Regulators have shut down New York’s cryptocurrency-focused Signature Bank in an effort to prevent the banking crisis from spreading.
The banking regulators cited “systemic risk” in a statement announcing the move on Sunday evening.
“We are also announcing a similar systemic risk exception for Signature Bank, New York, New York, which was closed today by its state chartering authority,” Treasury, Federal Reserve, and FDIC said in a joint statement Sunday evening.
Regulators said depositors at Signature Bank will have full access to their deposits, a similar move to ensure depositors at the failed Silicon Valley Bank will get their money back.
“All depositors of this institution will be made whole,” the regulators said.
“As with the resolution of Silicon Valley Bank, no losses will be borne by the taxpayer.”
The SVB collapse is the largest U.S. banking failure since the 2008 financial crisis and the second-largest ever.
The dramatic moves come just days after the tech-focused institution reported that it was struggling, triggering a run on the bank’s deposits.
Signature is one of the main banks of the cryptocurrency industry, the biggest one next to Silvergate.
Silvergate announced its impending liquidation last week.
It had a market value of $4.4 billion as of Friday after a 40% sell-off this year, according to FactSet.
As of December 31, Signature had $110.4 billion in total assets and $88.6 billion in total deposits, according to a securities filing.
To stem the damage and stave off a bigger crisis, the Fed and Treasury created an emergency program to backstop deposits at both Signature Bank and Silicon Valley Bank using the Fed’s emergency lending authority.
The FDIC’s deposit insurance fund will be used to cover depositors, many of whom were uninsured due to the $250,000 guarantee on deposits.
While depositors will have access to their money, equity, and bondholders at both banks are being wiped out, a senior Treasury official said.