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  • The New York-based lender was put under FDIC receivership Sunday.
  • President Biden assured depositors Monday that they would receive their funds, causing a rally in risk assets.

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Even before investors had come to terms with the collapse of Silicon Valley Bank, the New York state regulators announced Sunday that it was shutting down another lender, Signature Bank, saying that having the bank open could threaten the stability of the entire financial system.

Signature bank went down with $110 billion in total assets and $88 billion worth of deposits as of Dec. 31, and is now under the control of the Federal Deposit Insurance Corporation (FDIC), acting as the receiver. FDIC has transferred all the deposits due to the lender’s customers to Signature Bridge Bank, a new entity overseeing the process.

In a press release, FDIC wrote that “the transfer of all the deposits was completed under the systemic risk exception approved earlier today. All depositors of the institution will be made whole. The taxpayers will bear no losses; shareholders and certain unsecured debt holders will not be protected.”

The statement was reiterated by President Joe Biden, who assured the customers of Signature and Silicon Valley Bank, another lender that closed Friday, that their money was safe and insured by the Deposit Insurance Fund. A special assessment will cover any losses to the Deposit Insurance Fund levied on federally insured banks, according to a joint statement issued by the FDIC, Federal Reserve, and Treasury Department.

Cryptos surge despite the bearish sentiment

Despite the turmoil caused by the shutdown of the two banks, especially the perceived impact on digital assets, cryptos jumped on Monday after the assurance by the Federal Government that the depositors in the lenders would not suffer losses.

Said Noelle Acheson, economist and writer of the ‘crypto is Macro Now,’ who shared his view with CNBC: ”a slower hiking pace and a lower terminal rate, plus the likely injection of liquidity to prop up banks struggling to meet withdrawals imply greater market liquidity, even if this could be partially offset by higher volatility.”

Bitcoin traded at $24,363 at press time, representing a change of +15% in the past 24 hours, according to CoinMarketCap, while Ether added 9% to $1,684 in the same period. The overall crypto market cap, largely subdued under heightened regulatory scrutiny last week, was up 10% to $1.08 trillion.

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