- This is the third crypto-friendly bank to go down in less than a week
- Circle relied on Signature’s Signet to mint and redeem the stablecoin USDC
- With Signet gone, they'll be using BNY Mellon for settlements
New York regulators shut crypto-friendly, New York-based Signature Bank down on Sunday according to a joint announcement by the FDIC, the Federal Reserve, and the US Treasury Department. This is the third crypto bank to go down in less than a week. Silvergate Bank proceeded to liquidate voluntarily and Silicon Valley Bank shut down on Wednesday, resp. Friday.
All depositors will be “made whole”
Adrianna Harris of the NY Department of Financial Services (DFS) said the bank would go into receivership of the FDIC. According to the announcement, all customers who held deposits with Signature would be made whole. Harris assured:
Signature Bank is FDIC-insured, with total assets of approximately $110.36 billion and total deposits of approximately $88.59 billion as of Dec 31, 2022. The DFS is close contact with all regulated entities in light of market events, monitoring market trends, and collaborating closely with other state and federal regulators to protect consumers, ensure the health of the entities we regulate, and preserve the stability of the global financial system.
New risks for USDC: Signet is gone
On Sunday, regulators promised Silicon Valley Bank’s clients would receive their deposits in full, which seemed to resolve Circle’s $3.3 billion cash reserves issues. However, Circle relied on Signature’s Signet to mint and redeem the stablecoin USDC.
Signet, a blockchain-based system that processed payments around the clock in real time, has gone bust with the closure of Signature.
Circle CEO Jeremy Allaire tweeted:
With the closure of Signature bank announced tonight, we will not be able to process minting and redemption through Signet. We will be relying on settlements through BNY Mellon.
Many leading crypto companies used Signet, such as Coinbase. They announced they had joined the real-time payment and settlement system in their third quarter letter to shareholders last year. On Friday, the biggest US exchange suspended redemptions between US dollars and USDC, ensuring they’d be reinstated during regular banking hours on Monday.
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