Home Analysis Signature bank now servicing multiple crypto companies in the wake of Silvergate distress

Signature bank now servicing multiple crypto companies in the wake of Silvergate distress

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Signature Bank is said to be one of the few federally regulated U.S. banks to have actively courted digital assets, but competitor Silvergate has been forced to close due to FTX exposure and its accusations. It is said to be one of the few banks facing news that it is facing significant stress. I was in charge of the integration of the exchange and the Alameda investment fund.

In December 2022, financial times I have written The signing planned to offload up to $10 billion in deposits related to the cryptocurrency industry. The move has seen rapid growth by aggressively pursuing digital asset customers amid widespread turmoil in the crypto industry following the drop in token prices and the bankruptcy of his signing customer, the FTX exchange. It marked his U-turn for the bank that was in charge. The New York-based bank’s stock has fallen more than 50% since the beginning of 2021 after performing best in last year’s KBW Bank Index.

Eric Howell, Chief Operating Officer of Signature Bank, told the FT last December that the bank wants to reduce its share of cryptocurrency-related deposits from the current 23% to less than 15% of total deposits. I explained. Crypto Bank and we want that to come across clearly. ”

Silvergate’s predicament leads to Signature’s client

That was over 3 months ago. Signing is now one of the few banks that can still process transactions for the many cryptocurrency companies that need it as a result of Silvergate’s predicament.

On March 2nd, Yahoo Finance reported that LedgerX had begun converting clients to Signature. To distance itself from Silvergate Bank, LedgerX chose to switch to Signature Bank as its new domestic wire transfer recipient. The rumor was reported by both Yahoo and Bloomberg, but has not been confirmed by either Signature or LedgerX.

“While we cannot comment on specific clients, Signature Bank continues to hold a portion of the U.S. dollar deposits of digital asset clients,” said Signature Bank in a statement.

Additionally, Coinbase announced via Twitter that it is discontinuing use of Silvergate as a banking partner for Coinbase Prime clients. The cryptocurrency exchange said it will minimize corporate exposure to Silvergate and move to signature banks on March 2. Coinbase said in a memo sent to clients: I am writing.

“Coinbase Prime has decided to make changes to its US dollar banking partners. We are using our signing banks to facilitate fiat currency withdrawals and deposits. We are asking Signature Bank to renew.”

Signature’s deposits tripled from $33.4 billion in 2017 due to its decision to accept cryptocurrency exchanges, stablecoin issuers and bitcoin miners as customers. Scale deposits from crypto clients.

Signatures face unique challenges

In a class action lawsuit filed last month, Signature was accused of “substantially facilitating” the mingling of funds between FTX and its private trading firm, Alameda Research, increasing regulatory scrutiny of the bank. rice field.

Separately, Kraken recently reported to some users that they are phasing out Signature from transactions under $100,000. According to Bloomberg, the exchange has notified some users that they will no longer be able to use their signatures to deposit or withdraw dollars less than that amount.

On November 1, 2022, Signature’s stock price was $160.01. By March 3rd, SBNY was trading at $109.61.

Signature’s other businesses include wealth management and money lending, through which it finances capital calls to investment funds on behalf of its clients.

In contrast, distressed US bank Silvergate, owned by Silvergate Capital and accepting deposits from cryptocurrency customers, has defended its role in accepting deposits from FTX and Alameda Research. FTX was one of the world’s largest cryptocurrency exchanges until it collapsed in November. Signature Bank says its deposit ties with FTX and its affiliates account for less than 0.1% of his total deposits.

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