Signature Bank Crosses $10B in Deposits From Crypto Customers

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Deposits from customers in digital currency now make up almost 16% of total deposits at New York Signature Bank.

In a call for earnings on Thursday, Signature revealed that crypto industry customer deposits are now $ 10 billion – double that of California rival Silvergate Bank.

“We have clearly become the standout player in this space,” said Eric Howell, executive vice president of corporate and business development for the company. “It is obvious that digital assets and cryptocurrencies are not going away.”

Joseph DePaolo, CEO of Signature Bank, added that the bank’s blockchain-based payments platform, Signet, is the main driver of deposit growth in digital asset banking, and that institutional adoption is causing the industry to “skyrocket”. Prominent clients include Voyager Digital Holdings, Polychain Capital and bitFlyer USA.

According to DePaolo, signature banks are the “top 5 crypto exchanges” and now offer retail banking through them. (Silvergate is known to serve Coinbase, Kraken and Bitstamp. Exchanges often have more than one banking partner in order to attract new customers faster.)

Often times, crypto firms are a plentiful source of inexpensive deposits for the few banks that openly serve the sector. For this reason, analysts have paid special attention to the non-interest-bearing growth in deposits at Signature, especially since the bank does not split up any deposits from crypto customers in its annual financial statements.

Signature sees itself as a bank for wealthy individuals and institutions; The crypto banking business is unremarkable.

These deposits do not match the deposits made by crypto firms at the bank as Signature has many other lines of business. Overall, non-interest bearing deposits make up almost 30% of total deposits with the bank.

Total deposits with the bank increased $ 8.98 billion from the previous quarter, with money market deposits making up the lion’s share.

Signature’s average cost of deposits and financing costs for the fourth quarter of 2020 decreased 66 and 69 basis points, respectively, to 0.42% and 0.57%, respectively.