Signature Bank (SBNY) will shrink its deposits tied to cryptocurrencies by $8 billion to $10 billion, signaling a move away from the digital asset industry for the bank that until recently had been one of the most crypto-friendly companies on Wall Street.
“We are not just a crypto bank and we want that to come across loud and clear,” Signature Bank’s CEO Joe DePaolo said at an investor conference in New York hosted by Goldman Sachs Group on Tuesday.
Nearly a quarter of the New York-based bank’s $103 billion in total deposits, or roughly 23.5%, came from the crypto industry as of September 2022. But given the recent “issues” in the space, Signature will reduce that amount to under 15% eventually, DePaolo said.
FTX was one of the bank’s clients, although the crypto exchange’s deposits with Signature amounted to less than 0.1% of the bank’s overall deposits. Still, the relationship between the two caused Signature’s shares to drop almost 20% in November.
DePaolo specifically mentioned stablecoins as a business that the bank wants to exit, which could be bad news for Circle and other stablecoin issuers. Circle added Signature as its leading financial institution for USDC reserve deposits in April of last year.
“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,” DePaolo said.
Signature Bank had been considered one of the most crypto-friendly banks on Wall Street alongside rival Silvergate Bank, which on Tuesday was asked by several U.S. senators to address its supposed role in facilitating transfers between FTX and sister company Alameda Research. Silvergate said FTX made up nearly 10% of its $11.9 billion in deposits from digital asset customers, and its stock has tumbled as a result of FTX’s collapse.