Signature Bank released its mid-Q3 update showing a decrease in cash deposit balances attributed to crypto outflows totaling $4.27 billion.
“Digital deposit outflows are driven by the recent “crypto winter,” or downturn in cryptocurrency markets.”
In contrast, non-crypto deposits grew to $2.64 billion since the start of the quarter, with “specialty mortgage banking solutions” making up the bulk of that figure, accounting for $2.29 billion.
Despite pressure from digital asset outflows, the bank said it was “well placed to meet [its] combined loan and securities growth targetfor the third trimester.
Signature Bank occupies a unique space
Signature Bank offers financial services to institutional crypto traders and crypto businesses, including exchanges and miners.
The blockchain-based Signet platform underpins this, allowing crypto clients to transact more efficiently by settling in real time without incurring transaction fees.
“…enabling Signature Bank business customers to make US dollar payments 24 hours a day, seven days a week, 365 days a year.”
Signet bridges the gap between the US banking system which does not make real-time payments and the crypto markets which are tradeable all the time.
Signature Bank and its main rival, Silvergate Bank, are two of the only US banks to operate real-time payment networks and be crypto-friendly.
In July, when releasing its second-quarter results, Signature Bank investors expressed concern over large-scale crypto outflows.
The report said its total deposits fell by $5.04 billion to $104.12 billion during the second quarter. This was primarily due to a decline in New York Banking team client balances of $2.4 billion, and a drop in Digital Asset Banking team deposits of (also) 2, $4 billion.
Crypto winter bites hard
According to the Financial Times, Signature Bank was one of the best performing banks last year due to increased deposits from the crypto industry. However, fast forward to now, and in the depths of the crypto winter, everything has changed.
This is particularly noticeable in the company’s share price, which has fallen 49% since the start of the year.
Still suffering from falling token prices and fallout from CeFi bankruptcies, uncertainty continues to reign in the crypto industry.
Nonetheless, Signature Bank CEO Joe DePaolo explained that the bank’s direct crypto exposure is nil, as it only holds dollar deposits from its customers and no crypto.
“It happens to be an ecosystem that we serve, but we’re not exposed to the digital world or the crypto world. We had a loan that we made so far and it was paid off. We therefore have no outstanding loans. We have no digital assets on our books.