It seems that the US regulators and the government have vowed to take down the entire cryptocurrency industry in the country.
However, they have adopted a different approach to making it happen. The regulators are aiming to deal with the situation in a way that impacts the crypto industry passively and indirectly.
The regulators have started going after the major banking firms that had established themselves as cryptocurrency proponents.
So far, the regulators have taken strict actions against the crypto-pro banks. They have taken down the banks such as the Silvergate Bank, the Silicon Bank, and now, the Signature Bank.
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It was the only bank left supporting the major crypto firms when the Silvergate Bank revealed it was facing a financial crisis.
This ended up increasing the overall holdings of the Signature Bank for the crypto firms. However, the situation has changed tremendously now that the Signature Bank has been shuttered by the US Feds.
Signature Bank Shutdown Impacts Major Crypto Firms
As the Signature Bank has shut down, many concerns have been raised pertaining to the future of the cryptocurrency industry.
Several crypto firms have announced having been exposed to the Signature Bank. However, a few particular firms from the crypto industry have peaked the concerns ever since they’ve confirmed being exposed to the Signature Bank.
The major crypto firms such as Paxos, USDC issuing company, Celsius, a crypto lending company, and Coinbase, a major crypto exchange have revealed being exposed to the demised bank.
Who has Shutdown the Signature Bank?
The latest reports have confirmed that it was the New York regulators who took action against Signature Bank. They reportedly acted on March 12 and proceeded with shutting down the Signature Bank.
The NY regulators reportedly acted upon the accord of the Federal Deposit Insurance Corporation (FDIC) of the United States.
According to the US FDIC, their goal was to ensure that the economy of the country is kept secure and running. Their aim is to ensure that the people in the United States do not end up falling for crypto firms that cause them to face huge losses.
Therefore, it is better that such crypto firms are taken down. Most importantly, they have acted to shut down the banks that are involved in facilitating the crypto firms.
According to the FDIC, with the Silvergate Bank and the Silicon Valley Bank going own, most of the crypto firms operating in the US were going towards the Signature Bank.
With the crypto firms opening up their accounts and increasing their reserves at the Signature Bank, the systemic risk of the bank had been rising.
Tweet by Coinbase
On March 12, Coinbase tweeted about its exposure to the particular bank. They revealed having $240 million worth of funds exposed at the Signature Bank in the form of corporate funds.
According to the officials at the Coinbase exchange, they are in the process of retrieving their funds from the bank. They are hopeful that their funds will be fully recovered from Signature Bank.
Announcement by Paxos
Paxos made a similar announcement about their exposure at the Signature Bank. They tweeted about having $250 million worth of funds stuck at the Signature Bank.
While tweeting about the frozen funds at the bank, they did reveal that they had insured the funds belonging to the customers.
They revealed that their private insurance policy covers each depositor with $250,000 in the form of insurance coverage. They have clarified that the insurance coverage they have for the depositors is not the one provided by the FDIC.
Celsius Network Confirmed the Same
Details have just been shared by the legal teams working on the bankruptcy of the Celsius network. They have revealed that some of their funds were stuck at the Signature Bank.
Although the firm has revealed that it is exposed to the Signature Bank, the officials have not disclosed the amount.