Signature bank cuts deposits to crypto companies

One of Wall Street’s crypto-friendly firms, Signature Bank, will cut its corporate deposits by $10 billion, distancing itself from the digital asset industry.

Signature bank CEO Joe DePaolo stated on Tuesday:

We are not just a crypto bank and we want that to come across loud and clear.

About 23% of Signature’s $103 billion in customer deposits as of November were crypto-related. The company now aims to reduce that to less than 20% and eventually to less than 15% of total deposits, Chief Operating Officer Eric Howell said at the Goldman Sachs 2022 U.S. Financial Services Conference.

Crypto exchange FTX, which filed for Chapter 11 bankruptcy, was also the bank’s customer. Last month, Signature said its deposit relationship with FTX and affiliates accounted for less than 0.1 percent of its total deposits. Still, Signature’s shares fell nearly 20% in November.

In April 2021, Wall Street Signature Bank became the lead financial partner for Circle’s USDC reserve deposits last year. At the Goldman Sachs 2022 conference, Joe DePaolo emphasized that stablecoins are the part of the crypto industry the bank most wants to distance itself from:

We recognize that in certain cases, especially as we look at stablecoins and other parties in that space, that there’s a better way for us to utilize our capital.

Meanwhile, another Wall Street bank, Silvergate, was ordered by U.S. Senate to release full records of its relationships with FTX and affiliates. After the collapse, a Silvergate spokesperson told WSJ that less than 10% of the firm’s $11.9 billion in total digital deposits were in FTX, and that there were no loans or investments in FTX.

Related: Silvergate states minimal exposure to BlockFi

Senators stress in the letter:

Silvergate provided banking services to both Alameda and FTX, raising questions about the bank’s role in facilitating the improper transfer of FTX customer funds to Alameda. Apparently, “some FTX customers continued to send wire transfers” to Alameda’s Silvergate account “as recently as this year.” It appears that Silvergate did nothing to halt these activities.