I think part of what happened was that regulators wanted to send a very strong anti-crypto message. We became the poster boy because there was no insolvency based on the fundamentals. There was no real objective reason for Signature Bank to be seized…
That was former Congressman Barney Frank on CNBC. He was talking about Signature Bank’s collapse this past weekend.
If his name sounds familiar, Frank co-sponsored the Dodd-Frank Act back in 2010. That was the government’s official response to the 2008 financial crisis.
Perhaps it’s no surprise then that Frank found himself sitting on Signature Bank’s Board of Directors upon retiring from Congress.
Frank served on the board from June 17, 2015 through this past Sunday. That’s when regulators stormed in to freeze Signature Bank’s assets and prevent the bank from opening its doors on Monday.
We talked yesterday about the Silicon Valley Bank (SVB) fiasco. It’s now the second largest bank to collapse in history. And we had to ask the question – is there more to the story?
Well, Signature Bank is now on record as the third largest bank collapse in history. And there’s absolutely more to this story.
Signature Bank opened its doors to the cryptocurrency industry in 2018.
That sounds like a simple thing. But it was monumental back then.
At the time, most banks refused to open deposit accounts for businesses dealing with cryptocurrency in any way.
So Signature Bank has been a favorite of the crypto industry for years now. In fact, it housed $16.5 billion in deposits just from companies in the digital asset space.
And as of its most recent regulatory filings, Signature Bank held $88.6 billion in total deposits and $110.4 billion in total assets. As Frank pointed out, the bank simply was not in financial trouble.
So why did regulators shut it down?
Clearly, it was an attack on the crypto industry – as Frank pointed out. But there’s a lot more nuance to this story.
I’ve been plugged into the world of Bitcoin since 2014.
At the time there was Bitcoin and only a handful of other cryptocurrencies. And each of them had a specific purpose. We can talk more about that tomorrow.
Fast forward to today and the “crypto” industry is something entirely different.
Don’t get me wrong. Bitcoin hasn’t changed. It’s still mission-driven.
But the industry at large became something else. It turned into a worldwide casino. And for those who were hip to the game, “crypto” could provide incredible leverage.
Many projects created their own “tokens” and sold them for dollars. Then they used those dollars to acquire other assets. Or, in the case of FTX, to pay off a bunch of politicians.
This is why I despise the term “cryptos”.
Most cryptos are a scam. Their only purpose is to vacuum up dollars for the founders.
And even many of the crypto projects that have a legitimate business model aren’t exactly in alignment with Bitcoin’s true purpose these days. That disappoints me.
And this brings us back to Signature Bank…
As FTX demonstrated, the crypto industry became essentially an extension of the Eurodollar market. And the Federal Reserve has been hellbent on draining the Eurodollar market of liquidity.
That’s what the Fed’s aggressive rate hiking campaign has been all about. Inflation was just the cover story.
This is something we cover in a lot more depth in The Phoenician League’smonthly newsletter.
To keep it simple, Eurodollars are U.S. dollar-denominated deposits held at foreign banks. They are mostly held in European banks. Hence the name.
The Eurodollar market exists outside the U.S. regulatory system. And it provides liquidity to European financial institutions and ultimately European governments. They can leverage Eurodollars to support spending programs that they favor.
So by draining the Eurodollar market, the Fed is hamstringing the globalist power structure and their “Great Reset” plans. That’s what the rate hikes are really about.
And it appears quite likely that this is what the takedown of Signature Bank was all about also.
Simply put, there’s a power struggle happening at the upper echelons of the global financial system right now.
Of course, the media will explain it all away as “normal”. That’s what they are there for.
But what’s happening today is anything but normal. We’re living through an incredible inflection point in history.
If you would like to do a deeper dive on this story, please give our investment membership The Phoenician League a look.
We’re tracking these developments in extended detail every month. And then we use this understanding to craft highly robust investment strategies.
You can find us right here: The Phoenician League Home Page.