Signature Bank became the latest institution to fail late Sunday, following a string of bank collapses. On Sunday, state officials shut down a commercial bank in New York. This is the third banking collapse in less than a week, following Silvergate Bank’s voluntary liquidation on Wednesday and Silicon Valley Bank’s closure on Friday.
According to a joint statement issued by the Federal Reserve, the United States Treasury, and the Federal Deposit Insurance Corporation, Signature Bank was closed down by US regulators (FDIC). Nevertheless, the regulatory triumvirate stated that the bank would reopen on Monday and that all depositors in the New York-based institution would be compensated. According to a joint statement, the bank has been placed under FDIC management.
Some cryptocurrency firms rushed to Twitter to proclaim whether or not they were impacted by the government shutdown of the crypto-friendly company. But the statement released claimed that the decision to close the bank was taken to strengthen the country’s economy.
“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. This step will ensure that the U.S. banking system continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.”
Paxos, a stablecoin issuer and cryptocurrency trading firm, stated that as of now, it has $250 million at Signature Bank. The firm also stated that it secures individual deposits in excess of the amount Paxos now has at Signature Bank. Paxos anticipates the funds to be released Monday once Signature Bank reopens, citing the government’s “extraordinary measures” to safeguard the bank’s clients.
After the fall of Silicon Valley Bank last Friday, Paxos took to Twitter to issue a statement claiming that it had no involvement with the California-based bank, which was the second-largest financial institution failure in US history. In addition, they stated that its stablecoins had no exposure to the collapse of the bank.
However, Coinbase, the top cryptocurrency exchange in the United States, reported a corporate cash reserve of around $240 million in Signature Bank as of Friday. The exchange also stated that it intends to completely recover the cash.
Signature Bank’s recent move to reduce its exposure to the cryptocurrency sector is likely to have led to its downfall. After the recent bank collapses, regulators are expected to tighten their oversight of the banking industry, particularly with respect to exposure to riskier businesses such as cryptocurrency. Despite recent bank collapses, analysts say that the events are isolated and do not comment on the larger picture. The claim is that the banking sector’s overall health is good.
