Firms looking to acquire the troubled Signature Bank will reportedly have to exit its cryptocurrency business. Those interested in buying the financial institution or Silicon Valley Bank (SVB) can submit offers before March 17.
Both entities, which acted as primary lenders to numerous cryptocurrency organizations, revealed operational difficulties earlier this week, prompting US regulators to shut them down.
The necessary condition: forget about cryptocurrencies
According to a recent Reuters coverageany potential Signature Bank bidder must agree to forego all cryptocurrency forays into the organization.
American authorities forced the bank closed its doors a few days ago after it revealed significant liquidity problems. The Federal Reserve said the measures were aimed at strengthening public confidence in the local banking system.
Multiple crypto-related companies used Signature’s services, which means they experienced considerable issues. The US-based exchange coin base It said it had $240 million in corporate cash in the bank, while blockchain infrastructure platform Paxos had $250 million of exposure.
Concerns about a possible banking crisis in the world’s strongest economy arose when regulators pulled the plug on Silicon Valley Bank, one of the 20 largest national banks, before its collapse. Circle, the company that issues the USDC stablecoin, accepted have $3.3 billion of their cash reserves trapped there.
The news negatively affected the asset, which decoupled from its dollar value to as low as $0.87 (data from CoinGecko). In the days that followed, the USDC stabilized and is currently hovering around its price target.
Several bidders, including PNC Financial Services and Royal Bank of Canada, explored the option to acquire Silicon Valley Bank last week. SVB could file for bankruptcy protection to sell its remaining assets, Reuters added.
The signature cracks before the accident
As crypto potato reported, US authorities, including the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), previously investigated whether Signature Bank took the necessary steps to combat money laundering by monitoring transactions. It is unknown when the investigation began and if it forced the control agencies to close the institution.
Regulators said they had taken steps to prevent a possible domino effect in the US financial sector. President Joe Biden too reduced the panic that spreads, describing the national banking system as “safe”.
He said that taxpayers will not feel the demise of SVB as the money will come from the fees that banks distribute to the Deposit Insurance Fund. Entities and investors exposed to the bank, however, will lose their assets because “that’s how capitalism works,” he explained.
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