Breaking: Crypto-friendly Signature Bank shut down by New York authorities

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

While the crypto market is still struggling 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, New York authorities have closed Signature Bank. In particular, the Federal Reserve Board chiefs have assured that the deposits made in the bank will be returned to the customers in full.

The announcement stated,

“We are also announcing a similar systemic risk exemption for Signature Bank, New York, New York, which was closed today by the State Chartering Authority. All depositors of that institution will be made whole. As with the Silicon Valley Bank decision, no losses will be borne by the taxpayer .”

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

In addition, the bank had the largest crypto exchange – Binance – also on Signature Bank’s client list. However, the bank had raised the USD transaction line 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 the red on Friday, with shares falling nearly 32%. The bank’s problems started when Silvergate Bank announced it would wind up operations. The problem doubled after the failure of the technology-focused bank – Silicon Valley Bank.

The end for Signature Bank, but relief for Silicon Valley Bank

Also, the federal governors have come up with a resolution for the failed bank – Silicon Valley Bank. According to the statement, Treasury Secretary Janet L. Yellen “has authorized actions that enable the FDIC to complete its resolution of Silicon Valley Bank.”

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

The statement also reads,

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