Signature Bank, a regional-size bank with significant crypto exposure based out of New York City, has been shut down by the state charter authority.
In a joint statement, the Federal Reserve, together with the Federal Deposit Insurance Corporation (FDIC), said the decision was made to protect the U.S. economy and strengthen public confidence in the U.S. banking system.
@federalreserve @USTreasury @FDICgov issue statement on actions to protect the U.S. economy by strengthening public confidence in our banking system, ensuring depositors' savings remain safe: https://t.co/YISeTdFPrO
— Federal Reserve (@federalreserve) March 12, 2023
Comparing the fate of Signature Bank with Silicon Valley Bank, the Fed noted that depositors will be protected and all their deposits be made whole.
“No losses will be borne by the taxpayer.” – Federal Reserve
While FDIC guarantees deposits of only up to $250,000 per client and per bank, federal banking law, however, would allow the FDIC to protect uninsured deposits if a failure to do so would pose systemic risks.
Signature Bank is believed to have had over $114 billion in assets and $88.6 billion in deposits by January 2023 and was known as one of the more crypto-friendly banks in the United States.
Its shut down follows a string of crypto-friendly bank collapses in the United States.
Crypto-focused banks that failed this month:
– Silvergate Bank
– Silicon Valley Bank
– Signature Bank— BitKE (@BitcoinKE) March 13, 2023
Signature Bank’s collapse is seen as further contagion from the Silicon Valley Bank (SVB) collapse last week.
SVB’s implosion represents not only the largest bank failure since Washington Mutual in 2008, but also the second largest failure ever for a U.S. retail bank.
Little known to the general public, SVB specialized in financing startups and had become the 16th largest U.S. bank by assets. At the end of 2022, it had $209 billion in assets and approximately $175.4 billion in deposits.
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