Not long after the collapse of Silicon Valley Bank, Signature Bank, another cryptocurrency-friendly bank, officially shut down and is taken over by the NY Department of Financial Services.
The Federal Reserve explained this decision as protecting the U.S. economy and strengthening public confidence in the banking system.
@federalreserve @USTreasury @FDICgov issue statement on actions to protect the U.S. economy by strengthening public confidence in our banking system, ensuring depositors' savings remain safe: https://t.co/YISeTdFPrO
— Federal Reserve (@federalreserve) March 12, 2023
“The actions that we took today were designed to limit the consequences of the depositor outflows from Silicon Valley and from Signature and to reduce any spillover effects,” said a senior member of the U.S. Treasury. “The firms are not being bailed out. The depositors are being protected. The operations, the ability to keep payrolls working is really important,” the official added.
The Federal Reserve also noted that it is backstopping all depositors of Signature Bank.
“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. 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,” read the statement.
Signature Bank has closed down, per press release from the federal reserve 🤯 pic.twitter.com/sVl8B8G8bQ
— Pledditor (@Pledditor) March 12, 2023
Signature Bank has $88.6 billion in deposits as of December 31 and was thought to be one of the most crypto-friendly banks in the United States.
Silvergate Bank, another famous crypto-friendly bank, said last week that it will close and voluntarily liquidate “in light of recent industry and regulatory developments.”
According to some observers, Signature Bank was able to weather the FTX collapse because its depositories were far more diverse than those of Silvergate Bank, with only 25% of its deposits originating from cryptocurrency.