- The FDIC has sold Signature Bank’s deposits and loans to Flagstar Bank, a subsidiary of New York Community Bancorp, but crypto-related deposits were not part of the deal.
- The FDIC initially denied reports that prospective buyers of Signature Bank would be required to give up their crypto business ties as part of the acquisition process.
- The collapse of Signature Bank has raised concerns about the future of startups that turned to the crypto-friendly lender for financial services.
The recent collapse of Signature Bank has raised concerns about the role of regulators in the crypto industry. According to recent reports, the United States Federal Deposit Insurance Corporation (FDIC) has announced that Signature Bank deposits and loans will be sold to Flagstar Bank, a New York Community Bancorp subsidiary. However, the deal will not include crypto-related deposits. The FDIC confirmed transferring these deposits to customers who opened a digital banking account.
The Sale of Signature Bank deposits to Flagstar Bank
According to the FDIC, $38.4 billion worth of non-cryptocurrency-related deposits and $12.9 billion in loans will be taken over by the Michigan-based Flagstar Bank under a “purchase and assumption agreement.” Signature Bank’s 40 branches will begin operating as Flagstar Bank, where all deposits assumed by Flagstar Bank will continue to be insured until the $250,000 insurance limit.
The collapse of Signature Bank has led to rumors that regulators targeted the bank due to its involvement with the crypto industry. Some experts speculated that the move to shut down the bank signaled to the industry that regulators are cracking down on crypto-related activities.
However, the FDIC denied reports that prospective buyers of Signature Bank would be required to relinquish their crypto business ties as part of the acquisition process. The agency is not looking to prohibit any particular activity by banks and is making a concerted effort to return the lenders to the private sector.
Implications of the collapse of Signature Bank
The takeover deal from Flagstar Bank did not include approximately $4 billion of deposits held by Signature Bank’s digital assets business. This move demonstrates that despite regulatory challenges, the crypto industry must continue to innovate and find new ways to serve its customers. Coinbase, Celsius, and Paxos are three crypto firms recently confirmed to have some Signature Bank exposure.
The collapse of Signature Bank has led to concerns about the future of the startups that turned to crypto-friendly lenders for financial services. While concerns remain, the recent announcement that $4 billion of deposits held by Signature Bank’s digital assets business would be transferred directly to customers is a positive sign for the industry.
Moreover, the fact that the FDIC is making a concerted effort to return the lenders to the private sector suggests that there is still hope for the future of the crypto industry. Successful sales could minimize the fallout from the collapse of SVB and Signature Bank and prevent US taxpayers from bearing the cost of salvaging the banks.