Another crypto-friendly Signature bank forced to closure by NY authorities
Every day brings a new shocking revelation in the crypto world. Meanwhile, the crypto community is still battling with the collapse of the Silvegate bank and then Silicon Valley Bank. Now another crypto-friendly Signature bank is being forced to closure by the New York NY authorities.
The signature bank was the ultimate alternative for most of the crypto community ever since the demise of Silvergate bank. According to a statement issued by the Board of Governors of the Federal Reserve System, the Signature Bank has been closed. However, they ensured that customers’ deposits in the bank will get a full refund.
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. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”statement of FRS
Various Huge crypto-firm have been benefitting from the services of the Signature Bank. Like Circle the USDC issuer, Binance, LedgerX, Coinbase, and even the now-defunct FTX. Circle was using the SIgnature bank to carry its USDC transactions and account settlements. However, Customer Bank is now the only option for crypto customers. As it even already holds $1 Billion of its cash reserves.
Signature Bank’s closure may have a significant impact on one of the largest crypto exchanges, Binance. As it was also associated with it. However, the bank had imposed a minimum transaction amount of $100,000 for Binance users in USD. The reason for this decision was to minimize the bank’s exposure to the volatile crypto market. Moreover, a volatile crypto market can have lots of negative impacts on the bank like risks due to regulatory uncertainties around crypto or losses in it invested and more.
The crypto-friendly Signature bank saw a significant decline in its market value on Friday, with its shares dropping by almost 32%. The bank’s problems began when Silvergate Bank, which was also widely known as a crypto bank, announced its plan to cease operations. For Signature Bank the situation got even worse after the tech-focused Silicon Valley Bank failed.
Closure of crypto-friendly Signature Bank but good news for SVB
With the closure of the Signature bank, The Silicon Valley Bank will find some relief. As the Federal Bank Governors have found a resolution for SVB. Janet L. Yellen stated that she has “approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank.” She further added
“actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”
the closure of Signature Bank has affected a lot of depositors. According to the resolution tall the depositor will get access to their funds from Monday 13 March. It further clarified that taxpayers will not weigh the burden of any loss thus made. This could potentially mean that Circle and Ripple, who have funds stuck in the bank, may be able to recover their funds.