Breaking: Signature Bank closed by New York banking authorities

New York-based Signature Bank, another crypto-friendly bank, has been closed down by its state charter authority.

The Federal Reserve explained in a March 12 statement that the decision 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.

@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 Federal Reserve 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,” the statement added.

Shareholders and certain unsecured debtholders will not be protected though, according to the statement. The senior management has also been removed.

Signature Bank has closed down, per press release from the federal reserve pic.twitter.com/sVl8B8G8bQ

— Pledditor (@Pledditor) March 12, 2023

Signature Bank had $88.6 billion in deposits as of Dec. 31 and was understood by some as one of the more crypto-friendly banks in the U.S.

The other prominent crypto-friendly bank, Silvergate Bank announced last week that it would shut down and voluntarily liquidate “in light of recent industry and regulatory developments.”

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.