- The largest bank serving the cryptocurrency sector after Silvergate, which last week announced its impending liquidation, is Signature.
- According to the article, Signature, unlike Silvergate, did not offer any loans to the cryptocurrency industry or have any associated loans; however, due to its connections to cryptocurrency, its price fell along with the general market.
The New York State government recently closed the New York-based Signature Bank, making it the third bank to close this week after Silicon Valley Bank and Silvergate Bank.
In accordance with Section 606 of the New York Banking Law, the New York Department of Financial Services took control of Signature Bank to safeguard depositors. The bank’s receiver was chosen to be the Federal Deposit Insurance Corp.
As of December 31, Signature Bank had USD 110.36 billion in total assets and USD 88.59 billion in total deposits. The number as of today is unknown.
Superintendent Adrienne A. Harris, said in a statement that “DFS is in close contact with all regulated entities in light of market events, monitoring market trends and collaborating closely with other state and federal regulators to protect consumers, ensure the health of the entities we regulate, and preserve the stability of the global financial system.”
The Federal Reserve has offered to safeguard the funds of depositors in Silicon Valley Bank and Signature Bank customers, while allowing them to access their funds starting soon.
Even though the collapse of SVB is well known, there are fewer details available for Signature Bank. The only conclusion that can be drawn at this point is that the bank may have been shut down as a preventative measure rather than because it was about to fall down instantly.
While the bank had exposure to cryptocurrencies and FTX, the specifics of how Signature Bank got to this point have yet to be fully disclosed.
In a piece published on March 4, Amy Castor and David Gerard discuss how, in terms of the U.S. cryptocurrency market, Signature Bank was the East Coast’s Silvergate and that a sizeable portion of its deposits was linked to cryptocurrencies. Earlier this year, the bank reportedly tried to exit the cryptocurrency market.
According to the article, Signature, unlike Silvergate, did not offer any loans to the cryptocurrency industry or have any associated loans; however, due to its connections to cryptocurrency, its price fell along with the general market.
The failure of Signature Bank coincides with ongoing media coverage of SVB’s recent closure, the second-largest bank to fail in U.S. history. The downfall of three banks in a week has fundamentally trembled the market. Still, the Federal Reserve has moved to guarantee depositor funds to prevent what Y Combinator Chief Garry Tan warned could become an extinction-level event for startups.
The underlying macroeconomic factors that led to this situation are still present and known by investors. Some people are concerned that SVB and Signature Bank may only be the beginning of the future.