FDIC has asked banks interested in bidding for Signature Bank to submit their offer by March 17th but gave a condition: no more crypto business at the bank.
The Federal Deposit Insurance Corporation (FDIC) put the Signature Bank for sale after taking over its control following its closure. The upcoming auction, however, has unusual conditions.
FIDIC will only allow bidders with an existing bank charter to study the Signature Bank’s finance’s before submitting their offer. The move is seen as favoring traditional lenders over private equity firms.
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Prospective buyers of the collapsed bank are also required to abandon the cryptocurrency business at the bank. Reuters reported the development on March 15th, citing sources familiar with the matter.
Signature Bank was the third major US-based bank to fall in a span of one week, after Silvergate Bank and Silicon Valley Bank (SVB). All three banks were deemed crypto-friendly banking institutions. A quarter of Signature Bank’s deposits were in cryptocurrencies.
Statistica Capital Ltd. and Statistica Ltd. filed a putative class-action lawsuit against Signature for knowing and contributing to the FTX fraud. The bank was also under investigation by the US Justice Department and Securities and Exchange Commission (SEC) for potential lax in monitoring money laundering activities.
Major names in the crypto industry have speculated the shutdown of the three cryptocurrency-friendly banks to be part of a coordinated effort by regulators to eliminate crypto from the banking system.
Former Democratic congressman and Signature Bank board member Barney Frank told NBC News that the takeover of the bank was inspired by anti-cryptocurrency motives.
I think part of what happened was that regulators wanted to send a very strong anti-crypto message.
However, Frank’s claims were denied by the New York Department of Financial Services (NYDFS), stating that the closure of the bank had nothing to do with the crypto.