- Regulators cited systemic risk
- And promised to protect customer deposits
- Paxos and Coinbase have $490 million in reserves in the bank
US Regulators closed New York Signature Bank. This was stated in a joint press release from the US Treasury, the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC).
It is one of the largest lenders in the crypto industry. The reason for the closure was the risks of systemic bankruptcy of the bank, the regulators explain. At the same time, they guarantee the protection of all client deposits (even uninsured ones):
“All contributors [Signature Bank] will be saved. As with the Silicon Valley Bank solution, there is no loss to the taxpayer.”
Signature’s links to the crypto industry
Signature is a major lender to the crypto sector, including Coinbase and Paxos. According to the latest reportsit has total assets of about $110 billion and total deposits of more than $88 billion.
Reaction of Coinbase and Paxos
Crypto exchange Coinbase issued an official statement:
They said they held $240 million worth of corporate funds in Signature, but the company expects to fully recover these deposits.
Paxos has a little more – $ 250 million:
The company has private deposit insurance that “significantly exceeds” their cash balance and FDIC account limits.
Recall that on Friday regulators closed Silicon Valley Bank due to its insolvency.