Potential Signature Bank buyers asked to stop crypto business by FDIC: Report
- The report citing sources states that FDIC will only accept bids from banks with an existing bank charter, prioritizing traditional lenders over private equity firms.
- Signature bank’s crypto clients accounted for a quarter of its deposits
Signature bank, which was shut down by the United States Federal Deposit Insurance Corporation (FDIC), is now on the lookout for buyers. As per a Reuters report, FDIC has mandated any buyer of Signature to agree to give up all crypto business at the bank.
The report citing sources states that FDIC will only accept bids from banks with an existing bank charter, prioritizing traditional lenders over private equity firms. FDIC reportedly disallowing crypto firms to acquire Signature Bank is seen as an attack against the crypto sector by many in the community.
The latest move by FDIC also comes amid U.S. Representative Tom Emmer sending a letter to FDIC Chairman Martin Gruenberg, alleging that the government is “weaponizing” issues around the banking industry to go after crypto.
“These actions to weaponize recent instability in the banking sector, catalyzed by catastrophic government spending and unprecedented interest rate hikes, are deeply inappropriate and could lead to broader financial instability,” Emmer’s letter reads.
Apart from Emmer, Barney Frank, a former member of the U.S. House of Representatives, also alleged the regulators shutting down Signature Bank despite no insolvency was to demonstrate force over the crypto industry.
Irrespective of the allegations, it is concerning how FDIC has reportedly prohibited forms engaging in crypto business to acquire Signature Bank.
Over the years, Signature Bank has earned a reputation for itself as a crypto-friendly bank by servicing big companies in the Web3 space. Crypto exchange Coinbase, crypto lender Celsius and stablecoin issuer Paxos are some crypto firms which had their funds tied up at Signature Bank.
In February, the bank also faced a putative class-action lawsuit for allegedly facilitating the “FTX fraud“. “In particular, Signature knew of and permitted the commingling of FTX customer funds within its proprietary, blockchain-based payments network, Signet,” the suit alleged.