Bullet points:
• Jefferies analyst Ken Usdin downgraded Signature Bank stock from buy to hold.
• The downgrade comes after a 67% year-over-year decline in the stock’s price.
• The decision to shrink Signature Bank’s digital asset deposits business is understandable due to recent developments in the cryptocurrency industry.

Signature Bank (SBNY) is feeling the heat of the recent developments in the cryptocurrency industry. After a year-over-year decline in its stock of 67%, Jefferies analyst Ken Usdin downgraded the bank’s stock from buy to hold and slashed its price target to $124 from $185.

The decision to shrink Signature Bank’s digital asset deposits business is understandable due to the uncertainty present in the cryptocurrency industry. The recent turbulence in the digital asset industry has resulted in the need for banks to scale back their involvement in the space. This is evident in Metropolitan Commercial Bank’s decision to end its crypto-related services.

The negative impact of this decision on net interest margin (NIM) and net interest income (NII) has been underestimated, according to Usdin. This is because the bank’s involvement in the digital asset industry was seen as a potential source of growth for the company.

The panel on the show “The Hash” discussed how the FTX contagion will affect the banks that have expanded into crypto. Usdin noted that the banks that have adopted a more conservative stance with regard to digital assets will be better positioned to survive the current market conditions.

Usdin concluded by saying that further developments in the cryptocurrency industry could further impact the stock’s performance. He advised investors to remain cautious in the near term as the industry is still in its nascent stages and is far from being regulated.