Signature Bank, a crypto-focused bank, has taken a hit from US regulators. Regulators have shut down the crypto-focused bank, citing systemic risk. Here are the details…
Cryptocurrency-focused Signature Bank has been shut down
The collapse of Silicon Valley Bank (SVB) last week already seems to have wreaked havoc in the crypto space. The US Federal Reserve (FED) has shut down Signature Bank, as revealed in a press release on March 12. The company relied on a number of crypto companies as potential clients. Both Signature Bank and Silvergate; They were supporters of crypto-asset liquidity that enabled fast payments between clients, exchanges and hedge funds. Signature ran a payment network called Signet, allowing crypto customers to make real-time payments in dollars whenever they wanted.
Even cryptocoin.com As we reported, major market players like Coinbase integrated the bank’s Signet last October to allow their institutional customers to transfer funds instantly. But regulators have expressed concern about the systemic risks posed by the crypto-focused bank. The FDIC announced that the bank will reimburse all depositors. Regarding the decision in the USA, which was very busy with the closure of Silicon Valley Bank (SVB), officials said that it was an attempt to protect the country’s economy. The editors’ statements included the following statements:
Today, we are taking decisive action to protect the US economy by strengthening public confidence in our banking system. This step will ensure that the US banking system continues to fulfill its vital role of protecting deposits and providing households and businesses with access to credit, promoting strong and sustainable economic growth.
Capital leaves Signature Bank
There is a lot of ongoing debate about the potential impact of the Silicon Valley Bank shutdown, and most notably its impact on tech startups. Regulators seem confident that the measures taken after the 2008 recession are sufficient to avert a major crisis. Signature Bank is one of the largest crypto banks in the country and is behind Silvergate, another major crypto-related bank. Now, according to experts, the shutdown of Signet could severely impact users’ ability to quickly transfer and withdraw funds to exchanges.
The announcement that Signature Bank will be closed came through New York state regulators on Sunday, March 12 (at night time, Turkey time). It also states that all depositors will have access to their money on Monday. In a tweet over the weekend, Binance chairman Changpeng Zhao stated that this appears to be a “coordinated effort to shut down crypto-friendly banks.” Controversies surrounding Silicon Valley Bank and Silvergate have dominated the headlines lately.
The FDIC has created the platform to act as a “bridge” to enable Signature clients to access their funds on Monday morning, March 13. Signature Bank also faced strong deposit withdrawals after the collapse of FTX. Meanwhile, Paxos Global, the issuer of the Binance USD (BUSD) stablecoin, announced that it has private deposit insurance in excess of $250 million and cash balances at Signature Bank. However, the company added, “All of the Paxos stablecoin reserves are fully backed and can be redeemed at any time in US dollars for customers at a 1:1 ratio.”
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