Signature Bank Plans to Reduce Crypto Deposits by $10 Billion

Signature Bank's Strategic Move

Signature Bank, a prominent US financial institution, is set to reduce its crypto-related deposits by nearly $10 billion. This significant decision stems from the ongoing volatility in the digital asset industry. As of late 2022, crypto assets account for over 23% of the bank's total $103 billion in customer deposits. The bank's target is to bring this percentage down to about 20%, with a long-term goal of reducing it to less than 15%.

Balancing Exposure and Growth

The decision to cut back on crypto deposits aligns with Signature Bank's broader strategy to balance its exposure to the volatile crypto market. Eric Howell, the bank's Chief Operating Officer, emphasized the need to clarify that Signature is not solely a crypto bank. The institution aims to exit between $8 billion to $10 billion in deposits linked to the digital asset market.

Impact on Business and Clients

While the bank is downsizing its crypto-related deposits, it remains committed to maintaining a diversified asset portfolio. Notably, the bankrupt FTX crypto exchange was a client of Signature Bank, but its deposits constituted less than 0.1% of the bank’s overall deposits. Stablecoin firms also represent a significant portion of Signature's crypto business. However, the bank now perceives a need to reassess its investments in these areas.

Future Outlook

Signature Bank's decision reflects a cautious approach to managing risks associated with the crypto market. By reducing its dependency on volatile crypto assets, the bank seeks to ensure stability and sustainability in its operations. This move is part of a broader trend among financial institutions to reevaluate their involvement in the rapidly evolving digital asset landscape.