Impact of Signature Bank Closure on Crypto Firms

Signature Bank’s Sudden Shutdown

On March 12, New York regulators pulled the plug on Signature Bank, declaring it a “systemic risk” to the U.S. economy. The Federal Deposit Insurance Corporation (FDIC) teamed up with regulators to shut down the crypto-friendly bank.

Coinbase: The Optimistic Player

In the wake of this shocking development, Coinbase took to Twitter to inform users that it has around $240 million in corporate funds tied up at Signature. The exchange expressed optimism about fully retrieving the funds.

Coinbase’s Tweet:
As stated by the FDIC, we expect to fully recover these funds.

Paxos: Playing it Safe

Paxos, the issuer of stablecoins, disclosed that it had $250 million at Signature Bank but assured users that it possesses private insurance that exceeds the standard FDIC coverage of $250,000 per depositor. This conservative approach aims to provide added peace of mind.

Paxos’s Response:
Seeking private deposit insurance is part of our conservative approach to managing customer assets exceeding FDIC insurance limits.

Celsius: A Mixed Bag

The Celsius Official Committee of Unsecured Creditors also chimed in, mentioning that Signature Bank held some unspecified funds for the bankrupt crypto lender. In a reassuring statement, they promised that “all depositors will be made whole,” which is their polite way of saying, “Don’t panic!”

Other Crypto Firms Breathe Easy

While some firms were caught in the Signature crossfire, others breathed a sigh of relief. Rob Ferguson from Immutable X and Mitch Liu from Theta Network confirmed their companies had zero exposure to Signature Bank, sending a message to their customers that they are safe and sound.

Crypto.com Chief’s Assurance:
Kris Marszalek tweeted that Crypto.com also reported no funds were tied up at Signature Bank.

Regulatory Response: A Wider Context

This bank closure coincided with other regulatory actions, including a $25 billion program from the Federal Reserve aimed at ensuring liquidity for banks needing emergency support. In essence, it’s like giving the banking system a shot of caffeine during a sleepy afternoon.