Sebastian Sinclair

Signature Bank has told Binance it will no longer be handling SWIFT transactions for its customers below $100,000 next month in a bid to decrease its reliance on digital asset deposits.



Support for transactions below the threshold from its fiat trading partner would cease by Feb. 1, Binance said in a statement seen by Blockworks. Users will be unable to buy and sell crypto via their Signature bank account using the interbank messaging system following the limitation.



Using one of the other fiat currencies supported by Binance, including euros, and Binance’s P2P marketplace will continue to operate as usual, Blockworks was told. Bloomberg first <a href="https://www.bloomberg.com/news/articles/2023-01-22/binance-says-signature-sets-transaction-minimum-amid-pullback" target="_blank" rel="noreferrer noopener">reported</a> the news.



A spokesperson for Binance told Blockworks the exchange was “actively working” to find an alternative solution. Fewer than about 0.1% of its average monthly users are currently being serviced by the bank, they said.



The change doesn’t affect the vast majority of Binance’s users, who already use national or regional payment rails — such as SEPA in the EU and ACH in the US — to on- and off-ramp local currency to crypto exchanges.



Other banking partners of Binance have yet to follow up with similar announcements, including many across South East Asia — a region heavily serviced by the bank.



Signature, a New York State-chartered commercial bank and FDIC member, is a major partner to many of the industry’s leading exchanges including OKX, Bitstamp, Bithumb, eToro, Huobi and Kraken.



In its statement, Binance said all of Signature’s existing crypto exchange clients would be impacted by the move come February. When pressed, Binance&#8217;s spokesperson told Blockworks the team working on the issue was based in separate timezones and as such were unable to provide evidence to back the exchange’s claim on short notice.



Signature is attempting to limit its exposure to digital asset deposits following a “challenging cryptocurrency environment” spurred on by several bankruptcies and failures last year, Signature said in an <a href="https://investor.signatureny.com/pme/press-releases/news-details/2023/Signature-Bank-Reports-2022-Fourth-Quarter-and-Year-End-Results/" target="_blank" rel="noreferrer noopener">earnings call</a> last week.



Total deposits in the fourth quarter for the bank declined by roughly $14.2 billion to $88.6 billion, primarily driven by its planned reduction in digital asset banking deposits, which fell about $7.4 billion, the bank said.&nbsp;



Blockworks was previously told by Signature it was in the process of decreasing digital asset deposits to between <a href="https://blockworks.co/news/banks-crypto-efforts-undeterred">15% and 20%</a> of the total $110 billion in various assets it holds.



The bank did not immediately reply to a request for comment.



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Signature Bank Limit on SWIFT Transactions with Binance Affects Few

David Canellis

<div id="highlights-block_62ab9431b5ebf" class="highlights">
 <ul>
 <li>Crypto contagion has spread into equities with digital asset exposure</li>
 <li>Short interest for multiple top crypto stocks has peaked this month</li>
 </ul>
 
</div>



Stock traders looking to profit from tumbling cryptocurrency prices took aim at major players in digital assets this week, with Coinbase and MicroStrategy among the hardest hit.



Short sellers Monday bet more than $631 million, cumulatively, on the continued descent of six top crypto stocks, accounting for 39% of their collective trade volume for the day.&nbsp;



Spot crypto markets shed 16% over the weekend, suggesting short sellers had eagerly awaited equity markets opening to capitalize on the chaos.



Top US crypto exchange Coinbase took most of the wrath, facing shorts of $393 million Monday — 74% above its yearly average, according to FINRA data compiled by Blockworks. FINRA tracks volume on both the NYSE and Nasdaq, but its data excludes private markets and could count short trades that don’t specifically convert to an open short.



The same day, Coinbase <a href="https://cms.blockworks.co/coinbase-cut-workforce-ceo-wary-of-potential-recession/" target="_blank" rel="noreferrer noopener">said</a> it would lay off almost one-fifth of staff: more than 1,000 employees. Chief executive Brian Armstrong cited a potential US recession. Coinbase shares have since fallen some 16% since Friday’s close.



Also on Monday, short sellers bet $124 million against MicroStrategy — the data intelligence firm run by bitcoin bull Michael Saylor.



MicroStrategy stock, on average, recorded $70 million in shorts daily over the past year, which means Monday saw 77% more MicroStrategy short selling than usual. The tech company’s shares are now down 25%.



MicroStrategy maintains the largest corporate bitcoin reserves of any public company, holding 129,218 BTC as of April, worth $2.7 billion today. The company’s market capitalization is just $1.8 billion.



New York-based Signature Bank saw an even bigger short surge. Through its crypto-specific Signet service, Signature <a href="https://seekingalpha.com/article/4512236-signature-bank-tumbles-with-crypto-mayhem-time-to-buy" target="_blank" rel="noreferrer noopener">oversees</a> $29 billion in crypto deposits (as of May), including $7 billion in stablecoins. Market participants including exchanges, miners, funds and fiat-backed stablecoins, such as Circle’s USD Coin (USDC) and TrueUSD, all bank with Signature.



Short sellers initiated around $53 million in bets against Signature Monday, 82% above its yearly average. The company’s shares went on to shed 20%.



<figure class="wp-block-image"><a href="https://lh3.googleusercontent.com/ZvW-6FF1BUE0KK8c-vaDHQWkR6sbf2TFD452xfVcrrAwd1hOKgIJHbA_NfCcouBWpjK2PQgrzf5EUcWDDRStLRKWuGIpYe0P0AmhPghmt336plyXhoR3Aqw2M4mefGtxrEC1duZQCGvRBMxUuQ"><img decoding="async" src="https://lh3.googleusercontent.com/ZvW-6FF1BUE0KK8c-vaDHQWkR6sbf2TFD452xfVcrrAwd1hOKgIJHbA_NfCcouBWpjK2PQgrzf5EUcWDDRStLRKWuGIpYe0P0AmhPghmt336plyXhoR3Aqw2M4mefGtxrEC1duZQCGvRBMxUuQ" alt=""/></a><figcaption>Short selling volume over the past year | Data source: FINRA via TradingView</figcaption></figure>



The mounting losses are despite the bank having “virtually zero credit risk” via its crypto operations, as its digital asset balance sheet is almost entirely deposits, according to a <a href="https://seekingalpha.com/article/4512236-signature-bank-tumbles-with-crypto-mayhem-time-to-buy" target="_blank" rel="noreferrer noopener">recent</a> analysis.&nbsp;



Rival Silvergate, on the other hand, on Monday only saw 14% more shorts than average, or roughly $24 million. Silvergate <a href="https://ir.silvergate.com/news/news-details/2022/Silvergate-Capital-Corporation-Announces-First-Quarter-2022-Results/default.aspx" target="_blank" rel="noreferrer noopener">oversaw</a> about $15.8 billion in assets under management as of March 31, the most recent available data — making the firm one of the largest crypto banks.&nbsp;



In February, the firm spent $182 million to acquire assets and technology once intended to power Meta’s failed stablecoin offering Diem. Silvergate also issued a $205 million bitcoin-backed <a href="https://www.businesswire.com/news/home/20220329005397/en/Silvergate-Bank-Issues-205-Million-Loan-to-MacroStrategy-Collateralized-by-Bitcoin" target="_blank" rel="noreferrer noopener">loan</a> to MicroStrategy in March. Its share price is also down 20% since Friday’s close.



Curiously, crypto mining stocks weren’t targeted to the same degree. US-listed outfits Marathon Digital and Riot Blockchain recorded $27 million and $10 million worth of shorts on Monday, respectively, both significantly under their yearly daily averages of $53 million and $67.5 million.&nbsp;



<h3>Short sellers could target crypto mining stocks next</h3>



Shorting specialists might not be focusing on top miners just yet, as those companies are, at least in theory, large enough to acquire fresh mining rigs and electricity sources relatively cheaply, bitcoin mining consultant Alejandro De La Torr told Blockworks.&nbsp;



It could put some public crypto miners in a better position than some of their smaller, unlisted counterparts, at least in the short term. Todd Esse, co-founder of bitcoin mining fund HashWorks, told Blockworks he expects shorters will target certain vulnerable mining stocks moving forward.



In any case, short interest — a measure of how many outstanding shares are attributable — for nearly all these stocks are now at yearly highs, according to data from finance and blockchain analytics startup quantX.



MicroStrategy&#8217;s short interest hit 30% in May (3.4 million shares of 11.30 million outstanding), but has since dropped slightly. Signature Bank shorts have surged: Its short interest is up 60% month over month, now at 2.57 million shares of almost 63 million outstanding.



“Pure bitcoin plays have slightly declined in short interest, whereas broader crypto plays have spiked this month,” quantX co-founder Oisin Maher said. The short interest in cryptoasset manager Voyager Digital’s US-listed equity, in particular, has exploded some 600% in June, while Galaxy Digital’s has been steadily growing all year.&nbsp;



<figure class="wp-block-image is-resized"><a href="https://lh6.googleusercontent.com/ko7Hp-Hp--Df_JFT8Kbn2XML73c3YN0Sr30S7I7bpjNCdFu0CACJmrsP7OSX53eVK45c-zjbfyez9YOBTtQ6c01hIsQwx15p2Q7kAGqDltq2EDk54WB7pCx5O1Bd5NcmDIlzWr3p7AEMKfEkXQ"><img decoding="async" loading="lazy" src="https://lh6.googleusercontent.com/ko7Hp-Hp--Df_JFT8Kbn2XML73c3YN0Sr30S7I7bpjNCdFu0CACJmrsP7OSX53eVK45c-zjbfyez9YOBTtQ6c01hIsQwx15p2Q7kAGqDltq2EDk54WB7pCx5O1Bd5NcmDIlzWr3p7AEMKfEkXQ" alt="" width="840" height="415"/></a><figcaption>Coinbase short interest over the past year | Source: quantX via Bloomberg Terminal</figcaption></figure>



Top crypto stocks have already booked more short volume in June than last September — when bitcoin was worth more than double its current price.&nbsp;



Still, FINRA data shows far more bets on crypto’s demise last month, which saw the Terra ecosystem implode and lending platform Celsius begin to falter.&nbsp;



Indeed, altogether in May, more than $11 billion worth of shorts were opened against Coinbase, MicroStrategy, Signature, Silvergate, Marathon and Riot — almost 70% levied at Coinbase.&nbsp;



Short sellers only logged more bets against these crypto stocks at one other time throughout the past year; October and November together saw more than $19 billion worth of shorts opened, when bitcoin was just retreating from its $69,000 record high.



The total value of all cryptocurrencies has tanked 65% since then — indicating there’s some very happy short sellers out there. Recent <a href="https://money.yahoo.com/crypto-stock-short-sellers-raked-in-4-billion-this-year-134004038.html" target="_blank" rel="noreferrer noopener">data</a> shows they&#8217;ve raked in almost $4 billion by shorting crypto stocks this year.



This article was updated at 5:07 am ET, Jun 17 to include reference to Silvergate&#8217;s loan to MicroStrategy.



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