Last night it happened again. Another US bank was closed by the government to prevent further collapse. This time it was Signature, a bank based in New York. The bank had more than $100 billion in assets under management.
Signature goes after SVB and Silvergate
The US central bank, the Federal Reserve (FED) gave yesterday evening a statement for the decision to discontinue Signature. According to the body, Signature represented a “systemic risk” and it was crucial to act quickly. This story is obviously very similar to what we saw just a few days earlier at Silicon Valley Bank (SVB).
“We are also announcing a similar systemic risk exemption for Signature Bank, which was closed today by its national charter authority. All depositors of this institution will be compensated. As with the resolution of Silicon Valley Bank, no losses will be borne by taxpayers.”
Crypto and Signature
Just like Silicon Valley Bank and Silvergate, Signature had many crypto companies as clients. Some examples are none other than Circle, LedgerX and Binance. Earlier there was panic in the crypto market because Circle, the issuer of the USDC stablecoin, had a few billion with SVB. As a result of this panic, USDC even temporarily lost the peg to the dollar.
Now it seems that Circle also used Signature to transact and believed that both Signature and SVB were extremely important to the crypto industry. Both banks have since collapsed.
Customers get their money back
Almost accompanied by the statement from the American central bank, there was also the message that all SVB customers would sooner or later see their money back. This while according to the government there would be no ‘bailout’. This news is of course positive.
Whether something similar will also happen at Signature is not yet known