Signature Bank has been forcibly closed by regulators. Here’s what it means for the cryptocurrency industry.
Crypto-friendly Signature Bank was shut down by regulators on Sunday, March 12 marking the third such bank closure to occur this month.
The FDIC announced on March 12 that Signature Bank had been closed by the New York Department of Financial Services (NYDFS). The FDIC said it would act as receiver and move funds to a bridge bank, allowing customers to access insured funds.
The bank’s closure came as a surprise, as managers did not learn of the news until just before the public announcement. Though the firm faced a significant bank run beginning on Friday, that issue had supposedly been solved by Sunday.
Signature’s closure marks the third crypto-adjacent bank failure to occur this month. The competing crypto-friendly Silvergate Bank voluntarily halted operations on March 8. Later, the startup-focused Silicon Valley Bank was closed by regulators on March 13. The latter failure appears to have motivated the bank run on Signature Bank.
Customers of Signature and SVB will be made whole, as various U.S. government agencies including the Treasury have announced an emergency plan. Customers will regain all funds, not just those that they are insured for.
Signature Bank had over $110 billion of assets and $88.6 billion of deposits as of December 2022, according to the FDIC’s original announcement.
Signature Bank was known to serve several companies within the crypto industry including crypto exchanges Coinbase and Paxos and the bankrupt lender Celsius.
Crypto.com and Tether said that they had no exposure to Signature Bank. Stablecoin issuer Circle also said it had no exposure despite earlier plans to rely on its services.
It is unclear whether Signature’s failure was tied to its willingness to work with crypto companies. Signature board member and former U.S. representative Barney Frank suggested that Signature was closed to send an “anti-crypto message.” He also blamed regulatory panic following FTX’s failure in November for the bank’s closure.
However, the NYDFS has stated that the closure was unrelated to cryptocurrency and was instead related to a “crisis of confidence in the bank’s leadership.”
It is unclear how these events will affect the crypto market. Despite various recent crashes, Bitcoin is valued above $24,300 as of March 15, representing a three-week high. Meanwhile, future bank closures are possible but uncertain.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.