Another Blow to the Crypto Industry as Signature Bank Shuts Down

After Silvergate collapse here's another blow to the crypto industry as Signature Bank shuts down

Another significant setback for digital assets has been caused by the closure of Signature Bank, a lender that has several crypto industries among its clientele. This comes as the sector grows more and more isolated from the financial system.

According to the Treasury Department, New York state authorities liquidated Signature Bank on March 12 and depositors will have access to their money starting on March 13.

The closure occurs shortly after Silicon Valley Bank and Silvergate Capital Corp. both failed. At one point or another, each bank was regarded as one of the US's most crypto-friendly banking institutions.

With the collapse of the FTX exchange, Signature had started to distance itself from digital assets, but as of March 8, it still had US $16.5 billion in crypto-related client deposits. Fast transfers between clients, including hedge funds and exchanges, were also made possible by Signature and Silvergate, promoting the liquidity of digital assets.

The largest cryptocurrency exchange in the US, Coinbase Global Inc., said on Friday night (10th March 2023) that it has a US$240 million balance in the bank. Formerly working with Binance on the BUSD stablecoin, Paxos Global reported having US $250 million at Signature. According to the tweet from Paxos, their private deposit insurance "holds private deposit insurance substantially over our cash balance and FDIC per-account restrictions."

Austin Campbell, an adjunct professor at Columbia Management School, claimed that cryptocurrency has essentially been de-banked, particularly for 24/7 quick payments rails. The most likely course of action for the cryptocurrency, he continued, is "to look to other countries moving ahead."