at an event organized by Chainalysis, a blockchain analysis firm, Harris also dismissed claims that the bank’s closure was part of an attempt to suffocate the crypto industry.
Harris also commented on the lack of maturity in the crypto industry’s compliance programs, particularly regarding the Bank Secrecy Act-anti-money-laundering and cybersecurity. She expressed hope that the systems would mature and scale as the business side does.
Meanwhile, a report in the Wall Street Journal revealed that the DFS is finalizing regulations that will give it the authority to assess the crypto industry. This will enable the DFS to align its regulation of the crypto industry with how it assesses the insurance and banking sectors. The fees paid by companies for their examinations will be added to DFS’ resources, according to Harris.
The DFS has been actively regulating the crypto industry, including licensing and regulating crypto firms that operate in the state, and enforcing strict cybersecurity measures. In 2015, the DFS created the BitLicense, a regulatory framework that requires crypto companies to follow strict anti-money laundering (AML) and cybersecurity rules to operate in New York. The regulation was widely criticized by the crypto industry for being too strict and hindering innovation.
However, the DFS’s latest move to align its assessment of the crypto industry with other financial sectors could potentially ease concerns about the BitLicense and other strict regulations. While Harris denied that the closure of Signature Bank was related to crypto banking, the crypto industry remains wary of regulatory crackdowns, particularly in the US, where there have been increasing efforts to regulate the sector.
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