Regulators Announce Closure of NY’s Signature Bank, Which Held Significant Crypto Stakes

U.S. regulators announced Sunday that they would close Signature Bank. This was the second U.S. Bank to fail in days and the third largest bank failure in American history.

A December 2022 report Securities filing, N.Y.-based Signature Bank held more than $110 billion in assets and some of the biggest stakes among banks in the nation in the cryptocurrency industry.

To reduce risk, the bank stated that its $17.79 Billion in crypto-related deposits would be reduced by $8 billion. “a challenging cryptocurrency environment.”

The bank had client offices in New York, Connecticut, California, Nevada, and North Carolina, and had eight business lines beyond digital asset banking, including commercial real estate.

New York Governor Kathy Hochul, New York Governor, stated that Sunday’s closure decision, taken along with the state chartering agency and federal partners over the weekend was to “stabilize the banking sector and protect the hard-earned money of New Yorkers whose livelihoods depend on impacted companies.”

“I’m grateful that the Federal regulators have taken steps to do just that, and I hope that these actions will provide increased confidence in the stability of our banking system. Many depositors at these banks are small businesses, including those driving the innovation economy, and their success is key to New York’s robust economy.”

SVB Fail

Following the failure of the tech-focused Silicon Valley Bank (SVB) in Santa Clara, California, on March 10, stock prices plunged at other banks that cater to technology companies, including First Republic Bank and PacWest Bank. SVB’s closure was the second-largest bank failure in U.S. history at $209 billion, following Washington Mutual’s collapse in the 2008 crisis.

Regulators have stepped in to guarantee customer deposits, both insured and uninsured, in SVB and Signature Bank, seeking to reassure the public and prevent wider bank runs in tech-exposed institutions.

In a joint statement with the U.S. Treasury Department and Federal Reserve, the Fed’s emergency lending authority—the Federal Deposit Insurance Corporation (FDIC)—said that it is “announcing a similar systemic risk exception for Signature Bank” As SVB was granted.

“All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer,” Please read the following: Joint statement The federal regulators.

“Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law,” The statement went on.

“These actions will reduce stress across the financial system, support financial stability and minimize any impact on businesses, households, taxpayers, and the broader economy,” The Fed stated.

This report was contributed by The Associated Press.