Signature Bank Crypto customers have 1 week to close accounts

Customers of collapsed lender Signature Bank who hold cryptocurrency have been notified by the US Federal Deposit Insurance Corp (FDIC) that they have until April 5 to close their accounts and transfer their money.

Signature Bank’s bailout with Flagstar Bank, a New York Community Bancorp subsidiary, did not cover the crypto accounts created earlier this month.

Crypto is not part of the Signature Bank Deal

40 Signature Bank locations reopened as Flagstar properties following the March 19 deal. Flagstar Bank bought $12.9 billion in debt and $38.4 billion in assets for a discount of $2.7 billion.

BeInCrypto previously determined that the deal did not cover $4 billion in deposits made by Signature Bank’s cryptocurrency-related businesses. Along with deposits from web3 firms, the agreement has also excluded Signature Bank’s payment network, Signet.

The FDIC spokesperson stated, “These are the deposits we are encouraging customers to move by April 5. If they have not done so by that day, we will send checks to the address on file.”

According to reports, the FDIC will continue to hold $4 billion in assets from Signature Bank and about $60 billion in loans.

Banks’ reluctance to crypto and unclear rules

Signature Bank is not alone in eliminating the crypto vertical. Reports confirmed that the acquisition agreement for Silicon Valley Bank by First Citizens excluded cryptocurrencies and loans backed by digital assets from the purchase agreement.

Barney Frank, a former US representative on Signature’s board, told the Financial Times why this could happen. He said the banks were responding to an increase in regulatory hostility towards cryptocurrencies. This followed the collapse of the digital exchange FTX in November last year.

Meanwhile, Galaxy Digital CEO Mike Novogratz wants regulators to discuss AI rules instead of cryptocurrencies. On the company’s fourth quarter call, he said,

“When I think about AI, it shocks me that we talk so much about crypto regulation and nothing about AI regulation. I mean, I think the government has got it completely on its head.”

However, according to the New York State Financial Services Department, Signature Bank’s shutdown was not caused by crypto. According to the state regulators, the bank’s managers failed to provide reliable and consistent information. Therefore, the choice was based on lack of transparency rather than crypto.

In a recent piece, Katie Haun, founder of Haun Ventures and member of the Coinbase board, discussed how US financial regulators are purposefully suppressing the cryptocurrency industry. Silvergate, Silicon Valley Bank and Signature bank were the recent high profile collapses.

However, the head of the Basel Committee on Banking Supervision believes that international standards intended to limit banks’ crypto holdings may be revised depending on the market. But it remains to be seen whether bailed-out entities like Signature Bank will treat crypto customers differently in the future. New capital regulations could enter into force by the start of 2025, according to chairman Pablo Hernández de Cos.