The Federal Deposit Insurance Corporation (FDIC) confirmed the sale of Signature Bank’s assets, but digital asset deposits were not a part of the purchase agreement.
In a March 19 announcement, the FDIC said that 40 former branches of Signature would operate under Flagstar Bank, a subsidiary of New York Community Bancorp. All depositors, besides those related to Signature’s digital banking business, would automatically become depositors at Flagstar by opening hours of business on Monday.
“Flagstar Bank’s bid did not include approximately $4 billion of deposits related to the former Signature Bank’s digital banking business. The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business,” stated the FDIC.
The exclusion of Signature’s digital asset business comes after the FDIC denied a Reuters report last week, alleging that the agency required potential buyers to consent to giving up all crypto-related business activities.
Unsurprisingly, the decision sparked outrage among several industry watchers, who took to Twitter to state their frustration.
im sure the spin tomorrow is going to be "this was entirely flagstar's decision" of course – they saw what happened to the last two guys that stuck their heads out and supported crypto
— nic carter 🌠 (@nic__carter) March 20, 2023
“After hearing for the past two weeks about how FDIC always wants to keep banks together and do a full single sale, they make an exemption for crypto, just to try to kill it,” tweeted Bitcoin developer Matt Corallo.
Last week, crypto lobbying group the Blockchain Association launched an investigation into allegations of de-banking of crypto firms and actions taken by regulators that may have contributed to the failures of Signature, Silicon Valley Bank (SVB) and Silvergate.
The association sent Freedom of Information Act requests to the FDIC, the Federal Reserve and the Office of the Comptroller of the Currency (OCC) to provide documents and communications around the issue. It also requested crypto industry participants to come forward with their stories under confidentiality as it builds the investigation.