FDIC denies that would-be signature buyers need to give up crypto

FDIC denies that would-be signature buyers need to give up crypto

Following the collapse of Silvergate Bank – one of the two main banks providing financial services to crypto platforms – former customers began switching to competitor Signature, only for the latter to be seized by US authorities citing significant liquidity issues.

Significant crypto exposure

Given the public's lack of trust in the banking sector, U.S. authorities decided to place Signature Bank under receivership over the weekend, informing its leadership just hours before the public announcement. The bank was primarily invested in crypto, with over a quarter of all deposits coming from the industry.

The news dealt a blow to many crypto industry mainstays, decoupling USDC from Circle and creating uncertainty at Coinbase and Paxos, which had significant assets stashed at Signature Bank, among others.

The bank and its assets were put up for sale by US authorities, with the restriction that only potential buyers with an existing banking license were allowed to take a look at its finances. This led to both Royal Bank of Canada and PNC Financial Services ultimately deciding against purchasing.

FDIC denies any restrictions on crypto exposure

At the time, unnamed sources told Reuters that the FDIC had informed potential buyers that they would have to completely withdraw from the cryptocurrency industry.

However, an FDIC spokesman has now denied any such restriction, implicit or otherwise. As a result, Reuters has updated its previous article to reflect the FDICs' rebuttal.

Instead, the FDIC spokesperson reportedly referred potential buyers to a previous statement in which he simply stated that dealing with cryptocurrency could pose risks.

"In light of events highlighting a number of risks associated with crypto assets and crypto asset sector participants, the agencies issued a statement in January 2023 addressing key risks and are now issuing a Statement on Liquidity Risks. Given these increased risks, it is important for banking organizations […]to actively monitor the liquidity risks inherent in these funding sources and to adopt and maintain effective risk management practices."

According to the spokesman, potential buyers of Signature Bank can explain which assets and former customers they would like to take over. However, they are neither prohibited nor discouraged from continuing existing business relationships with the crypto industry.

The FDIC is currently making a second attempt to sell Signature after a previous attempt last Sunday.

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