In the wake of Silicon Valley Bank’s collapse, regulators have taken the drastic step of shutting down Signature Bank. The move comes after concerns were raised about Signature’s exposure to risky loans and its ability to weather a potential market downturn. With many experts warning of a coming economic slowdown, the closure of Signature Bank is likely to send shockwaves through the financial sector. Some analysts are already predicting that other banks with large tech portfolios could soon find themselves in regulators’ crosshairs.
Another setback has been dealt to the crypto industry as New York-based Signature Bank, which was friendly to cryptocurrency, was closed by authorities in an effort to prevent the spread of the banking meltdown. This happened just two days after the government closed Silicon Valley Bank, leaving billions of dollars in deposits unclaimed. The closure of these banks affected a number of crypto firms that were potential clients of digital asset liquidity that facilitated swift payments between clients, exchanges, and hedge funds. The closure of Signature Bank, which had assets worth $110 billion and nearly $89 billion in deposits by the end of 2022, was taken over by the FDIC, according to the New York Department of Financial Services. Deposit refunds for both closed banks will be carried out in full, and “no losses will be borne by the taxpayer”. The closure of these banks is expected to have a critical impact on the crypto market’s liquidity, thus placing the market’s future in uncertainty.