Signature Bank Folds Under Pressure After SVB’s Demise

The recent closure of Signature Bank in New York has sent shockwaves through the crypto industry, with authorities citing concerns over the spread of the banking meltdown as the reason for the shutdown.

The bank, which had a market value of $4.4 billion on Friday, had been a proponent of digital asset liquidity, offering clients swift payments between exchanges, hedge funds, and other businesses.

However, the closure of Silicon Valley Bank earlier in the week had caused many of Signature’s anxious business clients to inquire about the security of their deposits.

With the majority of depositors having more than $250,000 in their accounts, concerns were raised about the safety of their funds. The U.S. Federal Deposit Insurance Corporation, which seized SVB, only covers deposits up to $250,000 maximum.

In a joint press release issued by the US Treasury Department and other bank authorities, it was stated that all depositors of Signature Bank and Silicon Valley Bank would be refunded in full, with “no losses borne by the taxpayer.”

Despite this, the closure of Signature Bank, which had $110 billion in assets and nearly $89 billion in deposits at the end of 2022, has dealt a severe blow to the crypto industry.

Signature operated a payment network called Signet, which enabled its crypto clients to make real-time dollar payments round the clock.

Major companies like Coinbase had joined Signet in October to enable instantaneous fund transfers for their institutional clients. With Signet now gone, users’ capacity to rapidly move funds into and out of exchanges would be severely impacted, which would have serious consequences for the crypto market’s liquidity.