Impact of Signature Bank Closure on Crypto Firms

Signature Bank Shutdown

The New York Department of Financial Services has shut down Signature Bank, creating ripples across the financial sector. This move comes shortly after the collapse of Silvergate and Silicon Valley Bank, raising concerns among investors and institutions.

Affected Crypto Firms

Major crypto exchanges like Coinbase, Paxos Trust Company, and Celsius Network have reported significant exposures to the now-defunct bank. These firms have been directly impacted by the Federal Deposit Insurance Corporation's (FDIC) decision to close the bank on March 12.

Coinbase's Financial Exposure

Coinbase disclosed that it held approximately $240 million in corporate cash at Signature Bank. Despite the shutdown, the company anticipates a full recovery of funds as assured by the FDIC.

Paxos Trust Company's Precautionary Measures

Paxos Trust Company revealed it had $250 million deposited in Signature Bank. To safeguard its assets, Paxos holds private deposit insurance exceeding the FDIC's coverage limits, demonstrating a cautious approach to asset management.

Celsius Network's Undisclosed Holdings

The bankrupt crypto lender, Celsius Network, also had funds at Signature Bank. Though the exact amount remains undisclosed, the Official Committee of Unsecured Creditors confirmed all depositors would be compensated.

Systemic Risk and Economic Protection

Superintendent Adrienne A. Harris of the NYDFS stated the takeover aimed to protect the US economy from systemic risks posed by the bank. The consecutive failures of Silvergate, Signature, and Silicon Valley Bank have heightened anxiety in the financial sector.

Conclusion

The closure of Signature Bank has significantly impacted major crypto firms, highlighting vulnerabilities within the financial system. The swift action by authorities aims to stabilize the market and reassure stakeholders of their financial security.