This is the third major bank to collapse in a week, scaring investors. The joint announcement that depositors will be protected above $250,000 guaranteed by the FDIC appears to be intended to reassure bank customers that their money will not be frozen. Signature had $88.59 billion in deposits as of December 31, 2022 The New York Department of Financial Services has taken possession of the bank.
Signature was one of two banks widely used in cryptocurrency. Like Silvergate, which collapsed on March 8, Signature had a network that allowed crypto companies to transfer dollars in real time. With both crypto banks gone, it may be harder to get back into dollars.
In addition, the Fed’s announcement said that depositors at Silicon Valley Bank will also be made healthy. That’s good news for crypto, as stablecoin provider Circle kept $3.3 billion in reserves there. Circle controls USDC, a token always intended to be worth $1 – and an important part of crypto payments.
Also in the statement, regulators said depositors of Silicon Valley Bank, a non-crypto bank that failed on March 10 following a bank run, will be able to access their uninsured deposits on Monday. The statement noted that no losses would be paid by taxes in either case.