Flagstar buys signature bank – except for the crypto business
Important takeaways
- The FDIC announced yesterday that New York Community Bancorp would acquire Signature Bank through its Flagstar subsidiary.
- However, Flagstar’s bid excludes Signature Bank’s crypto customers.
- Signature Bank board member Barney Frank believes regulators are closing the institution to “send the message that crypto is toxic”.
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Flagstar is taking over Signature Bank’s operations, but crypto companies may no longer be able to use the institution, the FDIC suggested in its press release yesterday.
Digital banking excluded
Signature Bank has found a new home.
Federal Deposit Insurance Corporation (FDIC) announced yesterday that New York Community Bancorp had acquired the crypto-friendly bank Signature Bank through its subsidiary Flagstar Bank.
The FDIC indicated that all former Signature Bank branches would operate as usual, during their normal business hours, from March 20 onwards. Existing Signature Bank customers were asked to continue using their local branches until further notice.
However, the FDIC declared that “Flagstar Bank’s bid did not include approximately $4 billion in deposits related to the former Signature Bank’s digital banking business,” meaning crypto companies are unlikely to continue using the institution’s banking services. The regulator stated its intention to return $4 billion of crypto deposits to the businesses themselves.
The decision to exclude crypto companies is notable. Former congressman and Signature Bank board member Barney Frank claimed last week that regulators had shut down Signature Bank for political reasons and not fundamental ones. “I think the regulators, especially the 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 forced by regulators to agree to divest the bank’s crypto business — a demand that FDIC officials rejected.
Prominent members of the crypto community believe that the US government is currently trying to cut off the industry 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 had “weaponized their authorities over the past few months to purge legitimate digital assets and opportunities from the United States.”
Disclosure: At the time of writing, the author of this piece owned BTC, ETH and several other crypto assets.
