According to a joint statement by US Treasury Janet Yellen, Federal Deposit Insurance Corporation (FDIC) Martin Gruenberg, and US Federal Reserve Chair Jerome Powell, both Signature Bank and Silicon Valley Bank depositors will have access to their money starting today. New York’s state chartering authority shut down Signature Bank on Sunday.
The joint statement says this decision was reached after consultation with US President Joe Biden.
The three agencies are confident that the US banking system is still resilient because of the proper regulations put in place after the global financial crisis in 2008, which ensure better safeguards for the banking sector.
The joint statement also suggested that only depositors of the Signature Bank will be protected, not unsecured debtholders and shareholders. It added that the senior management of the crypto-friendly bank had been removed.
In a separate statement, the Federal Reserve Board said additional funds would be availed to eligible depository institutions to ensure they are able to meet their depositors’ needs.
The Fall of Signature Bank and Silvergate
The Signature bank closure marks the third US bank failure to happen within the past week and the second crypto-friendly financial institution to fall after Silvergate bank.
Silvergate announced last Wednesday that it would close operations and liquidate, promising to refund its depositors fully. Previously, the fallen bank disclosed that it would suspend its Silvergate Exchange Network (SEN).
The SEN platform played a vital role for crypto companies, facilitating payment between these firms and other institutions. Signature Bank runs a similar service called Signet. It is largely used by institutions’ clients for real-time payments.
Although both Signature and Silvergate were popular banks among crypto companies, Signature held $110 billion in assets, making it much bigger than Silvergate, which reported assets worth $11 billion at the end of last year.
Crypto Market Reacts
Following the joint statement, cryptocurrencies have seen an increase in their prices. In the past 24 hours, two of the largest digital assets, Bitcoin and Ethereum, have surged by 7% and 8.1% to $21,780 and $1,580, respectively, data from CoinGecko shows.
Moreover, USDC also charged towards its peg to the US dollar. The stablecoin had previously dropped to $0.87 after its issuer, Circle, announced that it had around $3.2 billion of the token’s cash reserves stuck in Silicon Valley Bank.