Signature Bank was among the top banking institutions known to serve crypto entities. Dramatically, it met a similar fate as its counterpart Silvergate Bank Silicon Valley Bank. Both the crypto-friendly banks fell short of users’ trust for different reasons—eventually leading to a fall similar to a house of cards. Though cryptocurrencies were not the primary reasons behind the havoc, the instance is likely to change the course of the industry.
Regulators up for Rescue of Signature Bank Depositors
Major US regulators—Department of the Treasury, Board of Governors of the Federal Reserve System, and Federal Deposit Insurance Corporation (FDIC)—announced the closing of Signature Bank. The joint statement said, “We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority.”
The Signature Bank fiasco caused two other prominent financial institutions which fell just days earlier. One being– Silvergate Bank, as mentioned above, while the other was tech and startup-focused Silicon Valley Bank (SVB).
As reported, the regulators assured that depositors would have access to the deposits with the bank. It is similar to the action that came in the wake of the fall of Silicon Valley Bank, where depositors were said to get their money back.
Crypto Market Rebounds After Regulatory Actions
The broader crypto market, which headwinds after two major crypto banking service providers’ abrupt collapse, showing recovery following the government’s interference in the matter.
Major cryptocurrencies Bitcoin (BTC) and Ethereum (ETH) have jumped over 7% within the last 24 hours and are trading at 22,033 USD and 1,580 USD, respectively, at the time of writing. The global cryptocurrency market’s high market capitalization confirms the recent rally after it rose to 1.01 trillion USD.
According to Reuters, Signature Bank was controlled by Federal Deposit Insurance Corporations (FDIC). By the end of last year, the bank had overall assets worth 110.36 billion USD and 88.59 billion USD in deposits.
Founded in 2001, the commercial bank has private client offices in New York, Connecticut, Nevada, North Carolina, and California. The firm’s operations extend across nine national business lines, from real estate to digital asset banking.
Signature started its offering to crypto firms in 2018, listing the firm among the few within the space. The bank’s deposit related to digital asset clients is reportedly 16.52 billion USD. By September 2022, cryptocurrency deposits were nearly one-fourth of their overall deposits. However, it announced in December 2022, to bring down its crypto deposits to 8 billion USD.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing
Source: https://www.thecoinrepublic.com/2023/03/13/signature-fall-of-crypto-bank-in-line-with-svb-and-silvergate/