The crypto-friendly Signature Bank was shut down by New York regulators more than a week ago, and Coinbase has apparently ceased supporting the institution’s Signet payment system.
The Wall Street Journal reported on March 20 that until further notice, Coinbase customers won’t be able to send money via Signet outside of banking hours. According to reports, the cryptocurrency exchange was seeking another payment network supplier while awaiting the resolution of the issue with Signature.
After the demise of Silicon Valley Bank on March 10 and Silvergate Bank on March 8, the crypto-friendly bank was the third domino to fall. Financial authorities said that their intervention was to “defend the U.S. economy by enhancing public trust in our banking system.” Yet, sources show that Signature had no solvency difficulties on March 12 when it was shut down.
With the exception of almost $4 billion in cryptocurrency deposits, the bank’s deposits and loans will be sold to New York Community Bancorp’s Flagstar Bank, according to a statement from the U.S. Federal Deposit Insurance Corporation. The government-run company declared its intention to give cryptocurrency deposits “straight to clients” who have online banking accounts.
Coinbase, Celsius, and Paxos all held money connected to Signature at the time of the bank’s collapse. Coinbase predicted that its business assets worth $240 million will be “completely recovered.” Paxos acknowledged having $250 million in bank accounts, while Celsius disclosed some exposure but not a precise figure.
On March 29, the United States House Financial Services Committee will hold an inquiry to examine Silicon Valley Bank and Signature Bank’s problems. Martin Gruenberg, chair of the FDIC, and Michael Barr, vice chair for supervision of the Fed, are anticipated to speak.