Coinbase Says it has About US$240 Million Cash Balance With Signature Bank

FILE PHOTO: People watch as the logo for Coinbase Global Inc, the biggest U.S. cryptocurrency exchange, is displayed on the Nasdaq MarketSite jumbotron at Times Square in New York, U.S., April 14, 2021. REUTERS/Shannon Stapleton

Coinbase Global announced on Sunday (Mar 12) via a tweet that it holds a corporate cash balance of approximately $240 million with Signature Bank, a US-based cryptocurrency exchange. This announcement came shortly after state regulators closed the New York-based lender.

However, due to the FDIC's hold on Signature's transactions, Coinbase Global is currently using other banking partners to facilitate all client cash transactions. This was also stated in the same tweet.

Just two days after the closure of Silicon Valley Bank, which caused global market turmoil and stranded billions of dollars in deposits belonging to companies and investors, California authorities have closed Signature Bank, marking the third-largest bank failure in US history.

In a joint statement, the US Treasury Department and other bank regulators have assured that all depositors of Signature Bank will be fully compensated and that no taxpayer money will be used to cover the losses.

Coinbase, a US-based cryptocurrency exchange, has announced on Twitter that it will not allow the exchange of Stablecoin USD Coin (USDC) for US dollars over the weekend while banks are closed, citing heightened activity. However, Coinbase plans to resume swaps on Monday. Stablecoins are cryptocurrencies that aim to maintain a fixed exchange rate with fiat currencies, such as the US dollar, and are commonly used in cryptocurrency trading. USDC is the second-largest stablecoin with a market cap of $37 billion, while Tether, the largest stablecoin, has a market cap of $72 billion, according to CoinGecko.

This week, traders have been alert for any indications of contagion in the financial sector, following the difficulties faced by Silicon Valley Bank and Silvergate, a crypto-focused financial institution that revealed its intentions to wind down its operations and voluntarily liquidate.

In a tweet on Friday, the CEO of Binance, a cryptocurrency exchange, stated that the company has no exposure to Silicon Valley Bank, a sentiment echoed by Tether's Chief Technology Officer, Paolo Ardoino. Other market players, such as stablecoin issuer Paxos and crypto exchange Gemini, have also taken to Twitter to confirm that they do not have any relationships with the troubled bank.

Read More: After SVB failure, US Acts to Shore Up Confidence in Banking System