Crypto Gloss

Signature Bank

Signature Bank was a New York City-based commercial bank founded in 2001, seized by the New York Department of Financial Services (NYDFS) on March 12, 2023 — two days after Silvergate Bank’s voluntary liquidation and two days after the FDIC’s takeover of Silicon Valley Bank. Signature Bank had become one of the two primary banking partners for the U.S. crypto industry, operating Signet (a 24/7 blockchain-based tokenized USD payment platform) and holding $16.5 billion in crypto-related deposits at its peak. Its sudden seizure — some argue triggered more by regulators’ desire to send a message to the crypto industry than by financial insolvency — became one of the most controversial regulatory actions of 2023.

Background

Signature Bank was built on relationship banking for New York professionals (attorneys, physicians, real estate). It entered the crypto space around 2018, onboarding crypto exchanges and institutional clients who needed banking. Unlike Silvergate (a California-based bank), Signature had dual exposure: traditional real estate and private equity lending alongside a large crypto deposit base.

Signet Network

Signet was Signature Bank’s blockchain-based 24/7 real-time USD payment platform — a direct competitor to Silvergate’s SEN:

  • Built on a permissioned blockchain using digital tokens representing dollar deposits
  • Allowed 24/7/365 USD settlement between Signature bank accounts
  • Used by Coinbase, Kraken, Circle, and major institutional crypto clients
  • Processed $1 trillion+ in annual volume alongside SEN

The March 2023 Seizure

Date Event
Mar 8, 2023 Silvergate announces voluntary liquidation
Mar 10, 2023 FDIC seizes Silicon Valley Bank (run triggered by tech depositors)
Mar 12, 2023 NYDFS seizes Signature Bank “to protect depositors”

Unlike SVB, Signature Bank was not obviously insolvent at seizure — a contention raised by the bank’s own executives and later by a House Financial Services Committee investigation. Former FDIC Chair Sheila Bair suggested the closure may have been influenced by regulators’ concerns about crypto exposure generally.

Operation Choke Point 2.0

Signature Bank’s closure (alongside Silvergate’s) was central to debates about “Operation Choke Point 2.0” — the theory that Biden-era financial regulators were systematically discouraging U.S. banks from serving crypto clients, replicating a controversial 2013 DOJ program that had pressured banks away from legal but disfavored industries. The “crypto banking desert” created by Silvergate and Signature’s collapse pushed U.S. exchanges to use foreign banks or stablecoins for settlement.

Related Terms

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