Signature Bank, a New York-based commercial bank, had become a major banking partner for the cryptocurrency industry. Approximately 25% of its deposits were from crypto clients, and it operated a real-time payment network (Signet) used by crypto exchanges.
When SVB collapsed on March 10, 2023, Signature Bank experienced a rapid deposit outflow as crypto clients and other depositors withdrew funds. On March 12, two days after SVB's failure, regulators seized Signature Bank. It was the third-largest bank failure in US history at the time.
The case illustrated the contagion risk of serving a concentrated, volatile industry: when the crypto winter hit and SVB failed, Signature's crypto-heavy deposit base was the first to run. The bank's fate was sealed by its industry concentration and the systemic panic that followed SVB's collapse.
Regulators seized Signature Bank two days after SVB collapsed, making it the third-largest US bank failure, because 25% of its deposits were from crypto clients who ran.
Signature Bank had ~25% of deposits from crypto clients, creating industry concentration.
SVB's collapse triggered a deposit run at Signature.
Regulators seized the bank two days after SVB's failure.
It was the third-largest US bank failure in history at the time.
A bank serving a concentrated, volatile industry is exposed to that industry's systemic risk. Signature's crypto deposits ran when SVB fell. Diversification is a survival requirement.
Signature Bank was seized and its assets were sold to New York Community Bancorp. The case, alongside SVB and Silvergate, prompted a re-examination of bank concentration risk and crypto banking regulation.
FOLLOW THE EVIDENCE