FDIC Updated on 'No Crypto Business' for Signature Bank Buyers

The FDIC updated its opinion over the purchase of Signature Bank, which collapsed recently.
On March 15, Reuters reported that the buyer of Signature Bank needs to close all crypto business at the bank.

The FDIC recently gave an update and denied that it would require any buyer of Signature Bank to divest its crypto businesses. The Federal Deposit Insurance Corporation (FDIC) is US regulatory that insures deposits in US banks.

An Update by The FDIC

The US regulator provided an update to Reuters’s March 15 report which it added that the future buyer of Signature Bank “must agree to give up all the crypto business at the bank,” by citing two unnamed sources.

After this, an FDIC spokesperson denied this to Reuters and said in an email that “the receivership does not end until all the bank’s assets are sold, and all the claims against the bank are addressed, and the acquirer decides the conditions of their bid.”

The spokesperson continued that the acquirer will tell the regulator “what assets and liabilities from the failed bank it is willing to take.” And further cited the agency’s resolution handbook. The spokesperson also referred to two joint statements published by the FDIC, Office of the Comptroller of the Currency, and the Federal Reserve, one of which states that banks are “neither prohibited nor discouraged” from providing services to any sector, as CoinDesk reported.

Meanwhile, an FDIC spokesperson told Reuters that “the agency would not require divestment of crypto activities as part of any sale.”

Over the weekend, Signature Bank was seized by the New York Department of Financial Services, then turned over to the FDIC. After this the Board member of Signature Bank, Barney Frank, claimed that this was a “political move” by regulators. The regulators had lost confidence in the bank’s leadership after a bank run on March 10, also a lack of “reliable” information.

The FDIC is ready to auction Signature Bank and Silicon Valley Bank (SVB), the other US bank seized by a state regulator last week. The auction of both of the banks is possible to happen by the end of this week.

On March 17, FDIC also shared a joint statement with the Department of Treasury, Federal Reserve, and Office of the Comptroller of the Currency. The statement is related to the actions by “the largest US banks to deposit $30 billion into First Republic Bank & demonstrate the resilience of the banking system.”

The following statement was released by Secretary of the Treasury Janet L. Yellen, Federal Reserve Board Chair Jerome H. Powell, FDIC Chairman Martin J. Gruenberg, and Acting Comptroller of the Currency Michael J. Hsu.

Moreover, according to a S&P Global Market Intelligence report, 94% of domestic deposits of SVB were uninsured. Additionally, 90% deposits of Signature Bank were uninsured. This is clearly quite higher than the proportion held by large US banks, nearly 47% according to S&P Global.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing