U.S. regulators have shutdown New York-based Signature Bank (SBNY), a major lender in the cryptocurrency sector, as they try to stem contagion from the collapse of Silicon Valley Bank (SIVB).
The U.S. Treasury Department, U.S. Federal Reserve and Federal Deposit Insurance Corporation (FDIC) issued a rare joint statement saying that Signature Bank has been closed by its state chartering authority.
The banking regulators added that all depositors at Signature Bank will have full access to their deposits and will get their money back.
The move follows the closing on March 10 of Silicon Valley Bank, which is the biggest U.S. bank failure since the 2008 financial crisis and the second largest bank failure in American history.
Signature Bank had been one of the main lenders to the cryptocurrency industry and the second biggest crypto bank after Silvergate Capital (SI), which announced last week that it is ceasing operations and liquidating its assets.
At the end of 2022, Signature Bank had $110.4 billion U.S. in assets and $88.6 billion U.S. in deposits, according to regulatory filings.
In recent days, the U.S. Federal Reserve and U.S. Treasury Department created an emergency program to backstop deposits at both Signature Bank and Silicon Valley Bank using the U.S. central bank’s emergency lending authority.
The FDIC’s deposit insurance fund will be used to cover depositors, many of whom were uninsured due to the $250,000 U.S. threshold needed to guarantee any deposits.
While depositors will have access to their money, equity and bondholders at Signature Bank and Silicon Valley Bank are being liquidated, according to U.S. regulators.
Signature Bank’s stock fell 23% on March 10 to trade at $70 U.S. per share. Silvergate Capital’s stock fell 53% last week to trade at $2.52 U.S. per share.
Shares in Silicon Valley Bank fell more than 60% last week to $106.04 U.S. per share before trading in that stock was halted.
