Key points
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Signature Bank, a crypto-friendly financial institution, has been shut down by New York banking authorities.
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The Federal Reserve said the closure is meant to protect the US economy and bolster public confidence in the banking system.
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Signature Bank’s closure follows the collapse of Silvergate Bank and Silicon Valley Bank.
New York banking officials close crypto-friendly bank
The Federal Reserve has declared that the New York-based Signature Bank has been shut down by its state charter authority on Sunday.
This latest cryptocurrency news means that this is the third major bank to cease operations in the space of a week.
In a statement issued on March 12, the Federal Reserve said the decision to shut down Signature Bank was made with the United States Federal Deposit Insurance Corporation (FDIC) to protect the U.S. economy and encourage public trust in the banking system.
The apex bank also declared that they would guarantee all depositors of Signature Bank. The Federal Reserve wrote;
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.
Shareholders and certain unsecured debtholders will not be protected. Senior management has also been removed. Any losses to the Deposit Insurance Fund to support uninsured depositors will be recovered by a special assessment on banks, as required by law.”
The Federal Reserve pointed out that the move is designed to ensure that the United States continues to perform its vital roles of protecting deposits and providing access to credit to households and businesses in a manner that promotes strong and sustainable economic growth.
Crypto market remains steady
The Fed said shareholders and certain unsecured debtholders would not be protected.
Signature Bank’s closure makes it the third major bank to cease operations within the space of a week. On March 9th, crypto-friendly Silvergate Bank closed its doors and liquidated its assets. The bank said it decided to do so in light of changing industry and regulatory conditions.
Silicon Valley Bank, a major bank for some crypto and tech startups, also collapsed last week. Nevertheless, the crypto market has remained undeterred.
Bitcoin rose by nearly 10% on Sunday to trade above $22k after dipping below the $19k level last week. The whole cryptocurrency market cap also stands above the $1 trillion level despite the continuous FUD in the market.
