Signature Bank, which has been facing financial difficulties and was closed by US regulators on March 12, has informed its crypto clients that they must close their accounts by April 5 and move their money to another institution. The bank’s crypto clients are estimated to have deposited around $16.5 billion.
Signature Bank’s plan
The Federal Deposit Insurance Corp (FDIC), which took control of Signature Bank following its closure, is urging the bank’s digital asset clients to move their deposits before the deadline, as the deal with New York Community Bancorp to buy deposits and loans from the failed bank did not include about $4 billion in deposits related to Signature’s digital asset business.
According to a spokesperson for the FDIC, “If they have not moved their funds by April 5, we will mail checks to the address on record.” The spokesperson confirmed that these deposits belonged to digital asset clients.
Signature Bank’s crypto clients have been given until April 5 to take their funds out and find another bank, or they will have their accounts closed by the federal regulator.
The bank’s payments platform Signet, which is powered by blockchain technology to facilitate real-time payments with no transaction fees or limits, was also excluded from the deal with New York Community Bancorp, and its fate remains uncertain.
Signature Bank’s executives explored “all avenues” to shore up its situation, including finding more capital and gauging interest from potential acquirers, but regulators closed the bank on March 12, stating that it posed a “systemic risk” to the US economy.
The move has raised eyebrows among observers, as regulators announced new facilities to shore up confidence in the country’s other banks on the same day they identified Signature Bank and Silicon Valley Bank as risks to financial stability.
FDIC’s action plan
The FDIC has informed Signature Bank’s digital asset clients that they have until April 5 to close their accounts and move their money to another institution. The FDIC spokesperson stated that if they have not done so by April 5, the FDIC will mail checks to the address on record.
The FDIC recently closed Signature Bank, and New York Community Bancorp entered into an agreement with US regulators to buy deposits and loans from the bank, but the deal did not include about $4 billion in deposits related to Signature’s digital asset business.
Signature Bank’s crypto clients have been advised to withdraw their funds before the deadline or face having their accounts closed. The bank’s executives explored various options to shore up its situation, including finding more capital and gauging interest from potential acquirers, but regulators closed the bank on March 12.
The move has raised eyebrows among observers, as regulators announced new facilities to shore up confidence in the country’s other banks on the same day they identified Signature Bank and Silicon Valley Bank as risks to financial stability.
The closure of Signature Bank has underscored the ongoing challenges that many financial institutions are facing, particularly those with high levels of uninsured deposits. The situation has raised questions about the safety of the US banking system and the potential implications for the broader economy.
