Coinbase says it has about US$240 million cash balance with Signature Bank
Coinbase Global has about US$240 million in corporate cash balance with Signature Bank, the US crypto exchange said in a tweet on Sunday (Mar 12), hours after the state regulators closed the New York-based lender.
“Due to FDIC’s hold on Signature’s transactions, we’re currently facilitating all client cash transactions with other banking partners,” the tweet added.
The closure comes just two days after California authorities shuttered Silicon Valley Bank, in a collapse that roiled global markets and left billions of dollars of deposits belonging to companies and investors stranded.
The US Treasury Department and other bank regulators said in a joint statement that all depositors of Signature Bank will be made whole, and “no losses will be borne by the taxpayer.” The Signature failure is the third largest in US history.
Coinbase said in a tweet it was not allowing Stablecoin USD Coin (USDC) to be exchanged for US dollars over the weekend while banks are closed, citing “heightened activity”, while it plans to resume swaps on Monday.
Stablecoins are cryptocurrencies designed to maintain a constant exchange rate with “fiat” currencies – those backed by a central government rather than a physical commodity such as gold – for example through a 1:1 US dollar peg.
Used in cryptocurrency trading, they have surged in value in recent years. USDC is the second-biggest stablecoin with a market cap of US$37 billion. The largest, Tether, has a market cap of US$72 billion, according to CoinGecko.
Traders have been on guard this week for signs of contagion in the financial sector and beyond from troubles for Silicon Valley Bank and crypto-focused Silvergate, which this week disclosed plans to wind down operations and voluntarily liquidate.
The chief executive of cryptocurrency exchange Binance said in a tweet on Friday it had no exposure to Silicon Valley Bank, as did Tether chief technology officer Paolo Ardoino. Stablecoin issuer Paxos and crypto exchange Gemini also tweeted that they do not have relationships with the bank.