After Silvergate Bank's voluntary liquidation on Wednesday and Silicon Valley Bank's shutdown on Friday, this is the third bank collapse in less than a week. This bank has been closed by the Federal Reserve, which announced that the Federal Depository Insurance Corporation (FDIC) has taken over its operations.
In a statement, New York Department of Financial Services Superintendent Adrianne Harris said the move was taken "to protect depositors." She added that the action was in line with DFS's policy to closely monitor market trends and collaborate with other state and federal regulators to protect consumers and ensure the health of regulated entities while preserving the stability of the global financial system.
Signature Bank had a number of crypto clients and announced last year its intention to reduce its exposure to the crypto sector. However, it is unclear whether this decision had any bearing on the bank's closure. A joint statement from the Federal Reserve, FDIC, and U.S. Treasury Department reassured depositors that they would be made whole. The statement also stated that no losses would be borne by the taxpayer.
According to Harris' statement, Signature Bank was a New York state-chartered commercial bank that was FDIC-insured, with total assets of approximately $110.36 billion and total deposits of approximately $88.59 billion as of December 31, 2022. The move is a reminder that even institutions with considerable assets and long-standing reputations can be vulnerable to economic volatility.
Crypto community members are concerned about the risks associated with the crypto sector in light of the closure of Signature Bank. Crypto is still an emerging market and is subject to fluctuations in value and regulatory uncertainties. As the market matures, it is expected that there will be more clarity and stability, but in the meantime, investors and institutions should remain vigilant and cautious.
Signature Bank's closure illustrates the need for financial institutions to have adequate resources to cope with market volatility and regulatory change. Moreover, it emphasizes the importance of regulators' efforts to protect consumers and ensure the stability of the financial system. In spite of the fact that the crypto sector presents a number of exciting opportunities, it is still a nascent market that requires careful management and attention in order to ensure its long-term viability.