The US Federal Deposit Insurance Corporation (FDIC) recently announced the sale of Signature Bank’s assets, with one notable exception: the cryptocurrency business.
Effective March 20th, Flagstar Bank will operate the 40 former Signature branches, and Signature savers who were not involved in digital banking will automatically become savers of New York Community Bancorp’s Flagstar Bank, with all deposits remaining FDIC insured.
However, Flagstar Bank’s purchase of Signature assets did not include approximately $4 billion in deposits related to the bank’s digital business.
The FDIC has stated that customers whose accounts are linked to the bank’s digital business will still have access to these deposits.
Founded in 2021, Signature Bank had over $110 billion in assets at the time of its collapse. Cryptocurrencies were not the bank’s primary focus, unlike Silvergate.
Signature Bank only began dealing with cryptocurrencies at the end of 2018, accounting for roughly 23% of all deposits, with plans to reduce their share to 15%.
There were rumors earlier that the FDIC would require future buyers of Signature to abandon the entire cryptocurrency business of the bank.
The FDIC also sought to sell Silicon Valley Bank (SVB) and Signature as a whole. If that failed, the corporation may consider selling in installments. However, the FDIC denied these rumors.
The FDIC spokesperson mentioned two joint statements, one of which states that banks are “not prohibited” from providing services to any sector.
According to the representative of the agency, the buyer himself will tell the FDIC what assets and liabilities of the bankrupt bank he is ready to take.
In addition to Signature, Silvergate and Silicon Valley also announced in March 2023 that they would cease operations.
The financial industry is facing a dynamic shift, and it is vital to keep an eye on market trends and innovations to remain relevant in the rapidly changing landscape.