- The deal to buy out Signature Bank has left its crypto business dead in the water.
- Crypto customers of the failed bank have until April 5 to remove their funds.
- The FDIC has completely removed any sign of crypto services from the bank after it was bought out by the NYCB.
The U.S. banking crisis that saw three crypto-friendly banks fall drew the attention of regulators. The Federal Deposit Insurance Corp. (FDIC) pin-pointed the banks’ digital asset offerings as the primary problem and led to regulators working on cutting out crypto from the businesses.
On March 28, the FDIC told crypto clients of collapsed Signature Bank that they should close their accounts and remove funds before an April 5 deadline. The regulator added any accounts not closed by the deadline will be automatically shut, and depositors will receive a check in the mail.
FDIC Takes Hold of Crypto to End It
When the New York Community Bancorp. (NYCB) swooped in to assume most of Signature Bank’s deposits and some of its loans earlier this month, but it was stated that the deal would not include any crypto.
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Around $4 billion of customer crypto deposits were held back by the FDIC, with the regulator telling Bloomberg it had contacted affected customers about what the implications of its decision would be.
“We are reaching out to the depositors from Signature whose deposits were not included in NYCB’s bid,” an FDIC spokesperson told Bloomberg.
However, it is not only the customer deposit that has been severed from the business.
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Signet, Signature’s real-time crypto payments network that crypto participants widely used, also stayed under the FDIC’s receivership following the NYCB deal.
Over-Reaching its Office
The decision by the FDIC to not include the crypto deposits and to keep hold of Signet in the banking deal raised red flags at the time with U.S. Representative Tom Emmer. Emmer said the “FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the U.S.”
The manner in which Signature has had its crypto services removed in this new deal indicates hostilities toward the digital asset space. However, at the time, crypto was not publicly blamed by the regulators. It was noted that Signature was shuttered due to “a significant crisis of confidence in the bank’s leadership,” the regulator said.
On the Flipside
- Despite crypto businesses being impacted in the U.S. by the banking crisis, Bitcoin – created in the wake of the 2008 financial crisis – has seen impressive price gains.
Why You Should Care
Decisions by regulators to make running crypto businesses in the U.S. more difficult – such as removing banking options – will result in an exodus of innovation to other nations more receptive to fostering the space.
Read more about the deal outlined by the FDIC:
Buyer of Signature Bank Told to Give up Crypto Business by FDIC.
Read more about Binance’s move to TUSD over BUSD:
Binance Finalizing BUSD Phase Out with New Range of TUSD Pairs.
