Signature Bank closure deals another blow to cryptocurrency industry

(March 13): The closure of Signature Bank, a lender that counts many cryptocurrency firms as customers, marks another major setback for Crypto assets as the industry becomes increasingly tied to the banking system.

New York state regulators closed Signature Bank on Sunday (March 12), and depositors will be able to withdraw money on Monday, the Treasury Department said.

The shutdown comes shortly after the double failures of Silvergate Capital Corp. and Silicon Valley Bank. At least at one point, all of the banks were listed as the most crypto-friendly financial institutions in the United States.

Signature began withdrawing Crypto assets after the FTX exchange crashed, but still had $16.5 billion (RM74 billion) in cryptocurrency-related customer deposits as of March 8. Signature and Silvergate also enable fast payments between clients, such as hedge funds and exchanges, supporting Crypto asset liquidity.

Coinbase Global Inc., the largest U.S. cryptocurrency exchange, said late Friday that it has a $240 million balance in the bank. Paxos Global, which previously partnered with Binance on the BUSD stablecoin, said it has $250 million in Signature. In a tweet, Paxos said it “holds private deposit insurance far in excess of our cash balances and FDIC limits per account.”

As of the close of business on Friday, March 10, Coinbase had a corporate cash balance of approximately $240 million at Signature. As the FDIC said, we want to fully recover those funds.
— Coinbase (@coinbase) March 12, 2023

“Cryptocurrencies have essentially been debanked, especially for 24/7 fast payment rails,” said Austin Campbell, an adjunct professor at Columbia Business School. He added that the most likely cryptocurrency solution is “looking to other jurisdictions going forward.”

pull back

Signature runs Signet, a payments network that allows commercial cryptocurrency customers to make real-time payments in U.S. dollars anytime, 7 days a week.

After rival Silvergate’s SEN network shut down in early March, Signet was the only option for many cryptocurrency customers when sending payments to exchanges and suppliers quickly or paying wages. Crypto derivatives platform LedgerX earlier instructed clients to send domestic wire transfers to Signature instead of Silvergate.

Circle Internet Financial Ltd., the issuer of the USDC stablecoin, said it has $3.3 billion in assets at Silicon Valley Bank and maintains USDC trading and settlement accounts at Signature. Circle CEO Jeremy Allaire tweeted that the company will not be able to process USDC minting and redemption through Signet and will rely on BNY Mellon for settlement.

Stamp system

Last October, Coinbase integrated Signet, allowing customers to transfer money instantly.

Back in 2021, the stablecoin TrueUSD was integrated into Signet for instant settlement. Signet is also integrating with Fireblocks in 2020.

If Signet fails, users may not be able to get in and out of the exchange quickly, greatly affecting the liquidity of the cryptocurrency market.

The ease of trading bitcoin-dollar and bitcoin-tether on some U.S. exchanges has fallen between 35% and 45% from early March through Saturday, according to research firm Kaiko. A breakdown of signatures could add to the impact.

Prices of major Crypto assets climbed on Monday as U.S. stock futures rose. U.S. regulators have moved to protect depositors’ money and set up new financial support mechanisms to boost investor sentiment following the collapse of Silicon Valley Bank.

Bitcoin, the largest coin, was up more than 3 percent and was trading around $22,200 as of 7:58 a.m. Singapore time on Monday. The second-ranked ether rose more than 2%. Smaller tokens like Solana and Avalanche are also more expensive.

Disclaimer: The above content is collected from THEEDGEMARKETS, and the copyright of the work belongs to the original author. All content is for the purpose of conveying information, which does not mean that this site agrees with its views, and does not serve as any investment guidance.There are risks in the currency circle, investment needs to be cautious

Related Posts

Animoca Brands Japan invests in SmartRetail Group

Animoca Brands Japan, which happens to be an affiliate of Animoca Brands, has officially announced that it has committed to making a calculated investment in SmartRetail Group. SmartRetail itself happens to be the absolute top Out-of-Home (EOOH) and Digital Home V2.0 (DOOH…
Read More

How to Buy Tether USDT in Saudi Arabia

How to Buy Tether USDT in Saudi Arabia: A Step-by-Step Guide Tether USDT has gained popularity in Saudi Arabia as a reliable and legal way to increase personal capital through Crypto assets. As the country aims to create a cashless society, Tether…
Read More