In Crypto: Signature Bank shuttered following Silvergate collapse

Signature Bank has been shuttered by regulators less than a week following the closure of fellow crypto-friendly bank Silvergate.

It is the latest blow to the wider tech industry following the collapse of the US-based Silicon Valley Bank on Friday.

Based in New York, Signature Bank was taken over by the New York Department of Financial Services. All depositors will be made whole, it said.

The Federal Reserve said the decision to close the bank was made with the United States Federal Deposit Insurance Corporation to protect the US economy and strengthen public confidence in the banking system.

It was reportedly designed to limit depositor outflows and prevent additional bank runs.

Signature Bank, founded by Scott Shay, Joseph DePaolo and John Tamberlane in 1999 with backing from Israel’s biggest lender Bank Hapoalim, had $88.6 billion in deposits at the end of 2022.

More than 80% of these deposits came from law firms, accounting firms, health care companies, manufacturers and real estate management companies. Almost nine-tenths were uninsured as they were above the $250,000 threshold.

Silvergate Bank, which like Signature had built a portfolio of clients in the cryptocurrency industry, announced last week that it would shut down and voluntarily liquidate “in light of recent industry and regulatory developments”.

President Joe Biden said he was “firmly committed” to holding those responsible for the banking mess “fully accountable”.

“Silvergate, Silicon Valley and Signature all shuttered. Depositors will be made whole, but there’s basically nobody left to bank crypto companies in the US,” tweeted crypto investor Scott Melker.

Jake Chervinsky, head of policy at the Blockchain Association, said: “The closures of Silvergate, SVB, and Signature create a huge gap in the market for crypto-friendly banking.

“There are many banks that can seize this opportunity without taking on the same risks as these three. The question is if banking regulators will try to stand in the way.”

The Federal Reserve Board has quickly announced $25 billion worth of funding aimed at backstopping banks and depository firms. This will offer loans of up to one year to “banks, savings associations, credit unions, and other eligible depository institutions”.

CEO Brad Garlinghouse says Ripple had exposure to SVB but expects no disruption to its day-to-day business. “We already held a majority of our USD w/ a broader network of bank partners,” he tweeted. “Rest assured, Ripple remains in a strong financial position.”

Proven has raised $15.8 million funding led by Framework Ventures to build a ZK-proof-based trust layer that enables exchanges, stablecoins, asset managers and custodians to safely and efficiently prove their solvency.

Web3 security startup Cubist has raised $7m led by Polychain Capital for its software developer kit that makes it easier for users to build cross-chain dApps.

The overall market cap of the 22,800 coins is at $1.03 trillion at the time of writing (7am UK), an 8% increase in the last 24 hours.

For round-ups of recent cryptocurrency news developments, click here.

For valuations of the top 100 coins by market cap in US dollars, plus 24-hour price change, see below.