- US FDIC advises crypto clients to move their funds and close all accounts on Signature bank before April 5.
- Signature’s payments platform, Signet, is still up for grabs as the FDIC seeks to sell it.
- The FDIC confirms that $4 billion in deposits held in Signature bank belong to digital asset clients.
The US banking industry was recently hit as some important banking institutions were forced to shut down. Several companies in the crypto industry have felt the brunt of the US banking crisis, and their clients are being advised to withdraw all deposits from these banks.
The US FDIC (Federal Deposit Insurance Corporation) has contacted Signature bank’s crypto clients, requesting that they withdraw and close all accounts on or before April 5, 2023.
A spokesperson for the US FDIC claimed that it is in contact with the crypto depositors whose deposits are not included in the NYCB’s bid. Bloomberg also reported that these deposits belong to virtual assets clients.
The reports further state that depositors with their accounts closed should expect a check to their registered addresses. Hence, clients who are unable to transfer the funds in their Signature accounts are advised to have their registered addresses updated.
Although a subsidiary of New York Community Bancorp (NYCB)—Flagstar Bank—acquired the majority of Signature’s deposits and loans, which were $34.8 billion worth of non-crypto-related deposits and $12.9 billion worth of loans, the purchase did not include the $4 billion deposits held by Signature bank’s virtual assets business.
“Flagstar’s bid did not include approximately $4 billion of deposits related to the former Signature Bank’s digital assets business,” the FDIC reported.
The FDIC confirmed that it would return these deposits “directly” to clients whose accounts were related to the virtual assets banking business.
Along with the fallen bank’s digital assets, the bank’s payments platform, Signet, was also excluded from the deal with NYCB as the FDIC is now looking to sell the blockchain-powered technology used in approving real-time payments for crypto firms with zero transaction fees or restrictions.
What happened to Signature Bank?
On March 12, the New York-based bank—Signature Bank—was shut down by the city’s regulators (New York Department of Financial Services( who took control of the crashed bank and handed the insurance process to the FDIC.
A joint statement released by the Treasury, FDIC, and Federal Reserve stated that shutting down Signature bank was a “decisive action to protect the US economy” and improve the people’s faith in the banking industry.
The signature bank was known to be a crypto-friendly bank, so when the New York regulator cited a systemic risk as the reason for shutting down the bank, crypto clients affiliated with the bank were worried about their accessibility to their funds on the platform.
Conclusion
The FDIC has warned crypto clients with funds in the Signature bank to withdraw all deposits before April 5. Following the recent incidents that triggered investors to move their investment portfolios to money market funds, faith in the US banking system has been up for debate.
