FDIC Denies Report That Signature Bank Must Give Up On Crypto• March 18, 2023 10:46 am • Comments
The FDIC has recently denied multiple reports that stated that Signature Bank would have to stop all crypto operations as a result of the FDIC takeover.
Signature Bank was one of the most popular crypto banks within the United States that ended up having the same fate as Silicon Valley Bank.
The spokesperson for the FDIC specifically stated that it is not requiring the divestment of any crypto companies as part of any sale.
This goes against the suspicion from the crypto community where many thought that Signature Bank was targeted because it was a crypto bank.
At the time of the collapse, Signature Bank had around $100 billion in total assets under management which makes it one of the largest failures since 2008.
The Federal Deposit Insurance Corporation (FDIC) has denied a report that it would require any purchaser of Signature Bank to divest its crypto activities.@nikhileshde reportshttps://t.co/z2IQoNS85l
— CoinDesk (@CoinDesk) March 17, 2023
Earlier this week, Barney Frank, an ex-congressman who helped pen the Dodd-Frank Act, told CNBC that banking regulators shuttered the bank to send “a very strong anti-crypto message.” Frank also served on the Signature Bank board.
The New York Department of Financial Services was quick to dismiss his claim, saying in a statement the decision to place Signature into receivership “was based on the current status of the bank and its ability to do business in a safe and sound manner.”
Only bidders with existing banking charters will be allowed to review the bank’s financials before submitting an offer, according to Reuters.
The FDIC said it will accept bids until Friday for Signature Bank, which it shuttered on Sunday, and Silicon Valley Bank, which it shut down on March 10. For Silicon Valley Bank, or SVB, this will be the regulator’s second attempt to sell the institution after a failed auction on Sunday.
Currently, the FDIC is trying to find buyers for both SVB and Signature Bank and is exploring all options such as auctioning off individual parts if necessary.
Since the FDIC is denying the report, it means that whoever buys Signature Bank can continue the existing crypto operations that the bank had and that the FDIC is maintaining a neutral position on the cryptocurrency industry.
With that being said, it looks like it is quite difficult to find a buyer of Signature Bank as it seems that both the Royal Bank of Canada and PNC Financial Services decided not to make a purchase after looking at the bank’s financials.
According to the data, around 25% of the bank’s deposits had been invested in crypto which is much higher than many other traditional banks.
FDIC Denies That Potential Signature Buyers Must Give Up Crypto https://t.co/gOUFpl6Ony
— _ReportWire (@_ReportWire) March 18, 2023
Instead, the FDIC spokesperson allegedly referred potential buyers to an earlier statement, stating only that dealing with cryptocurrency may be a risk.
‘In light of events that highlight a number of risks associated with crypto–assets and crypto-asset sector participants, the agencies issued a statement in January 2023 addressing key risks and are now issuing a statement related to liquidity risks.
In light of these heightened risks, it is important for banking organizations […]to actively monitor the liquidity risks inherent in such funding sources, and establish and maintain effective risk management practices.’
According to the spokesperson, potential buyers of Signature Bank are in a position to declare which assets and former clients they would like to take on. Still, they are neither prohibited nor discouraged from continuing existing business relations with the crypto industry.
The FDIC is currently making a second attempt at selling off Signature after a previous attempt last Sunday.
A recent Reuters report suggested that #Signature Bank buyers would be required to abandon any crypto business.
FDIC denied the report, claiming the agency does not intend to prohibit any particular bank activities.
Banks can submit bids by March 17 for both Signature and #SVB. pic.twitter.com/te9MZOvLTn
— CryptoPotato Official (@Crypto_Potato) March 17, 2023
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