Customers of Signature have been asked to close any crypto-related accounts before a certain date. If the cryptocurrency deposits are not moved or the accounts close they will be sold off.
The amount obtained from liquidating the crypto assets will be sent to the client’s physical address in the form of a check.
Signature Bank’s Crypto Customers
Reportedly, customers of Signature Bank who hold cryptocurrency have until the 5th of April to withdraw their funds and switch to a different bank.
The Federal regulator would be forced to shut down such accounts in the event of failure to meet the 5th April deadline.
The US Federal Deposit Insurance Corporation (FDIC) has contacted depositors from Signature Bank whose deposits were not part of NYCB’s bid.
This was as per a statement of FDIC’s spokesperson reported by Bloomberg, confirming thereby that these deposits belonged to clients holding digital assets.
Depositors to Receive a Check
If depositors have their accounts closed by Signature Bank, they will nonetheless be sent a check to their addresses. This check would be equivalent to the value of the crypto assets deposited in the bank account.
Therefore, individuals who have crypto funds with Signature but are unable to transfer them should ensure that their registered address is accurate.
In such an event while the depositors won’t lose their investments entirely, they will lose their crypto investments.
With the latest bullish trend in the crypto markets, investors wouldn’t want to lose out on their crypto savings.
There is no confirmation from the FDIC on this development as yet but it might soon make announcements related to it.
New York Community Bancorp Acquires Signature’s Loans and Deposits
Last week, most of the loans and deposits of Signature Bank were acquired by New York Community Bancorp (NYCB).
However, the deal with the FDIC excluded deposits worth around $4 billion that were connected to Signature Bank’s business related to digital banking..
The deal between New York Community Bancorp and Signature Bank did not even include Signet, which is the bank’s payments platform.
Signet is powered by blockchain technology and allows for real-time payments without transaction charges or restrictions.
This means that the company uses blockchain as its underlying technology to operate and function. It is unclear what will happen to Signet at this time.
How Was FIDC Appointed As Receiver of Signature?
Earlier in march the bank based in New York, Signature was closed down by state regulators.
The closure was owing to fears that the bank was undergoing a bank run and posed a significant risk to the broader US economy.
In fact, it was potentially affecting the financial system as a whole. If not the only cause of the banking system failure in the US, it was definitely one of the main causes.
When banks are unable to meet their financial obligations, the FIDC is appointed as the receiver as was done in the case of Signature.
As the receiver, the FDIC is now responsible for managing and distributing the assets, funds, and property associated with Signature.
It will basically act as the liquidator of the bank and help sell off its assets now that it has been declared bankrupt. The FIDC was also taking bids from banks that were interested in buying Signature’s assets.
Other Crypto-Friendly Banks Face Challenges Too
Yesterday, the Senate Banking Committee in the United States organized a hearing to discuss how regulators responded to recent bank failures.
Representatives from FDIC, Federal Reserve, and Treasury were all present at the hearing.
The FDIC chairman Martin Gruenberg discussed the reasons behind the failures of other crypto-friendly banks like Silicon Valley and Signature Bank as well.
Additionally, it also reflected on the impact of the digital assets and how the FDIC was going to handle the situation.
These banks like Silicon, Signature, and Silvergate have taken on additional risks associated with cryptocurrency without addressing traditional banking risks. It is possible that due to their crypto-friendly nature, these banks have failed to manage the traditional financial risks that come with banking.
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