Crypto-friendly Signature Bank was shut down on Sunday by the U.S. government, according to a joint statement from regulators on March 12. The New York Department of Financial Services (DFS) has taken possession of Signature, while the Federal Deposit Insurance Corporation (FDIC) has taken receivership of the bank.
U.S. Regulators Shut Down Signature
In a March 12 statement, the Federal Reserve Board said the decision was taken 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 Fed said.
Depositors to Receive Payouts by March 13
The Fed added that all depositors of the bank would have full access to their money starting Monday, March 13 – a similar move to ensure the now-collapsed Silicon Valley Bank’s depositors receive payouts.
“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,” the joint Fed/FDIC/Treasury statement said.
The statements, however, revealed that shareholders and certain unsecured debt holders will not be protected.
Signature Bank had total assets of approximately $110.36 billion and total deposits of approximately $88.59 billion as of December 31, 2022. Last year, the bank announced it was reducing its crypto-tied deposits by as much as $10 billion following the cryptocurrency exchange FTX implosion.
A Coordinated Effort?
The latest move to shutter Signature is another setback for crypto as the industry becomes more isolated from the traditional banking system. Signature has become the third crypto-friendly bank to be shuttered in under a week.
On Wednesday, crypto bank Silvergate said it was winding down operations and voluntarily liquidating its assets following recent industry and regulatory development. Silicon Valley Bank, another key bank to the crypto sector, was recently closed by U.S. regulators after the bank had a run on deposits.
These banks were at one time listed among the most U.S. crypto-friendly banks. The banks provided payment networks that enabled crypto exchanges and investors to move large amounts of U.S. dollars.
Changpeng Zhao (CZ), CEO of Binance, recently spoke about his speculation on the recent events, saying that “it almost feels like there is a coordinated effort to shut down crypto friendly banks.”
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