Signature Bank, one of the two major banks for the crypto business, has also been closed down by New York regulators, making it the third US bank failure in a week.
All Signature Bank depositors “shall be paid whole,” declared US Treasury Secretary Janet Yellen, Federal Reserve Board Chair Jerome Powell, and Federal Deposit Insurance Corporation (FDIC) Chairman Martin Gruenberg in a joint statement.
Signature Bank had $88.59 billion in deposits as of December 31, 2022, and the bank has been taken over by the New York Department of Financial Services, according to The Verge.
Coinbase, the leading cryptocurrency exchange, had $240 million in cash at Signature Bank.
“As of close of business Friday March 10, Coinbase had an approximately $240m balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds,” the crypto exchange said in a tweet.
Circle, the company behind the USDC stablecoin, is also impacted by the closure of Signature Bank.
Its CEO Jeremy Allaire said in a tweet that with the closure of Signature Bank, “we will not be able to process minting and redemption through SigNet, we will be relying on settlements through BNY Mellon”.
“Additionally, we will be bringing on a new transaction banking partner with automated minting and redemption potentially as soon as tomorrow. We are committed to building robust and automated USDC settlement and reserve operations,” he added.
Circle also has $3.3 billion stashed at Silicon Valley Bank (SVB), a non-crypto bank that failed last week, causing fear in the tech industry.
BlockFi, the bankrupt cryptocurrency lender, also has $227 million in funds in SVB.
The best cryptocurrency exchanges Following the collapse of SVB, Binance and Coinbase have also temporarily banned USDC stablecoin conversions.
Silvergate Capital, another US traditional bank, said this week that it was “winding down operations and voluntarily dissolving” its bank section.
The collapse of Silvergate Capital, a lender of choice to startups and IT enterprises, is the result of the collapse of cryptocurrency exchange FTX and an overall breakdown in the global crypto market.
The Federal Reserve Board has recently declared that it will provide additional funding to qualifying depository institutions in order to ensure that banks can meet the needs of all its depositors.
The regulators have stated that SVB depositors will be able to retrieve their uninsured deposits on Monday (US time), and that no losses will be covered by taxes.
