According to a Tuesday report, Signature Bank’s cryptocurrency clients were told by the Federal Deposit Insurance Corporation to close their accounts by April 5th. All accounts not voluntarily closed by that point will automatically be shut down. The New York Community Bancorp. took over most of Signature’s operations but excluded the cryptocurrency business.
Signatures Crypto-Related Accounts to Be Closed By April 5th
The Federal Deposit Insurance Corporation allegedly informed Signature Bank’s clients that all cryptocurrency-related accounts are to be closed by April 5th. The FDIC also warned that all such accounts still open in a week will be automatically closed and the depositors will receive their funds back.
Signature Bank became the 3rd US bank to close in the span of 5 days after the FDIC stepped in on March 12th citing “systematic risk”. The fate of the company’s cryptocurrency business, and the Signet Network, remained uncertain as it remained in FDIC receivership even after the bank was shut down.
On March 20th, it was reported that The New York Community Bancorp. agreed to take most of Signature’s operations over, the digital assets side of things was left excluded. The collapse of Signature raised concerns throughout the cryptocurrency industry as it was one of the two most important US-based crypto-friendly banks along with Silvergate.
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The Crisis of US Regional Banks
The rapid collapse of three important US banks in the span of 5 days caused what has been termed a “crisis of confidence” in the solvency of American regional banks. Additionally, the fall of all three had key ramifications for the cryptocurrency industry as two of the closed banks—Signature and Silvergate—were major crypto-friendly companies, and the Silicon Valley Bank was a key part of the startup ecosystem.
The crisis sparked contagion among regional banks with First Republic being the hardest hit. It also caused the federal authorities to take extraordinary steps to stabilize the situation, though the revelation that the banks used the measures to borrow $148 billion in less than a week sparked some renewed concerns.
The successful sale of Signature’s operations and, more recently, the successful sale of SVB proved to have a stabilizing effect on the sector. The effect has, however, been somewhat limited as First Republic Bank continued its decline this week despite surging more than 30% in the Monday pre-market.
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