New York banking authorities shut down crypto-friendly Signature Bank

Key takeaways

• Crypto-friendly bank Signature Bank has been shut down by New York Banking authorities. 

• The Federal Reserve said the decision was made to protect the US economy and strengthen public confidence in the banking system.

• Signature Bank’s closure comes days after the collapse of the Silvergate Bank and the Silicon Valley Bank.

Another crypto-friendly bank has been closed down

The Federal Reserve announced on Sunday that the New York-based Signature Bank had been closed down by its state charter authority.

This latest cryptocurrency news means that Signature Bank is the third major bank to shut down operations within the space of a week. 

In a statement issued on March 12, the Federal Reserve said the decision to shut down Signature Bank was made with the United States Federal Deposit Insurance Corporation (FDIC) to protect the U.S. economy and strengthen public confidence in the banking system.

The United States apex bank added that they would backstop all depositors of Signature Bank. The Federal Reserve wrote;

“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. 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.

Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”

The Federal Reserve pointed out that the move is designed to ensure that the United States 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. 

The crypto market remains resilient 

The Fed said shareholders and certain unsecured debtholders would not be protected. 

Signature Bank’s shutdown makes it the third major bank to close operations within the space of a week. On March 9th, crypto-friendly bank Silvergate shut down its operations and voluntarily liquidated its assets. The bank said it made the decision in light of recent industry and regulatory developments.

Silicon Valley Bank, a major bank for some crypto and tech startups, also collapsed last week. However, the crypto market has remained resilient.

Bitcoin rose by nearly 10% on Sunday to trade above $22k after dropping below the $19k level last week. The total cryptocurrency market cap also stands above the $1 trillion level despite the ongoing FUD in the market.