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Signature Bank has provided a mid-Q3 statement revealing a decline in spot deposit balances attributable to $4.27 billion in bitcoin withdrawals.
"The recent "crypto winter," or decline in cryptocurrency markets, is the cause of digital deposit outflows."
In contrast, non-cryptocurrency deposits climbed to $2.64 billion through the end of the quarter, with "specialist mortgage banking solutions" contributing for $2.29 billion.
In spite of pressure from digital asset withdrawals, the bank reported that it is "well-positioned to meet [its] combined loans and securities growth target" for the third quarter.
Signature Bank possesses a unique space
Signature Bank provides financial services to institutional cryptocurrency traders and cryptocurrency businesses, including as exchanges and miners.
This is supported by the blockchain-based Signet platform, which enables crypto clients to perform more efficient transactions by settling in real-time and incurring no transaction costs.
"...enabling commercial clients of Signature Bank to make U.S. dollar payments 24 hours a day, seven days a week, 365 days a year."
Signet bridges the gap between the U.S. banking system's lack of real-time payment processing and the constant liquidity of crypto marketplaces.
Signature Bank and Silvergate Bank are the only banks in the United States that operate real-time payment networks and are crypto-friendly.
In July, upon the release of the bank's second-quarter financial results, Signature Bank's investors expressed alarm over massive crypto outflows.
During the second quarter, total deposits decreased by $5.04 billion to $104.12 billion, according to the report. This was primarily attributable to a $2.4 billion decline in customer balances held by the New York Banking Team and a $2.4 billion decline in deposits held by the Digital Asset Banking Team.
Crypto winter is vicious
According to the Financial Times, Signature Bank was one of the most successful banks in 2017 thanks to a surge in crypto industry deposits. Now, however, deep within the crypto winter, everything has altered.
This is especially evident in the company's share price, which has fallen by 49% since the beginning of this year.
The crypto business continues to be plagued by uncertainty as a result of falling token values and the repercussions of failed CeFi exchanges.
CEO of Signature Bank Joe DePaolo indicated that the bank's direct exposure to cryptocurrencies is nil, as it keeps only the dollar deposits of its customers and no cryptocurrencies.
"We happen to service an ecosystem, but we have no exposure to the digital or cryptocurrency worlds. One loan was taken out and repaid by our organization. So there are no outstanding loans. There are no digital assets on our balance sheet."
