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Breaking: Crypto-friendly Signature Bank closed by New York authorities

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Crypto-friendly Signature Bank closed by New York authorities

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  • New York authorities have shut down Signature Bank, which closed in the red on Friday
  • Silicon Valley Bank customers will get back their deposits in whole, with withdrawals opening on Monday

While the crypto-market is still grappling with the collapse of the crypto-centric bank – Silvergate Bank, another bank has had its shop closed. In a statement released today by the Board of Governors of the Federal Reserve System, the New York authorities have closed Signature Bank. Notably, the Federal Reserve Board Governers have assured that the deposits made in the bank will be returned to customers wholly.

The announcement read,

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”

Several crypto entities including USDC issuer – Cirlce availed services from Signature Bank. In its most recent statement, Circle stated that it used Signature Bank to maintain transactions and settle accounts for USDC. With this bank out of the picture too, the stablecoin issuer is down to just Customers Bank, which holds $1 billion of its cash reserves. Other crypto-clients included Coinbase, LedgerX, and the now-collapsed crypto exchange, FTX.

Additionally, the bank had the largest crypto exchange – Binance – was also on Signature Bank’s customer list. However, the bank had raised the USD transaction bar to a minimum of $100k for Binance users. This move was reportedly a result of the bank trying to reduce its exposure to the crypto market. However, the exchange eventually announced the temporary suspension of USD deposits and withdrawals

Notably, the crypto-friendly bank closed the market in red on Friday, with its shares falling by nearly 32%. The bank’s trouble started when Silvergate Bank announced it would wind up its operations. The trouble doubled after the failure of the tech-focused bank – Silicon Valley Bank.

The end for Signature bank but relief for Silicon Valley Bank

Moreover, the Federal Governors have come up with a resolution for the failed bank – Silicon Valley Bank. According to the statement, Secretary of Treasury – Janet L. Yellen has “approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank.”

The resolution fully covers all the depositors and they would have access to their funds from Monday, i.e., March 13, 2023. Additionally, the statement assured that the losses incurred in this process will not be shoulders by the taxpayers. Notably, this could mean that Circle would get back its $3.3 billion funds stuck in the bank, along with Ripple.

The statement also read,

“actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”

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Priya is a freelance cryptocurrency writer at AMBCrypto. A student in business administration, Priya focuses on the latest developments in the cryptocurrency and blockchain technology space.
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