Feds Close Crypto-Focused Signature Bank Citing Systemic Risks
Signature Bank is the next bank to be closed by Federal regulators. Regulators closed the crypto-focused bank, citing systemic risk.
The Federal Reserve has closed Signature Bank, as revealed in a press release issued on March 12. The regulators noted that they were concerned about the systemic risks posed by the crypto-focused bank. The FDIC will make all depositors of the bank whole.
The closure marks yet another bank in the United States to go down, with the closure of Silicon Valley Bank sparking fear in many countries. Regarding the decision, the authorities said that it was a bid to protect the country’s economy,
“Today we are taking decisive actions to protect the U.S. economy by strengthening public confidence in our banking system. 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.”
There are many ongoing discussions about the potential impact of the closure of Silicon Valley Bank, not the least of which is its effects on the tech startup scene. The regulators appear confident that the measures taken following the 2008 recession are enough to prevent a large-scale crisis.
Signature Bank is one of the biggest crypto banks in the country, behind another major crypto-associated bank that is in turmoil – Silvergate. The markets have responded in kind, seeing red before clawing back some growth over the year.
Signature Bank, Silicon Valley Bank, and Silvergate Roil Markets
The discussions surrounding Silicon Valley Bank and Silvergate have dominated headlines recently. Analysts have paid attention to what U.S. Treasury Secretary Janet Yellen has said, with the latter confirming that Silicon Valley Bank wouldn’t receive a bailout. The focus is on protecting depositors.
Silvergate has also decided to shut down, voluntarily liquidating its assets to fully repay all deposits. It is also discontinuing its Silvergate Exchange Network (SEN), a platform that offers secure, institutional-grade access to capital through U.S. dollar loans collateralized by bitcoin.
Could Crypto Be a Strong Focus Now?
Former American politician Barney Frank pinned much of the blame on cryptocurrencies, which he believes have a “potentially destabilizing” effect on the financial system. Some other United States lawmakers have similar opinions on cryptocurrencies, though there are some who believe in the asset’s class potential.
Meanwhile, researchers at JPMorgan Chase believe that the collapse of Silvergate will test the crypto industry. Offering some relief to investors, Binance CEO Changpeng Zhao has confirmed that the popular exchange has no exposure to Silicon Valley Bank.
Disclaimer
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.
