Last week, CEO of crypto-friendly Signature Bank, Joseph DePaolo, said in a third-quarter earnings meeting that $ 1 billion deposit growth was driven in part by dollar-backed stablecoins held by the bank. .
Major stablecoins such as USDC, PAX and TUSD are backed by actual dollars held in bank accounts. While it is unclear which stablecoin Signature issuer it is serving, DePaolo's statement revealed for the first time that the bank is banking in those companies.
Signature's Commitment to the Crypto Industry
For years, Signature was one of the few banks to offer accounts where cryptocurrency companies could securely hold fiat. The New York-based bank competes with California's Silvergate Bank and other institutions for low-cost cryptocurrency deposits, offering an Ethereum-based payment platform (here the quotation in real time) called Signet, which competes with the Silvergate Exchange Network as a bridge to fiat.
The bank also made around 40 Paycheck Protection Program (PPP) loans to companies in the cryptocurrency sector this year. Signature's CEO announcement last week comes after the U.S. Office of the Comptroller of the Currency (OCC) released new guidance in September, clarifying domestic banks could hold fiat for stablecoin issuers. The OCC has specified that the new guides refer to stablecoins supported on a one-to-one basis by fiat currencies.
A little numbers
Signature's banking team working on crypto companies added the same amount of new deposits it produced in the second quarter. DePaolo has attributed the wealth of the last few quarters in the billions of dollars to customers who have gradually become accustomed to the presence of Signature in the space.
“The customers we're bringing aboard were hesitant at first,” he said. "They wanted to see that we would stay in the business." The $ 4,11 billion added in the third quarter made up a quarter of the bank's $ 8 billion in new deposits, an increase of XNUMX%.
About 30% of Signature's total $ 54,34 billion deposits, or $ 16,2 billion, are non-interest bearing, and typically represent cryptocurrency deposits. Signature's cost of deposits increased slightly to 66 basis points from 56 basis points in the second quarter.
Cryptocurrency companies are often a rich source of low-cost deposits for the few banks that openly serve the industry. Therefore, analysts have been paying close attention to deposit growth at Signature, Silvergate Bank and Metropolitan Commercial Bank.
