FDIC seeking Signet buyer, returning Signature crypto deposits next week

Members of the House Financial Services Committee pressed Federal Deposit Insurance Corp. Chair Martin Gruenberg over his agency’s handling of Signature Bank’s digital asset-related business. 

The FDIC assumed control of Signature earlier this month after state regulators shut the institution down over bank run concerns. The bank regulatory agency currently controls a ‘bridge bank’ meant to temporarily continue Signature’s services without significant disruption until the bank or its assets can be sold off. 

Gruenberg affirmed that the FDIC would not block a buyer for Signet if part of an acquisition. Another New York bank has agreed to assume a large chunk of Signature’s deposits, though Gruenberg made clear the deal does not include the majority of Signature’s digital asset business.

Pressed by Rep. Andrew Garbarino, R-N.Y., as to why Signature’s digital asset deposits weren’t included in the recent sale, Gruenberg replied that the winning bidder for Signature’s deposits didn’t want them. 

“The winning bid chose not to bid on the digital assets, and there were about $4 billion of those,” said Gruenberg, who added that the agency is in the process of marketing Signet, Signature’s crypto-focused payments network, for sale. 

“It’s my understanding that Signet was not acquired and is in the process now of being marketed,” said the FDIC chair. Gruenberg added that the agency plans to return the $4 billion in crypto-related deposits to customers next week. 

Asked by Rep. Tom Emmer, R-Minn., about Silicon Valley Bank’s digital asset customers, Gruenberg said that the bidder in that case took on all of the failed bank’s deposits, in contrast to the partial bid that the FDIC received for Signature’s. 

The FDIC chair, who notably did not specifically blame exposure to crypto assets in the failure of Silvergate Bank during testimony before Congress this week, also denied that bank regulators had told banks that take on digital asset clients that they would be tougher on them, a criticism levied by some crypto advocates, including Emmer, in recent months. 

“Has the FDIC ever communicated implicitly or explicitly to any banks that their supervision will be more onerous in any way if they take on new or maintain existing digital asset clients?” Emmer asked. 

“No,” replied Gruenberg.

New York state regulators seized Signature Bank earlier this month after a run on the bank following the collapse of tech-friendly Silicon Valley Bank.

Former Rep. Barney Frank, an author of a major financial regulation law and a member of the bank’s board, criticized the state-level decision by arguing that regulators “wanted to send the message that crypto is toxic.”  

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.