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Regulators Close Crypto-Focused Signature Bank

In the US, regulators have decided to close the New York-based Signature Bank, which is one of the largest lenders in the crypto industry.

Regulators Close Crypto-Focused Signature Bank

Source: Pixabay.com

This decision was made as part of efforts to prevent a large-scale crisis in the US banking system. The joint statement of the Treasury, the Federal Reserve System, and the FDIC, which was published on Sunday evening, refers to the exclusion of a financial institution from the risk system.

Regulators also reported that depositors of the bank, whose closure was announced, will not lose access to their deposits. Earlier, a similar decision was made regarding Silicon Valley Bank, which went bankrupt at the end of last week. This is necessary so that depositors have the opportunity to return their money. Regulators assured that in this case, taxpayers will not face the problem of losses.

The Silicon Valley Bank was closed by the decision of regulators last Friday, March 10. The regulatory authorities also seized the deposits of the financial institution. This bankruptcy is the largest banking collapse in the United States since the 2008 financial crisis and the second largest in the history of American banking. The decision to close the financial institution was made a few days after it became known that Silicon Valley Bank reported technical problems that caused the reduction of deposits.

Signature is the largest bank in the cryptocurrency industry, after Silvergate. According to FactSet, on Friday, the market value of the financial institution was $4.4 billion after a 40% sell-off in early 2023. As of December 31, 2022, the total assets of the bank were equal to $ 110.4 billion, and the total amount of deposits was $88.6 billion.

In order to reduce the financial blow from the bankruptcies of the largest banks and reduce the risk of a large-scale systemic crisis, the Fed and Treasury have developed an emergency program to support deposits. The FDIC will be used to cover the losses of depositors, many of whom do not have insurance due to a previously provided deposit guarantee of $250,000.

As we have reported earlier, US Fed Establishes $25B Funding to Support Banks Amid Collapse.

 

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.