Last updated on March 30th, 2023 at 03:17 am
The Federal Deposit Insurance Company (FDIC) of the United States has stated that any investor who wishes to purchase Signature Bank must agree to discontinue all the bank’s cryptocurrency-related activities.
Signature Bank, headquartered in New York, and California-based Silicon Valley Bank (SVB) were known for their favourable stances towards cryptocurrencies as financial institutions. However, the regulator took over both banks last weekend, Signature Bank on Sunday and Silicon Valley Bank (SVB) on Friday, over concerns that the banks posed a systemic risk to the American economy.
According to a recent report, the FDIC requested that banks interested in acquiring the now-defunct financial institutions submit their bids by March 17, 2023.
The FDIC will only consider proposals from institutions with a bank charter, favouring traditional lenders over private equity groups. The regulator intends to sell off the entirety of SVB and Signature’s businesses, but is also open to offering parts of the banks for sale if its initial goal can’t be fulfilled.
Signature Bank became a dominant player in the cryptocurrency industry through its collaborations with and support for various enterprises, including Coinbase, Paxos, BitGo, and the insolvent cryptocurrency lender Celsius. The Bank’s position in the crypto market solidified even further when it partnered with Circle, the issuer of the second-largest stablecoin by market value, USD Coin (USDC).
Before its takeover, Signature Bank was reportedly being investigated by the Department of Justice (DOJ) and the US Securities and Exchange Commission (SEC) for possible negligence in monitoring its clients, including crypto clients who make up 25% of its deposits. The government agencies believed its perceived lax oversight may have allowed for money laundering to occur.
Meanwhile, the Federal Reserve commenced an investigation into the collapse of Silicon Valley Bank on March 13, 2023, to assess the regulatory and oversight strategies that the financial institution employed. Michael Barr, the Vice Chair for Supervision at the Federal Reserve, will lead the inquiry. The findings are expected to be made public on May 1, 2023.
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