Summary

  • Signature Bank is now providing banking services to multiple crypto companies after Silvergate Bank recently announced it would no longer be servicing crypto companies.
  • Signature Bank is the first major US bank to provide banking services to crypto companies, which will help to legitimize the industry and provide greater access to banking services.
  • The move by Signature Bank is seen as a positive step towards the mainstream adoption of cryptocurrency, as it will help to reduce the reliance on unregulated exchanges and provide greater financial stability.

Signature Bank, one of the few federally regulated US banks that has actively courted digital assets, is now servicing multiple crypto companies in the wake of Silvergate Bank's distress. The move marks a U-turn for the New York-based bank, which achieved rapid growth by aggressively pursuing digital asset clients amidst broader turmoil in the crypto industry.

Signature Bank's Chief Operating Officer, Eric Howell, told the Financial Times in December that the bank wanted to reduce the share of crypto-related deposits to less than 15% of total deposits from the current 23%. However, with Silvergate Bank facing significant stress due to its exposure to FTX and accusations it was responsible for the co-mingling of exchange and Alameda investment funds, Signature Bank is now one of the few banks left standing.

LedgerX, a crypto trading platform, has opted to switch to Signature Bank as its new domestic wire transfers receiver, while Coinbase announced via tweets that it would discontinue its use of Silvergate as a banking partner for Coinbase Prime clients.

Signature Bank's shares have fallen more than 50% since the start of 2021, after being the best-performing stock in last year's KBW Bank index. The bank is now facing challenges of its own, as it is accused of “substantially facilitating” the commingling of funds between FTX and its private trading firm Alameda Research, prompting increased regulatory scrutiny.

Kraken reported to some users recently that Signature would be phased out of transactions less than $100,000. On November 1, 2022, Signature’s share price was $160.01. By Mar. 3, SBNY was trading at $109.61.

Signature Bank's other businesses include wealth management and fund lending, through which it bankrolls capital calls to investment funds on behalf of clients. The bank is now hoping to distance itself from its crypto-related activities and emphasize its other services.