US Federal regulators have reportedly given cryptocurrency clients of Signature Bank until April 5 to withdraw their funds or have their accounts closed. The Federal Deposit Insurance Corporation (FDIC) confirmed that these deposits belonged to digital asset clients. The FDIC took over the bank as a receiver after it was closed by New York regulators on March 12. The bank was reportedly experiencing a bank run and posed a “systemic risk” to the US economy.
While New York Community Bancorp (NYCB) bought most of the deposits and loans held by Signature Bank on March 19, the deal did not include approximately $4 billion of deposits related to the former Signature Bank’s digital banking business. The FDIC asked interested banks to submit bids for the acquisition of the assets of Signature Bank by March 17. However, they requested banks to forgo backing any cryptocurrency services.
The fate of Signet, Signature’s payments platform, is still currently uncertain. The platform uses blockchain technology to facilitate real-time payments with no transaction fees or limits. Signature Bank clients who have their accounts closed will receive a check to their registered address, so anyone with funds held with Signature should ensure their registered address is up-to-date.
The ongoing investigation into careless oversight that permitted financial wrongdoing makes it difficult for the bank to recover. Regulators want to sell the entire businesses of Signature Bank and Silicon Valley Bank, but they may consider offers for just a portion of the banks.
The crypto community has expressed its concerns about the treatment of crypto-related assets by banks. The closure of Signature Bank’s crypto-related accounts is seen as a blow to crypto adoption by banks. The event is a reminder that centralised entities like banks could pose a threat to the crypto space.
Rep. Tom Emmer worries that the federal government is using problems in the banking sector as “weapons” to target cryptocurrencies in a letter to the FDIC. The authorities continue to deny claims that they are anti-crypto, and they place the blame for all of these actions on their lack of faith in the bank’s management.