• 23 July, 2024
News

Paxos Trust Assures Customers of Asset Safety After Signature Bank Closure

Paxos Trust, a regulated NYDFS Trust Company, reassured customers on Twitter that their assets were secure after Signature Bank closed its doors abruptly on Sunday. The closure came after regulators warned that keeping the bank open could threaten the stability of the entire financial system.

Paxos, which currently holds $250M at Signature Bank, maintains relationships with multiple leading global banks and seeks private deposit insurance to manage customer assets exceeding FDIC insurance limits. The company also holds private deposit insurance well in excess of its cash balance and FDIC per-account limits as part of its conservative approach to risk management.

As a regulated NYDFS Trust Company, Paxos holds all customer assets and stablecoin reserves bankruptcy remote. Paxos stablecoin reserves are fully-backed and redeemable to customers 1:1 with the U.S. dollar at all times.

The company manages more than 90% of stablecoin reserves in short-term US Treasury bills and overnight repo to limit exposure to the US banking system and reduce US dollar cash holdings at depository institutions.

The government has taken extraordinary measures to protect customers and announced all customer deposits at Signature Bank will be fully guaranteed and available to customers on Monday. Gov. Kathy Hochul of New York stated that small businesses, including those driving the innovation economy, are key to New York’s robust economy, and their success is important.

On Friday, Signature Bank saw a torrent of deposits leaving its coffers, with customers panicking about their money. The outflows slowed by Sunday morning, and the bank’s leaders expected to weather the storm. However, regulators closed the bank, and customers of both banks will be made whole regardless of their account balances.

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