Government Officials Shut Down Crypto-Focused Signature Bank Over Systemic Risk

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A man entering Signature Bank in New York City on March 12, 2023.

Reuters

U.S. regulators have taken the decision to close Signature Bank, a major lender in the crypto sector, in order to protect the system from the ongoing banking crisis.

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” Treasury, Federal Reserve, and FDIC said in a joint statement Sunday evening.

The banking regulators ensured that customers of Signature Bank will have full access to their deposits, similar to the measure taken to ensure that depositors of the failed Silicon Valley Bank will be reimbursed.

“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,” the regulators said.

The regulators closed Silicon Valley Bank last Friday and confiscated its deposits, the most significant U.S. banking failure since the 2008 financial crisis — and the second-largest ever. This move came shortly after the tech-focused institution reported that it was having difficulties, sparking an outflow from the bank’s deposits.

Signature is one of the main banks for the cryptocurrency industry, the most important one apart from Silvergate, which declared its impending liquidation last week. It had a market value of $4.4 billion as of Friday after a 40% decline this year, according to FactSet.

As of Dec. 31, Signature had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing.

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