Signature Bank closed as FDIC, Treasury and Fed cite ‘systemic risk’
It is the third major bank to fall in the space of a week, and investors are spooked. The joint announcement that depositors will be protected beyond the $250,000 guaranteed by the FDIC appears to be intended to reassure bank customers that their money will not be frozen. Signature had $88.59 billion in deposits as of December 31, 2022. The New York Department of Financial Services took ownership of the bank.
Signature was one of two banks widely used in cryptocurrency. Like Silvergate, which collapsed on March 8, Signature had a network that allowed crypto companies to move dollars in real time. With the demise of the two crypto banks, it may be more difficult to recover dollars.
Additionally, the Fed announcement indicates that Silicon Valley Bank depositors will also be healed. This is good news for crypto, as stablecoin provider Circle kept $3.3 billion of its reserves there. Circle operates USDC, a token that is still believed to be worth $1 – and a significant part of crypto payments.
Update March 12 at 8:02 p.m.: Adds Coinbase statement, Circle statement.