Several crypto firms have come forward to report their exposure to the now-shuttered Signature Bank, which was shut down by New York regulators on March 12 in conjunction with the United States Federal Deposit Insurance Corporation (FDIC) to “protect the U.S. economy” as they claimed the bank posed a “systemic risk.” Signature Bank was a key partner for many crypto firms, and its closure has prompted concerns about the safety of crypto firms’ funds.
Crypto exchange Coinbase tweeted on March 12 that it had around $240 million in corporate funds at Signature Bank that it expected would be fully recovered. Stablecoin issuer and crypto firm Paxos also came forward, tweeting it had $250 million held at the bank but added it held private insurance that covers the amount not covered by the standard FDIC insurance of $250,000 per depositor.
The Celsius Official Committee of Unsecured Creditors, a body that represents the interests of account holders at the bankrupt crypto lender Celsius, added Signature Bank “held some of its funds” but did not disclose the amount. It added that “all depositors will be made whole.”
Crypto Firms without Exposure to Signature Bank Come Forward
As Signature Bank serviced so many firms in the crypto industry, those firms with no exposure equally came forward to quell fears about their related exposures. Robbie Ferguson, co-founder of Web3 game development platform Immutable X and Mitch Liu, co-founder of the media-focused Theta Network blockchain separately tweeted that both of their respective companies had no exposure to Signature.
Crypto exchange Crypto.com also reported it had no funds in the bank through a March 12 tweet by its CEO Kris Marszalek. The chief technology officer of stablecoin firm Tether, Paolo Ardoino, similarly tweeted Tether’s non-exposure to Signature Bank.
Regulators Take Actions to Protect Depositors
The announcement of Signature Bank’s forced closure aligned with other banking-related announcements by U.S. regulators. The Federal Reserve said the FDIC was approved to take actions to protect depositors at Silicon Valley Bank, a tech-startup-focused bank that experienced liquidity issues due to a bank run that spread contagion to the crypto sector. The Fed also announced a $25 billion program to ensure ample liquidity for banks to cover the needs of their customers during times of turbulence.
As regulators take action to protect depositors and ensure liquidity during times of turbulence, it begs the question: how can we ensure the safety and stability of the crypto industry in an ever-changing financial landscape? Is it time for a new approach to securing and safeguarding these funds?