Signature Bank is the second victim of the ongoing US banking crisis. The New York-based financial institution abruptly stopped working on Sunday – customers will be healed. Regulators said Signature Bank also created a systemic risk and could threaten the US banking system. In other words, the government acts to protect the economy.

“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by the state charter authority,” the U.S. Treasury Department, FDIC and Federal Reserve said in a joint statement. “All savers of this institution will be healed. As with the Silicon Valley Bank resolution, no losses will be borne by taxpayers.”

Signature Bank had 40 branches in New York, California, Connecticut, North Carolina and Nevada. As of December 31, 2022, the bank had $110.4 billion in total assets and total deposits of $82.6 billion.

The financial institution provided banking services to real estate companies, law firms and cryptocurrency companies – about 30% of the bank’s deposits came from the crypto industry.

That crypto angle is why Silicon Valley Bank and Signature Bank became intrinsically linked. As the SVB implosion began to unfold on Friday, the crypto industry became increasingly concerned about the financial stability of their banking partners.

Circle in particular became the subject of headlines when people discovered that it is one of the major clients for SVB due to USDC, a popular stablecoin managed by Circle.

USDC is pegged 1:1 to the US dollar. It is designed to be backed by reserves consisting of a mix of cash and short-term US Treasury bonds. When Circle issues a new USDC, it essentially stores one USD in a bank account as collateral.

Circle kept part of its backing capital with SVB. “$3.3 billion of ~$40 billion in USDC reserves remains with SVB,” the company wrote on Twitter. All will be well for these assets stored at SVB as the Federal Reserve has announced that depositors will have access to all of their money by Monday morning.

But Signature Bank became a collateral casualty as the bank was also a victim of a bank run – many companies tried to withdraw their assets at the same time. That’s because many clients had more than $250,000 and the FDIC insures assets up to $250,000 per client. In addition, Signature Bank’s customer base was not sufficiently diversified, making it impossible to operate normally.

The closure of Signature Bank will also pose technical challenges for crypto companies, as the bank operated Signet, a 24/7 payment system used by crypto companies for entry and exit. The company partnered with Circle, Coinbase, OKX and others.

But at least customers will have access to their funds on Monday. The FDIC has set up a bridge bank that will open its doors on Monday – depositors and borrowers automatically become customers of this bridge bank.