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After Silicon Valley Bank, Signature Bank shuts down amid banking turmoil in US

Signature Bank had $88.59 billion in deposits as of December 31, 2022 and the New York Department of Financial Services has taken possession of the bank.

Hritika Mitra Edited By: Hritika Mitra @MitraHritika Washington Published on: March 13, 2023 13:40 IST
Signature Bank shuts down amid banking turmoil in US
Image Source : FILE Signature Bank shuts down amid banking turmoil in US

After shutting down two banks in last week, New York regulators shut down another significant one in the crypto industry, the Signature Bank. US Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome Powell and Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg said in a joint statement that all depositors of Signature Bank 'will be made whole'.

Signature Bank had $88.59 billion in deposits as of December 31, 2022 and the New York Department of Financial Services has taken possession of the bank, reports The Verge. Leading crypto exchange Coinbase had $240 million in cash at Signature Bank.

"As of close of business Friday March 10, Coinbase had an approximately $240m balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds," the crypto exchange said in a tweet. Circle, the firm behind USDC stablecoin, is also affected by the Signature Bank closing.

Its CEO Jeremy Allaire said in a tweet that with the closure of Signature Bank, "we will not be able to process minting and redemption through SigNet, we will be relying on settlements through BNY Mellon. Additionally, we will be bringing on a new transaction banking partner with automated minting and redemption potentially as soon as tomorrow. We are committed to building robust and automated USDC settlement and reserve operations."

Crypto firm Circle also have $3.3 billion stuck at Silicon Valley Bank (SVB), the non-crypto bank that collapsed last week, triggering panic in the tech industry. Bankrupt crypto lender BlockFi also has $227 million in funds stuck at SVB. Top cryptocurrency exchanges Binance and Coinbase have also temporarily suspended USDC stablecoin conversions after the collapse of SVB.

Another US traditional bank Silvergate Capital last week announced it was "wind down operations and voluntarily liquidating" its bank division. The fall of cryptocurrency exchange FTX and an overall meltdown in the global crypto market is the reason behind the collapse of Silvergate Capital -- a lender of choice to startups and tech firms.

The Federal Reserve Board has now announced it will make available additional funding to eligible depository institutions to help assure banks have the ability to meet the needs of all their depositors. The regulators have said that depositors of SVB will have access to their uninsured deposits on Monday (US time) and no losses would be paid for by taxes.

ALSO READ | Silicon Valley Bank's fall causes shockwaves across world; will it impact Indian startup ecosystem?

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