Crypto Updates

Coinbase and Paxos Disclose Massive Exposure


Signature Bank became the third US bank institution to collapse in the span of four days. Similar to the now-collapsed Silvergate Bank, it also had a large corporate customer base from the cryptocurrency industry. The other one, Silicon Valley Bank (SVB), mostly tapped the technology sector, including crypto firms.

New York state regulator, the Department of Financial Services, shuttered Signature Bank on Sunday “to protect depositors,” putting it under the Federal Deposit Insurance Corporation (FDIC) receivership.

The FIDC also took control of the SVB, but Silvergate Bank declared voluntary liquidation and did not seek the FIDC receivership. Though FIDC protects banking deposits, it only covers up to $250,000. This limit falls significantly short when it comes to corporate clients.

According to the New York Department of Financial Services (DFS), Signature Bank had total assets of about $110.36 billion and total deposits of around $88.59 billion by the end of 2022.

The bank had nine business lines, including commercial real estate and digital assets banking. Almost a quarter of its savings came from the cryptocurrency industry in the quarter ending in September. However, crypto deposits shrunk to around $8 billion by the end of December.

Though the US government was initially against bailing out the two banks, SVB and Signature, it announced the protection of all depositors of both banks on Sunday. As highlighted, the move is to “protect the US economy by strengthening public confidence in our banking system.”

“We are also announcing a… systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority. All depositors of this institution will be made whole… [and]… no losses will be borne by the taxpayer,” Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell, and FDIC Chairman Martin Gruenberg said in a joint statement.

Crypto Companies’ Exposure to Signature Bank

Meanwhile, many major cryptocurrency companies voluntarily disclose their exposure to Signature Bank. It includes Coinbase, Paxos, and now-bankrupt Celsius. However, many crypto firms also denied any exposure to the collapsed bank.

Click Here to Read the Full Original Article at CryptoCurrency – Finance Magnates | Financial and business news…