Signature Bank in New York could reduce its digital assets deposits by more than $8 billion in the coming weeks.
The $114.5 billion-asset bank said during a Goldman Sachs conference that it plans to reduce its exposure to digital assets deposits to 15% to 20% of total deposits, or $8 billion to $10 billion, over time.
Signature had $23.5 billion of digital-asset-related deposits on Nov. 14, or roughly 23% of total deposits.
“Investor confidence in the digital asset space remains fragile given the reduction in crypto values off the highs recorded in November 2021 and the recent liquidity crisis and allegations of misused funds at FTX,” Jake Civiello, an analyst at Janney Montgomery Scott, wrote in a recent note to clients.
“We believe the decision by [Signature] to reduce exposure represents capitulation that there is a long road ahead to determine crypto-industry winners,” Civiello added. “We also contend that investors should consider indirect exposure such as regulatory risk and revenue associated with venture and PE banking derivatives.”