Crypto exchange Coinbase disclosed a significant cash balance at Signature Bank, which has been shut down by U.S. regulators.
In a tweet on Sunday, Coinbase said it expects to fully recover the $240 million in corporate cash it holds at Signature.
As of close of business Friday March 10 Coinbase had an approximately $240m balance in corporate cash at Signature. As stated by the FDIC, we expect to fully recover these funds. https://t.co/XY5L7m4RMs
— Coinbase (@coinbase) March 12, 2023
The announcement came after a joint press release issued by the U.S. Treasury, Federal Reserve and the Federal Deposit Insurance Corporation (FDIC) revealed that state authorities closed the bank to prevent further systemic risk.
The FDIC’s intervention has put a hold on Signature’s transactions, forcing Coinbase to facilitate all client cash transactions with its other banking partners. At the time of writing, the exchange had not disclosed the names of these alternative partners.
“Despite the turbulence we have seen in the traditional banking sector recently, Coinbase continues to operate as usual. At Coinbase all client funds continue to be safe and accessible including USDC conversions which will resume on Monday,” tweeted Coinbase.
Late on Friday, Coinbase halted USDC to USD conversions amid concerns around the collapse of Silicon Valley Bank (SVB) and the fact that USDC issuer Circle held $3.3 billion worth of reserves there.
“During periods of heightened activity, conversions rely on USD transfers from the banks that clear during normal banking hours. When banks open on Monday, we plan to re-commence conversions,” said Coinbase at the time.
The FDIC’s statement that all SVB depositors will be made whole has alleviated some fears, but there were still some concerns around how the situation will play out in terms of the exchange’s fiat payment rails.
The closures of Silvergate, SVB, and Signature create a huge gap in the market for crypto-friendly banking.
There are many banks that can seize this opportunity without taking on the same risks as these three.
The question is if banking regulators will try to stand in the way.
— Jake Chervinsky (@jchervinsky) March 12, 2023