The Downward Spiral: Signature Bank’s Collapse

In a surprising twist of events, Signature Bank, known for its crypto-friendly services, was shuttered by regulators, setting off a chain reaction in the financial world. Just over a week later, Coinbase announced it would stop utilizing Signature’s Signet payment platform. Talk about a break-up that was bound to happen!

Coinbase Users Left in the Lurch

As of March 20, Coinbase users can no longer make transfers using Signet, particularly those outside the traditional banking hours. Users are left scratching their heads, and likely fumbling for alternatives. Coinbase is on the hunt for new payment network providers, but until then, patience may be a virtue — or a painful necessity.

Caught Up in the Fallout

Signature Bank was the last straw in a series of unfortunate banking events that began with Silvergate Bank’s implosion on March 8 and reached a crescendo with Silicon Valley Bank’s fall on March 10. It seems like these banks are auditioning for a reality show titled ‘Who Gets Closed Next.’ Regulators state their intervention was meant to safeguard the economy, but insiders whisper that Signature wasn’t actually on the brink of bankruptcy.

The FDIC’s Playbook Post-Shutdown

The FDIC took swift action after Signature’s closure, announcing that most of the bank’s deposits, minus around $4 billion in cryptocurrency holdings, would be transferred to Flagstar Bank. On March 19, the agency proudly tweeted about securing customers’ crypto deposits — potentially leading to a glimmer of hope for those left in the dark.

Who Was Affected?

Coinbase was not alone in being caught in Signature Bank’s wake. Celsius and Paxos also had funds lodged with the bank at the moment of its closure. Positively thrilling, right? Coinbase expects to recover $240 million in corporate assets, while Paxos has $250 million tied up there. Celsius? Well, they’ve withheld the details of their exposure — maybe it’s like revealing a magician’s secret.

Looking Ahead: Congressional Inquiry

Mark your calendars! The U.S. House Financial Services Committee has scheduled a hearing on March 29 to dissect the failures of both Silicon Valley and Signature Banks. FDIC chair Martin Gruenberg and Fed Vice Chair for Supervision Michael Barr are gearing up to testify. One can only imagine the popcorn sales spiking in anticipation of the drama that will unfold.