Amid the harsh market conditions in the crypto space, Signature Bank (SBNY), New York based full service commercial bank, signaled that it is lowering its crypto linked deposits by around $8 Billion to $10 Billion. It can be seen that the commercial bank was one of the biggest crypto supporters in New York city.
Official Statement by Signature Bank CEO
During an investor conference in New York, hosted by Goldman Sachs Group Inc. on December 6, 2022 the CEO of Signature Bank, Joe DePaolo, talked about their new move. He said “We are not just a crypto bank and we want that to come across loud and clear.”
Mr. DePaolo stated that “We recognize that in certain cases, especially as we look at stablecoins and other parties in that space, that there’s a better way for us to utilize our capital.”
Earnings from The Crypto World
An estimated figure of around 23.5% from a quarter of Signature Bank’s $103 Billion came up from the crypto world as of September 2022.
By citing the current market condition, Signature Bank’s CEO finally decided to reduce the amount to under 15%.
On November 15, 2022 after the meltdown of FTX, Signature bank said that it has a deposit relationship with the crypto exchange. FTX, which was one of the clients of Signature Bank, had deposits with the bank that were less than 0.1% of the bank’s overall deposits. Even after this fact, the share price of Signature dropped by 20% in November. That may somewhere let the bank to re-think about their crypto interest.
Signature Bank’s CEO specifically mentioned that as a stablecoins as a business perspective, the bank wants to pull-back their hands. The unexpected move by the bank may be a bad decision for stablecoin issuers such as Circle. As in April 2021, the stablecoin issuer joined hands with Signature Bank as its leading financial institution for USDC reserve deposits.
On the other hand, on December 6th, 2022, Signature Bank’s rival, Silvergate Bank was asked by the U.S. Senators to direct their role in providing transfers between FTX and its sister firm, Alameda Research. Over this, the Signature bank rival responded FTX made up around 10% of its $11.9 Billion in deposits from digital asset clients thus its stock price broke down after FTX collapse.
In a month, the SBNY is down from 148.38 USD to 118.86 USD till December 6th, 2022.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2022/12/08/signature-bank-is-reducing-crypto-linked-deposits-by-10-billion/