The following statement was released today (Mar 13) by Opposition Leader Cole Simons…
Signature Bank, Bermuda‘s banking solution for our emerging Digital Asset Business and our emerging cryptocurrency business is closed by New York State Regulators on Sunday. It is now under the control of the Federal Deposit Insurance Corporation.
According to Reuters, this is the third largest failure in US Banking industry.
What a blow to Premier’s Burt‘s emerging Fintech and digital asset industry, and moreover, what will be the impact for the reputation of Bermuda Inc, as the Government has reportedly been working diligently to promote Bermuda as the destination of choice for FinTech companies looking for a place to domicile.
In a media release from February 2019, the Burt Government unveiled its relationship with Signature Bank as a Banking Service Solution for Bermuda‘s Fintech companies and boasted that “Bermuda is setting itself apart by providing regulatory certainty combined with a world-renowned reputation for transparency and the highest standards of global compliance’. Signature Bank’s endorsement showcases how Bermuda is competitively placed to advance the pace of the digitization of global commerce as modern technology is applied to the highly regulated world of finance.”
The release further stated that Signature Bank agreed to provide full banking services which includes deposit account and debit card services to both BDA and US ‘Fintech startups in the digital asset and cryptocurrency industries and provide a full range of banking services to companies that meet Bermuda and Signature Bank‘s standards.
Now that this banking option is off the table, what’s next for Bermuda’s emerging Digital Asset and Crypto currency industry?
Did our Government perform adequate due diligence before they entered the relationship with Signature Bank?
Were they providing any ongoing monitoring and due diligence since the start of the relationship?
Did Bermuda’s regulators perform their ongoing enhanced due diligence with the New York State financial service regulators?
If they did, were they aware that as of September, almost a quarter of its deposits came from the cryptocurrency, and that the bank announced in December that it would shrink its crypto-related deposits by $8 billion dollars?! This should have been a red flag.
Again, this mega bank failure is extremely alarming and has the real potential of compromising Bermuda‘s blue chip financial services jurisdictional reputation.