US regulators shuttered New York-headquartered crypto-focused bank Signature Bank on Sunday.
Signature Bank is a big lender in the crypto industry. Its collapse comes on the heels of the collapse of rival crypto bank Silvergate last week and Silicon Valley Bank (SVB), which announced it was in trouble last week triggering a run on deposits.
The Treasury, the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) issued a joint statement on Sunday in which they said that Signature Bank posed a systemic risk and was shut down to prevent market contagion.
As was the case with the collapse of SVB, depositors at Signature Bank will have the opportunity to withdraw their money.
“All depositors of this institution will be made whole. As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer”, the regulators assured.
Signature Bank was estimated at a market value of $4.4bn but it saw a 40% sell-off so far this year, prompting regulators to step in.
The upheaval over the weekend marks the largest US banking failure since the collapse of Lehman Brothers triggered the 2008 financial crisis.
The FDIC’s deposit insurance fund is to be used to cover depositors, however, according to the Treasury, equity and bondholders at SVB and Signature are being wiped out.
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