Signature Bank, a bank based in New York that had been friendly to the crypto industry, has been closed and taken over by the New York Department of Financial Services (NYDFS).

In a statement released on February 12th, Superintendent Adrienne A. Harris announced that Signature Bank had been taken over by the New York Department of Financial Services (NYDFS) under Section 606 of New York Banking Law, and the insurance process will be managed by the U.S. Federal Deposit Insurance Corporation.

In a statement on March 12, the Federal Reserve stated that the decision to shut down Signature Bank was taken in collaboration with the Federal Deposit Insurance Corporation (FDIC) of the United States. The move was aimed at safeguarding the American economy and reinforcing public trust in the banking system.

According to reports, a high-ranking official from the U.S. Treasury stated that the recent measures taken by the NYDFS and Federal Reserve aimed to curtail depositor outflows and prevent further bank runs. The official explained that the objective was to minimize the impact of the outflows from Signature Bank and Silicon Valley Bank and limit any potential adverse effects.

According to a Treasury official, the goal of the recent actions taken by the NYDFS and Federal Reserve is to protect depositors and prevent bank runs, not to bail out the affected firms. The official emphasized the importance of maintaining operations and ensuring payrolls are met. Additionally, the Federal Reserve stated that it will provide support to all depositors of Signature Bank and that no taxpayer losses will be incurred, similar to the resolution of Silicon Valley Bank.

The statement further mentioned that:

This measure would guarantee the continued functioning of the U.S. banking system, which plays a crucial role in safeguarding deposits and granting credit to households and businesses, thereby promoting robust and sustainable economic development."

Additionally, the senior management has been removed and shareholders, as well as certain unsecured debtholders, will not receive protection.

As of December 31, Signature Bank had deposits totaling $88.6 billion and was considered one of the more friendly banks towards cryptocurrencies in the United States.

Silvergate Bank, another prominent bank known for being friendly towards cryptocurrencies, announced last week that it would shut down and begin the process of voluntary liquidation in light of recent industry and regulatory developments.

Signature Bank was reportedly able to withstand the impact of FTX's collapse, as per some experts, due to its more diverse depositories compared to Silvergate Bank. Reportedly, only 25% of its deposits were from crypto, unlike Silvergate Bank.


Mar 13, 2023
Crypto News

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