Federal Deposit Insurance Corporation (FDIC) has denied a report that Signature Bank’s purchaser must divest its crypto activities. The report had claimed that the FDIC was demanding that any customer of Signature Bank would need to relinquish all cryptocurrency-related activities conducted by the bank.
However, an FDIC representative refuted the assertion and explained that the bank’s receivership would persist until the bank’s properties are auctioned and all complaints against the bank were settled. The bidder decides the specifics of their proposal, media reports said.
The FDIC has made it clear that it will be up to the acquirer to determine which assets and liabilities of the failed bank they are willing to acquire, citing the agency’s resolution handbook. The spokesperson also referenced two collaborative declarations released by the FDIC, which confirm that banks are not limited or discouraged from providing services to any sector.
The FDIC’s rebuttal comes in the wake of the recent takeover of Signature Bank by the New York Financial Services, which were then transferred to the FDIC’s control over the weekend.
The bank run on Friday and a lack of reliable information over the weekend led to the NYDFS losing confidence in the bank’s leadership. Barney Frank, a board member of Signature and co-author of the Dodd-Frank Act, implied that the bank’s seizure was politically motivated and might have been influenced by an anti-crypto bias. Nevertheless, a spokesperson for the New York Department of Financial Services rejected this assertion, indicating that the regulatory agency had lost faith in the bank’s leadership following a bank run and a lack of dependable information over the weekend.
The FDIC is planning to auction off both Signature and Silicon Valley Bank, which was seized by a state regulator the previous week, by the end of this week. The news of Signature’s crypto activities not being required to be divested has brought some relief to the crypto community, which has been wary of regulatory pressure on banks providing services to the industry.
This development also highlights the evolving relationship between traditional finance and cryptocurrencies. While many regulators have been skeptical of the industry, the increasing adoption of cryptocurrencies by banks and other financial institutions has forced regulators to take a more nuanced approach to the sector.
