Customers of collapsed lender Signature Bank who hold cryptocurrencies have been notified by the US Federal Deposit Insurance Corp (FDIC) that they have until April 5 to close their accounts and transfer their funds.
The crypto accounts made earlier this month were not included in Signature Bank’s rescue arrangement with Flagstar Bank, a subsidiary of New York Community Bancorp.
Crypto Signature is not part of the bank deal
Following the March 19 settlement, 40 Signature Bank locations were reopened as Flagstar properties. Flagstar Bank acquired $12.9 billion in loans and $38.4 billion in assets for a discount of $2.7 billion.
BeInCrypto previously established that the settlement did not include $4 billion in deposits held by Signature Bank’s crypto-related businesses. Along with deposits from the Web3 firms, the deal also excludes Signature Bank’s payments network, Signet.
“Those are deposits that we are encouraging customers to transfer before April 5. If they have not done so by that day, we will mail a check to the address on record,” said an FDIC spokesperson.
According to reports, the FDIC will have Signature Bank’s $4 billion in assets and about $60 billion in debt.
Banks’ resistance to crypto and unclear regulations
Signature Bank is not alone when it comes to dismantling the crypto vertical. The report confirms that the acquisition agreement for Silicon Valley Bank by First Citizens excludes cryptocurrencies and loans backed by digital assets from the purchase agreement.
Barney Frank, the former US representative on the Signature Board, told the Financial Times why this is happening. He added that banks were reacting to a rise in regulatory hostility towards cryptocurrencies. This happened after the collapse of digital exchange FTX last November.
Meanwhile, Galaxy Digital CEO Mike Novogratz wants regulators to discuss AI regulations instead of cryptocurrencies. On the company’s fourth quarter call, he said,
“When I think about AI, it amazes me that we are talking so much about crypto regulation and nothing about AI regulation. I mean, I think the government has done it all. Kind of turned it upside down.
However, according to the New York State Department of Financial Services, the closing of Signature Bank was not brought about by Crypto. According to state regulators, the bank’s officials failed to provide reliable and consistent information. Therefore, the choice was based on lack of transparency rather than crypto.
In a recent piece, Katie Hahn, founder of Hahn Ventures and Coinbase board member, discussed how US financial regulators are deliberately stifling the cryptocurrency industry. Silvergate, Silicon Valley Bank and Signature Bank were recent high-profile collapses.
However, the head of the Basel Committee on Banking Supervision believes that international standards designed to limit crypto holdings of banks can be modified depending on the market. But, it remains to be seen whether shielded institutions like Signature Bank will treat crypto customers any differently in the future. The new capital rules could come into effect as early as 2025, according to Chair Pablo Hernandez de Cos.
BeInCrypto has reached out to the company or individual involved in the story for an official statement regarding the recent developments, but has not yet received a response.