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- Second-Largest Crypto Lender Signature Bank Shut Down
Fiona Simmons March 13, 2023 2 min read
Second-Largest Crypto Lender Signature Bank Shut Down
The fallout of Silicon Valley Bank has prompted reverberations across the entire financial system, forcing the regulators to step in and contain possible risks of contagion
Now, the second-biggest crypto lender, Signature Bank, has been shut down by authorities, with the Treasury, the Federal Reserve, and FDIC all stepping in to contain what they fear could have been a much larger market meltdown. The institutions gave a joint statement in which they said that the bank was closed down by the New York chartering authority.
Signature Bank Founders amid Silicon Valley Bank Collapse
Unlike Silicon Valley Bank, though, depositors need not worry, as they will have access to their full deposits and be able to withdraw them. This is not true for Signature Bank equity and bondholders who will lose their assets, the Treasury said in the statement.
The regulators assured that just like the case with Silicon Valley Bank, no losses would be “born by the taxpayer.” The shutting down of Signature Bank comes in the wake of Silicon Valley Bank’s meltdown which has already been felt across the world, including in places such as China where tech start-ups relied on the American bank to access US capital.
The failure of Silicon Valley Bank is the largest bank collapse since the 2008 financial crisis, but regulators have assured that the conditions did not mimic those of the previous banking crisis from over 14 years ago. Meanwhile, Signature Bank is a significant blow to the cryptocurrency industry and comes in the wake of the collapse of FTX, a beleaguered cryptocurrency exchange that misused consumer funds high-handedly.
The regulators have in the meantime rallied to ensure that depositors have nothing to worry about and a larger systemic risk is nipped in the bud. The collapse of Signature Bank is largely linked to that of Silicon Valley Bank.
Signature Bank’s collapse comes as a surprise nevertheless, as both recent collapses were unexpected by investors. Meanwhile, the fact that a mainstream bank had a knock-on effect on a crypto counterpart indicates that the two financial systems are beginning to become increasingly interwoven, prompting regulators to step in and act more determinedly in certain cases.
Although Fiona doesn't have a long-spanning background within the gambling industry, she is an incredibly skilled journalist who has built a strong interest in the constantly growing iGaming network. The team at GamblingNews.com is glad to have her on our roster to help deliver the best stories as soon as they hit. Aside from writing, she loves to dabble in online casino games such as slots and roulette, both for her own enjoyment and also as research to better improve her understanding of the industry.
Blockchain March 13, 2023