The recent closure of Signature Bank, which provided services to several crypto companies, represents another significant setback. The detachment of the industry from traditional banking systems appears to be increasing and poses a challenge for future growth.
The Signature Bank was closed by state regulators in New York on Sunday, as confirmed by the Department of Financial Services. It was further reported that depositors can still access their funds. This development follows the recent collapse of Silvergate Capital Corp. and Silicon Valley Bank (SVB), both of which were among the most crypto-friendly financial institutions in the United States. There are not many banking institutions left for US crypto companies.
Signature Bank: a major infrastructure provider
The Signature Bank operated Signet, a payment network that allowed commercial cryptocurrency clients to make dollar payments in real time 24 hours a day and every day of the week. After the shutdown of Silvergate's SEN network in early March, Signet became the only practical option for many crypto institutions that wanted to send timely payments to exchanges and sellers or fulfill payroll requests.
If Signet fails, customers could have difficulty quickly entering and exiting the exchange, which would have a dramatic impact on the liquidity of the cryptocurrency market. Already, market depth for bitcoin-to-dollar and bitcoin-to-tether transactions on some US exchanges has dropped between 35% and 45% since early March, according to crypto research firm Kaiko.
Ein geplanter Angriff der Krypto-Branche?
The regulatory closure of Signature Bank was announced in a joint statement by the US Treasury Department, the Federal Reserve, and the Federal Deposit Insurance Corporation (FDIC) regarding the situation surrounding the insolvent Silicon Valley Bank (SVB). However, no detailed explanation can be found as to why similar measures were taken for the crypto-friendly institution. The authorities merely stated that the decisions were made to protect depositors.
"Superintendent Adrienne A. Harris announced today that the New York Department of Financial Services (DFS) has taken possession of Signature Bank, pursuant to Section 606 of New York Banking Law, in order to protect depositors. DFS appointed the Federal Deposit Insurance Corporation (FDIC) as receiver of the bank. Signature Bank is a New York state-chartered commercial bank and is FDIC-insured, with total assets of approximately $110.36 billion and total deposits of approximately $88.59 billion as of December 31, 2022." - Statement DFS
Following the collapse of the FTX exchange, Signature had begun to withdraw from digital assets, but as of March 8, still held $16.5 billion in crypto-related customer deposits. Dozens of customers, including leading US crypto exchanges and stablecoin issuers, must now look for alternatives.
When I warned about chokepoint a month ago, I didn’t think in a million years that they would go 100x further and actually take down the top 3 crypto-facing banks. It’s breathtaking. And this wasn’t an accident. It was a demolition https://t.co/HacUQfUWWF
— nic carter 🌠 (@nic__carter) March 13, 2023