Key points to remember
- The FDIC announced yesterday that New York Community Bancorp would acquire Signature Bank through its subsidiary Flagstar.
- However, Flagstar’s offer excludes Signature Bank crypto customers.
- Signature Bank board member Barney Frank believes regulators shut down the institution to “send the message that crypto is toxic.”
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Flagstar is taking over operations from Signature Bank, but crypto firms may no longer be able to use the institution, the FDIC hinted in its press release yesterday.
Digital banking activities excluded
Signature Bank has found a new home.
The Federal Deposit Insurance Corporation (FDIC) announcement yesterday that New York Community Bancorp acquired crypto-friendly Signature Bank through its subsidiary, Flagstar Bank.
The FDIC said all former Signature Bank branches will operate as usual, during their regular business hours, beginning March 20. Existing Signature Bank customers have been asked to continue using their local branches until further notice.
However, the FDIC said that “Flagstar Bank’s offer did not include approximately $4 billion in deposits related to the digital banking business of the former Signature Bank,” meaning the companies are unlikely cryptography can continue to use the institution’s banking services. The regulator has declared its intention to return the $4 billion in crypto deposits to the companies themselves.
The decision to exclude crypto companies is noteworthy. Former Congressman and Signature Bank board member Barney Frank claimed last week that regulators shut down Signature Bank for political, not fundamental, reasons. “I believe regulators, especially New York state regulators, wanted to send the message that crypto is toxic,” he said. Reuters later reported that bidders for the shuttered bank were coerced by regulators into agreeing to exit the bank’s crypto business, a claim that FDIC officials denied.
Prominent members of the crypto community believe that the US government is currently attempting to cut the industry off from the banking sector, a strategy reminiscent of the Obama administration’s treatment of online poker. Last Wednesday House Majority Whip Tom Emmer (R-MN) sent a letter to the FDIC questioning whether regulators have “armed their authorities over the past few months to purge legal digital asset entities and opportunities from the United States.”
Disclosure: At the time of writing this article, the author of this article owned BTC, ETH, and several other crypto assets.