key takeaways
- The FDIC announced yesterday that New York Community Bancorp would buy Signature Bank through its subsidiary, Flagstar.
- However, Flagstar’s offer excludes Signature Bank’s crypto clients.
- Signature Bank board member Barney Frank believes that regulators shut down the institution to “send the message that cryptocurrencies are toxic.”
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Flagstar is taking over operations of Signature Bank, but cryptocurrency firms may no longer be able to use the institution, the FDIC hinted in its press release yesterday.
Digital Banking Business Excluded
Signature Bank has found a new home.
The Federal Deposit Insurance Corporation (FDIC) Announced yesterday that New York Community Bancorp had acquired crypto bank Signature Bank through its subsidiary, Flagstar Bank.
The FDIC indicated that all of Signature Bank’s former branches would operate as usual, during their normal business hours, beginning March 20 onwards. Existing Signature Bank customers were told to continue using their local branches until further notice.
However, the FDIC stated that “Flagstar Bank’s offer did not include approximately $4 billion in deposits related to the former Signature Bank’s digital banking business,” meaning it is unlikely that cryptocurrency companies will be able to continue using Institution’s banking services. The regulator declared its intention to return the $4 billion of crypto deposits to the companies themselves.
Notable is the decision to exclude crypto companies. Former congressman and Signature Bank board member Barney Frank claimed last week that regulators had closed Signature Bank for political, not fundamental, reasons. “I think the regulators, especially the ones in New York state, wanted to send the message that cryptocurrencies are toxic,” he said. Reuters later reported that regulators forced bidders for the shuttered bank to agree to give up the bank’s cryptocurrency business, a claim that FDIC officials denied.
Notable members of the crypto community believe that the US government is currently trying to separate the industry from the banking sector, a strategy reminiscent of the Obama administration’s treatment of online poker. Last Wednesday, the House Majority lashed out at Tom Emmer (R-MN) sent a letter to the FDIC questioning whether regulators had been “arming their authorities in recent months to purge US digital asset legal entities and opportunities.”
Disclosure: At the time of writing, the author of this article owned BTC, ETH, and various other crypto assets.
