New York’s Signature Bank Shut Down by State Regulators
New York-based Signature Bank, known for its willingness to work with cryptocurrency companies, has been closed down by state regulators and taken over by the New York Department of Financial Services (NYDFS).
The decision was made in collaboration with the United States Federal Deposit Insurance Corporation (FDIC) to protect the U.S. economy and strengthen public confidence in the banking system.
The news was announced by Superintendent Adrienne A. Harris in a Mar. 12 statement, in which she explained that the NYDFS had taken possession of Signature Bank under Section 606 of New York Banking Law. The FDIC has been appointed to handle the insurance process.
A senior member of the U.S. Treasury reportedly told the press that the NYDFS and Federal Reserve’s actions were designed to limit depositor outflows and prevent additional bank runs. The official clarified that the firms are not being bailed out and that depositors are protected. The Treasury official added that the operations and ability to keep payrolls working are critical.
The Federal Reserve has stated that it will backstop 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,” the statement said.
@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
This step is intended to ensure that the U.S. banking system continues to perform its vital role of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
However, according to the statement, shareholders and certain unsecured debt holders will not be protected. The senior management has also been removed.
Signature Bank had $88.6 billion in deposits as of Dec. 31. It was understood by some as one of the more crypto-friendly banks in the U.S. Its ability to work with cryptocurrency companies has been appreciated by many in the industry. Its closure will be felt by those who rely on it for their banking needs.
According to some analysts, Signature Bank was able to weather the storm caused by the FTX collapse because its depositories were much more diversified than the likes of Silvergate Bank, with only 25% of its deposits coming from crypto.
READ MORE: Here is the Worst Case Scenario for Crypto, According to Benjamin Cowen
The closure of Signature Bank comes just a week after Silvergate Bank announced that it would shut down and voluntarily liquidate “in light of recent industry and regulatory developments.”
As more and more banks face increased scrutiny from regulators, it remains to be seen how the industry will evolve and what role crypto-friendly banks will play.
Andrey Kunev
Reporter at CoinsPress
Andrey Kunev is a knowledgeable cryptocurrency content creator passionate about the crypto market. With extensive experience in market analysis and investment reporting, Andrey is a valuable asset to the CoinsPress team. As a frequent contributor, he offers insightful and comprehensive coverage of market trends, price fluctuations, and new advancements in cryptocurrency. Whether you're a seasoned investor or just getting started, Andrey's clear and concise writing offers a comprehensive look at the current state of the crypto market and its prospects. Stay up-to-date with CoinsPress's expert analysis and commentary on all things cryptocurrency.
