JAKARTA - Bank Signature, which is widely used by crypto companies for withdrawing funds, was forced to close its operations. This comes after the Silvergate bank experienced operational difficulties earlier this month. Like Silicon Valley Bank (SVB), the US government has agreed to fully bail out the company's deposit as part of a "systemic riskualization".
No losses related to the bank will be borne by taxpayers, as clarified by the Federal Reserve, Department of Finance, and Federal Deposit Insurance Corporation in a joint statement. The steps taken aim to strengthen public trust in the banking system and ensure that the banking system can continue to play its vital role in the economy.
According to the Financial Times, senior management of Signature Bank was surprised to see their bank placed in the curator. The company faced a wave of outflows along with a massive stock sell on Friday due to panic surrounding the SVB, but the first reportedly stabilized on Sunday.
Signature Bank was Coinbase's preferred bank when Silvergate began showing signs of financial problems, just like LedgerX. Instead, Kraken distanced itself from Signature earlier this month when it stopped processing transactions for non-comporatory clients through banks.
The second-largest stablecoin publisher, USDC, had exposure to Silvergate, Signature, and SVB in January, according to a January audit. The company managed to save Silvergate reserves before the bank entered voluntary liquidation on Thursday, February 9.
However, for the time being the company lost control of $3.3 billion in cash on the SVB on Friday, March 10 causing USDC to lose its benchmark. USDC is back above US$0.99 after Circle CEO Jeremy Allaire confirmed that all token reserves have been restored, and will be transferred to BNY Melon as CryptoPotato reported.
The managers of Signature Bank faced an unexpected situation when their banks were placed in curators. However, the steps taken by the US government aim to strengthen public confidence in the banking system and ensure the continuity of its vital role in the economy.
However, a number of crypto companies such as Kraken moved away from Signature Bank after the bank's decision to stop processing transactions for non-corruption clients. This shows that the crypto world still has a large dependence on conventional banking systems.
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