Signature Bank’s seizure creates obstacles for the crypto industry while promoting ‘unbanked’ innovations
Crypto market players voiced their displeasure on Monday after the weekend seizure of Signature Bank, a crypto-friendly regional bank in New York, just days after crypto-focused bank Silvergate Capital shut down operations and US regulators shut down Silicon Valley Bank.
“The Signature Bank closure serves as a one-two punch as concerns mount about the vulnerability of any bank exposed to the crypto industry,” Francesco Melpignano, CEO of Kadena Eco, told CoinTech. “With only a small number of publicly traded banks associated with the crypto space, many investors are rushing to place bets against them.”
Known as one of the largest cryptocurrency lenders, Signature was the second victim of the ongoing US banking crisis, but regulators said its clients will be healed, meaning the government is stepping in to protect the economy from further damage.
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. About 30% of the bank’s deposits came from the crypto industry.
The crypto industry should closely monitor deposit flight from regional banks in the coming week, said Tegan Kline, chief business officer and co-founder of Edge & Node. “If it gets worse, the regulators will have a huge problem. Many regional banks may have to close.”