Regulators Close Crypto-Focused Signature Bank, Citing Systemic Risk
The U.S. has shut down Signature Bank in an attempt to prevent the further spread of the banking crisis.
On Sunday, U.S. regulators shut down New York's New York-based businesses
In an effort to stop the banking crisis spreading, a large lender in crypto has been identified as.
"We also announce a similar systemic risks exception for Signature Bank New York, New York," Treasury, Federal Reserve and FDIC stated in a joint statement on Sunday evening.
Signature Bank depositors will have full access, according to the banking regulators. This is a similar move to protect depositors at the bank that was closed.
Silicon Valley Bank
They will receive their money back.
"All depositors at this institution will be compensated." The regulators stated that no taxpayer losses would be caused by Silicon Valley Bank's resolution.
Silicon Valley Bank seized its deposits on Friday in the worst U.S. bank failure since 2008's financial crisis. It was also the second-largest U.S. bank failure. These dramatic actions come days after the tech-focused bank reported it was in trouble, prompting a run on the bank’s deposits.
Signature, the largest bank in the cryptocurrency industry and the second-largest, is the home of the cryptocurrency industry. It was also the most liquidated after Silvergate announced last week its imminent liquidation. According to FactSet, it had a market capitalization of $4.4 billion on Friday following a 40% sell-off in the year.
Signature had $110.4 Billion in total assets as of December 31, and $88.6 Billion in total deposits, according the Signature website.
A securities filing
The Fed and Treasury established an emergency program to protect deposits at Signature Bank and Silicon Valley Bank, using the Fed's emergency lending authority. This was done in order to stop further damage and avoid a worse crisis.
Depositors will be covered by the FDIC's deposit insurance funds. Many of them were not insured due to the $250,000 deposit guarantee.
A senior Treasury official stated that depositors will still have access to their money but that equity and bondholders at both banks will be wiped out.