--- title: "Regulators Just Shut Down a Crypto Lender to Stem a Growing Financial Disaster" description: "Financial regulators have shut down Signature Bank, which was known for letting people make deposits via crypto, in an effort to stem a wider banking crash." date: "2023-03-13" modified: "2023-03-13" authors: - name: "Noor Al-Sibai" job_title: "Senior Staff Writer" link: "https://futurism.com/authors/nooralsibai" url: "https://futurism.com/the-byte/regulators-shut-down-signature-bank" categories: - "Blockchain" - "Cryptocurrency" - "Future Society" tags: - "crypto" - "finance" - "silicon valley bank" - "the digest" --- # Regulators Just Shut Down a Crypto Lender to Stem a Growing Financial Disaster ![Financial regulators have shut down Signature Bank, which was known for letting people make deposits via crypto, in an effort to stem a wider banking crash.]() *\Image: Getty / Futurism\* ## Seize Up The fallout from the [government seizure of Silicon Valley Bank]() continued apace this weekend with the regulator-mandated shutdown of Signature Bank, which is known as a big cryptocurrency industry lender. In a [jointly-released statement](), the Treasury Department, Federal Reserve, and Federal Deposit Insurance Corporation cited the "systemic risk" posed by the bank, which, as the [*New York Times* noted](), was likely related to the fact that nearly 90 percent of its deposits were uninsured at the end of 2022 [per regulatory filings](). The latter is a particularly big deal because, according to the bank's own protocols, only deposits of $250,000 or more would be insured — and given that many of its lenders paid in crypto, whose value [plummeted last year](), their money is now worth much less than it once was. In fact, over the weekend, crypto markets [hit a near-two-month low](), with Bitcoin falling below $20,000. "All depositors of this institution will be made whole" the joint filing declares, which in English means that the New York-based bank has to pay back everyone who put their money into its hands. The agencies plan to ensure this with the creation of a [special emergency insurance fund]() for people who deposited their money with Signature and SVB. ## Crash and Burn As the *NYT* notes, Signature Bank was one of the first major financial institutions to begin taking crypto deposits in 2018, and although its confidence in digital assets [initially bore fruit](), it now appears to be intertwined with its destruction. "This story has more to do with crypto, huge error in judgment by veteran bankers," Christopher Whalen, the owner of the Whalen Global Advisors analysis and consulting firm, told the paper of record. "Result was the same in a deposit run." With bank runs, or a rush to withdraw money due to financial instability, being at the heart of some of the [biggest]()[ crypto crashes]() last year and the collapse of SVB, regulators are now rushing to stem the tide of an all-out banking crash. Things are, once again, looking pretty dire in both the crypto and fiat financial industries, which again forces us to beg the question: who let it get this bad in the first place? **More on bad financial bets:** [*Bank of America Obsessed With AI, Says It's the "New Electricity"*]() ## Author At Futurism, I've often been drawn to unpacking the narratives that underlie technological, scientific and medical progress, with a special interest in areas of conflict and ambiguity that end up setting agendas and steering the fates of both elites and the hoi polloi. I'm a committed generalist, but I often find myself returning to work involving NASA and the private space sector, the effects of AI on media and society, and the mechanics of the pharmaceutical industry, with a specific focus on the spread of GLP-1 drugs like Ozempic and Wegovy. Prior to Futurism, I worked for publications ranging from Media Matters and Truthdig to Raw Story and Bustle. I'm also the author of "Myspace Scene Queens," a 2024 title in Instar Books' acclaimed "Remember the Internet" series. My work at Futurism has been cited by outlets including the New Yorker, Slate, Nieman Lab, the Verge, the MIT Technology Review, the Sunday Times, and the Daily Beast. I grew up in North Carolina, attended the University of North Carolina at Asheville, and now live in Brooklyn, New York. In my free time, I'm an avid reader and music fan; you can probably find me at a local poetry reading, concert, underground rave, or DJ set. I'm the proud parent of an ineffable orange cat named Mee-Mow. ### Author social links [Bluesky]()