New York-based Signature Bank, another crypto-friendly bank, has officially closed and been taken over by the New York Department of Financial Services (NYDFS).
Superintendent Adrienne A. Harris made the announcement in a March 12 statement. New York regulators took over Signature Bank under Section 606 of the New York Banking Act and appointed the FDIC to handle the insurance process.
The Fed explained in a March 12 statement that the decision to close the bank was made jointly with the Federal Deposit Insurance Corporation (FDIC) to protect the U.S. economy and increase public confidence in the banking system. Today’s actions by the NYDFS and the Fed are aimed at limiting deposit outflows and preventing additional bank runs, a senior member of the U.S. Treasury reportedly told the press: "The actions we are taking today are aimed at limiting the fallout from depositor outflows from Silicon Valley and Signature and reducing any spillover effects."
"The companies are not bailed out. Depositors are protected," the official said. "The ability to operate, to sustain employment is really important," the Treasury official added.
The Fed also noted that it is supporting all depositors at the Signature Bank. "All depositors at the institution will be made whole. As with the SVB resolution, there will be no taxpayer losses."
"This step will ensure that the U.S. banking system continues to perform its vital role in protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth," the statement added.
Shareholders and certain unsecured debt holders will not be protected, according to the statement. Senior executives have also been removed. With $88.6 billion in deposits as of Dec. 31, Signature Bank is considered by some to be one of the more crypto-friendly banks in the United States. Another well-known crypto-friendly bank, Silvergate Bank, announced last week that it would be closing and going into voluntary liquidation “in light of recent industry and regulatory developments.”
According to some analysts, Signature Bank was able to weather the storm from the FTX crash because its deposits are more diversified than banks like Silvergate Bank, with only 25 percent of deposits in cryptocurrencies.
