Following the collapse of Silvergate bank – one of the two main banks providing financial services to crypto platforms – former clients began pivoting to competitor Signature, only for the latter to be seized by U.S. authorities, citing significant liquidity issues.
Significant Crypto Exposure
Faced with a public lack of trust in the banking sector, U.S. authorities decided over the weekend to place Signature Bank in receivership, informing its leadership mere hours before the public announcement was made. The bank was majorly invested in crypto, with over a quarter of all deposits coming from the industry.
The news dealt a blow to many mainstays of the crypto industry, de-pegging Circle’s USDC and causing uncertainty for Coinbase and Paxos, who, among others, had significant assets stashed away at Signature Bank.
The bank and its assets were put up for sale by U.S. authorities, with the caveat that only potential buyers with an existing bank charter were allowed to take a peek at its financials. This led to both the Royal Bank of Canada and PNC Financial Services ultimately deciding against a purchase.
FDIC Denies any Limitation on Crypto Exposure
At the time, unnamed sources told Reuters that the FDIC had informed potential buyers that they would be required to divest from the cryptocurrency industry completely.