New York-based Signature Bank was shut down by New York State authorities today, making it the third bank to close this week, following SilverGate Bank on Wednesday and Silicon Valley Bank on Friday.

The New York Department of Financial Services took control of Signature Bank pursuant to Section 606 of New York Banking Law in order to protect depositors. The Federal Deposit Insurance Corp. was appointed as the receiver of the bank.

Signature Bank had total assets of $110.36 billion and total deposits of $88.59 billion as of Dec. 31. It’s unclear what the figure is today.

“DFS is in close contact with all regulated entities in light of market events, monitoring market trends and collaborating closely with other state and federal regulators to protect consumers, ensure the health of the entities we regulate, and preserve the stability of the global financial system,” Superintendent Adrienne A. Harris said in a statement.

Along with an offer to guarantee the funds of depositors in Silicon Valley Bank, the Federal Reserve has also extended the offer to Signature Bank customers, with their funds able to be accessed from Monday.

@federalreserve @USTreasury @FDICgov issue statement on actions to protect the U.S. economy by strengthening public confidence in our banking system, ensuring depositors' savings remain safe: https://t.co/YISeTdFPrO

— Federal Reserve (@federalreserve) March 12, 2023

Although the downfall of SVB is well-documented, there are nowhere near the details available for Signature Bank. The only takeaway so far is that the bank may have been shut down as a precautionary move rather than being on the verge of immediate collapse.

The details of how Signature Bank got to this point are yet to be fully revealed, but the bank had exposure to cryptocurrency and FTX.

In an article written on March 4, Amy Castor and David Gerard describe how Signature Bank was the East Coast equivalent of Silvergate in terms of the U.S. cryptocurrency industry and how significant portions of its deposits were tied to cryptocurrency. The bank was also reportedly trying to get out of cryptocurrency earlier this year.

The article argues that, unlike Silvergate, Signature didn’t lend money to the crypto industry, nor were any loans tied to crypto, but because of its links to crypto, its price was dragged down with the broader market.

Signature Bank’s collapse comes amid ongoing attention to the closure Friday of SVB, the second-largest U.S. bank in history to go out of business. The Federal Reserve has moved to guarantee depositor funds to fend off what Y Combinator Chief Garry Tan said could turn into an extinction-level event for startups, but the collapse of three banks in a week has fundamentally shaken the market.

The underlying macroeconomic conditions that led to this point remain and investors know this. The fear of some going forward is that SVB and Signature Bank may just be the beginning.

Image: Signature Bank