Signature buyers will be forced to put a halt on all crypto operationsThe US Federal Deposit Insurance Corp (FDIC) has asked for bids from interested banks to acquire failed lenders Silicon Valley Bank and Signature Bank, with submissions due by March 17th.
Signature buyers must put a halt to crypto operations
According to unnamed sources, any buyer of Signature Bank must agree to give up all crypto business at the bank. This is a result of the bank’s shuttering due to “a significant crisis of confidence in the bank’s leadership.”
However, an FDIC spokesperson has since clarified that the agency would not require divestment of crypto activities as part of any sale. FDIC Chairman Martin Gruenberg has stated that the agency is not looking to prohibit any particular activity by banks.
The bank was well known in the crypto space, and at the end of September, almost a quarter of its deposits came from the cryptocurrency sector.
Despite earlier reports that buyers of Signature Bank would need to divest themselves of all crypto business at the bank, the FDIC spokesperson stated that the agency would not require divestment of crypto activities as part of any sale.
Class action lawsuit filed against Signature Bank
A class action lawsuit has been filed against Signature Bank and former CEO Joseph DePaolo, CFO Stephen Wyremski, and COO Eric Howell for allegedly committing fraud.
Shareholders have accused the bank of falsely claiming to be “financially strong” just three days before it was seized by the state regulator. The lawsuit seeks unspecified damages for shareholders who held stock between March 2 and 12.
According to Barney Frank, a former member of the U.S. House of Representatives, New York regulators closed Signature Bank despite no insolvency.
Frank speculated that the action was to demonstrate force over the crypto industry, being a “very strong anti-crypto message.” However, the FDIC in January said that it didn’t prohibit or discourage banking organizations from providing banking services to customers of “any specific class or type, as permitted by law or regulation.”
The FDIC aims to sell both banks in their entirety. Any offers for parts of the banks will only be considered if the sale of the entire company is not feasible.
Silicon Valley Bank and Signature Bank have been in the hands of regulators since last week, following a period of turmoil that has affected the global financial system. The FDIC is hoping that returning the lenders to the private sector will help minimize potential capital shortfalls.
Only bidders with an existing bank charter will be allowed to examine the banks’ financials before submitting an offer, in an effort to give traditional lenders an advantage over private equity firms.
The FDIC has been in the news lately for other reasons too, namely its efforts to expand the FedNow Service. This system is designed to facilitate instant payment services by financial institutions nationwide, regardless of their size or location.
Financial institutions participating in the FedNow Service will be able to send and receive instant payments around the clock, every day of the year.
The FedNow Service is set to launch in July, and the FDIC is currently in the process of certifying participants for the launch.
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