If crypto companies had hopes of resuming business with one of the industry’s favorite banks, they should think again. Any buyer of Signature Bank, which was shut down last weekend by regulators, would have to ditch crypto altogether, according to a report.
Signature Bank (ticker: SBNY) was left as one of the few US lenders doing business with crypto companies after Silvergate Capital (SI) announced last week that it would voluntarily wind up and liquidate its bank. It didn’t last long.
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If crypto companies had hopes of resuming business with one of the industry’s favorite banks, they should think again. Any buyer of Signature Bank, which was shut down last weekend by regulators, would have to ditch crypto altogether, according to a report.
Signature Bank (ticker: SBNY) was left as one of the few US lenders doing business with crypto companies after Silvergate Capital (SI) announced last week that it would voluntarily wind up and liquidate its bank. It didn’t last long.
Hot on the heels of regulators stepping in to close SVB Financial Group
‘s
(SIVB) Silicon Valley Bank Last Friday, Signature Bank was shut down by its chartering authority in New York with a promise that depositors would be made whole. These are the biggest bank failures since the 2008-09 financial crisis and have sparked panic as investors and depositors worry about the health of lenders – an unintended consequence of higher interest rates, which have hit bank asset portfolios.
There are major implications for the crypto sector as a result of Signature’s shutdown, including risks to market liquidity and an ever-shrinking list of banks that will do business with the digital asset industry. And even Signature had started to distance itself – late last year, after the crash in crypto prices and a string of bankruptcies around the world, the bank shifted to dramatically reduce its reliance on deposits from crypto customers.
While Signature had reduced crypto customer deposits to under 20%, any rejuvenated version of the bank could see that figure drop to 0%.
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US Federal Deposit Insurance Corp. (FDIC) is trying to put Signature Bank back into public hands, and has asked banks interested in acquiring the group to submit a bid by Friday, Reuters reported on Thursday, citing anonymous sources. Any buyer of Signature would have to agree to give up all crypto business, the report added, citing two anonymous sources.
That’s not the best news for crypto companies hoping that their old relationship with Signature can be revived.
Write to Jack Denton at [email protected]
