- Signature Bank, a New York-based bank, plans to reduce deposits around cryptocurrencies
- Due to the continued volatility in the cryptocurrency market. Signature Bank shares fell 50%
According to a Financial Times report, New York-based Signature Bank (SBNY), plans to cut its cryptocurrency-related deposits by $8 billion to $10 billion. This indicates a move away from the digital asset industry for the bank. The bank is considered one of the most crypto-friendly on Wall Street.
In September 2022, the crypto industry accounted for nearly a quarter of the bank’s total deposits of $103 billion. This represented approximately 23.5%. However, given the recent crypto industry fiasco, Signature will eventually reduce the amount to less than 15%. Signature Bank CEO Joseph J. DePaolo mentioned that stablecoins were seen as a potential exit strategy.
FTX was a client of Signature Bank, although its deposits with the bank represented less than 0.1% of the bank’s total deposits. Nonetheless, the relationship between the two caused Signature’s stock to plummet almost 20% in November.
The impact of Signature’s move
Signature Bank happens to be one of the few federally regulated banks known to have taken large deposits from crypto customers. Moreover, it has grown rapidly since it set foot in the cryptocurrency market. However, the bank’s shares have fallen more than 50% this year, and one of its clients was the now-defunct ex-crypto exchange FTX.
The Wall Street Journal also reported in August, Signature Bank, along with Silvergate Capital and Customers Bancorp, was one of three smaller banks to invest in crypto-related businesses when the industry was booming. Over time, it lost momentum when crypto prices fell. Among Signature’s clients was crypto lender Celsius Network, which deposit for bankruptcy in July.
“We’re not just a crypto bank and we want to make that plain and clear,” Signature Bank COO Eric Howell told an industry conference recently.
Signature Bank has long been considered one of the most crypto-friendly banks in the United States. But as the crypto industry goes through a slump following the implosion of FTX, the bank is apparently on its way out.