Signature Bank (SBNY), one of the most crypto-friendly banks in the world, has taken a step back on crypto. The bank recently announced that it had reduced cryptocurrency-related deposits by $10 billion.
According to the bank, the condition of the crypto market is very volatile. Hence, it is taking a step back to avoid a potential crisis.
Is Signature Bank No More A Crypto-Friendly Bank?
The most recent move made by SBNY gives the impression that the institution may be moving further away from the crypto sector. Earlier in the week, the Goldman Sachs Group held an investor conference in New York.
At the conference, Joe DePaolo, Signature Bank’s CEO, said the company is more than a cryptocurrency bank, and everyone should keep that information in mind.
Meanwhile, Signature Bank is the only US-regulated bank that took a positive stance toward digital currencies. Four years ago, the financial institution opened its doors to crypto deposits from miners, stablecoin issuers, and crypto exchanges.
As a result, the bank’s total deposit tripled, bringing it to about $33.4 billion during that period. In September, reports estimated that 23.5% of the bank’s $103 billion deposit was from the crypto sector.
However, the CEO clarified that the amount had reduced to less than 15% due to current market situations.
Is The FTX Saga To Blame?
Meanwhile, the bank’s resolution is coming after the bankruptcy of FTX, which affected most crypto firms. On the other hand, the bank asserts that it did not experience any insolvency from the FTX crash.
In November, SBNY reported that its deposit relation with FTX was less than 0.1% of its total deposits. However, Signature’s stock price plunged nearly 20% in November following FTX’s bankruptcy saga.
This situation may have prompted the bank to reevaluate its cryptocurrency investment. Signature Bank’s CEO also noted that the bank is pulling back on stablecoins.
Notably, the bank’s actions to slow down on crypto deposits could affect stablecoin issuers such as Circle. Last April, the stablecoin issuer collaborated with Signature Bank.
Signature Bank became Circle’s principal financial firm for its USDC reserve deposits as part of the partnership.
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