The FDIC plans to return around $4 billion worth of Signature Bank deposits tied to digital assets by "early next week."

FDIC to Return $4B in Signature Bank Deposits Next Week

  • The Federal Deposit Insurance Corporation (FDIC) plans to return around $4 billion worth of Signature Bank deposits tied to digital assets by “early next week.”
  • The bank’s payment platform, Signet, and around $4 billion in deposits, along with $60 billion in loans, were not part of the purchase agreement with Flagstar Bank.
  • All the crypto related accounts at Signature Bank that are not part of the NYCB deal will be closed by April 5, in case the depositors do not move their funds. 
  • Nellie Liang, the under secretary for domestic finance at the US Treasury Department, didn’t believe crypto “played a direct role” in the failure of US banks.

A prominent crypto-friendly bank, Signature Bank, was closed by the New York Department of Financial Services (NYDFS) following the collapse of Silicon Valley Bank and its closure by the California Department of Financial Protection and Innovation (DFPI). The two banks were put up for sale, with a subsidiary of New York Community Bancorp purchasing Signature. Interestingly, around $ billion worth of deposits and $60 billion worth of loans remained with the bank, which the Federal Deposit Insurance Corporation (FDIC) plans to return by “early next week.”

The FDIC was established as the receiver of both Silicon Valley Bank and Signature earlier this month following their collapse. In a March 29 hearing of the US House Financial Services Committee, which was responsible for exploring the responses of federal regulators over the failure of these banks, the chair of the United States FDIC, Martin Gruenberg, confirmed that the plan for the remaining $4 billion in Signature Bank deposits is being set in motion. 

Gruenberg stated that the plan is to return the deposits that were not covered in the agreement between the subsidiary of New York Community Bancorp (NYCB) by “early next week.” It is crucial to note here that these $4 billion are tied to crypto deposits, and the FDIC plans to close all the crypto related accounts at Signature Bank which are not part of the NYCB deal by April 5 in case the depositors do not move their funds. 

As reported earlier by Reuters, Flagstar Bank, the subsidiary of NYCB, in agreement with Signature Bank, purchased all of the bank’s deposits, some of its loan portfolios, and all 40 of its former branches. Along with $4 billion worth of crypto deposits, $60 billion worth of loans also remain in receivership with the FDIC. Flagstar will buy $12.9 billion of loans at a discount of $2.7 billion, and the deal cost the government agency around $2.5 billion from the Deposit Insurance Fund.

Gruenberg also confirmed that the payment platform debuted by Signature Bank, Signet, along with its crypto deposits, were not included in the NYCB deal and added that these were “in the process now of being marketed” to potential buyers. 

It is important to mention here that Nellie Liang, the under secretary for domestic finance at the US Treasury Department, didn’t believe crypto “played a direct role” in the failure of either Signature or Silicon Valley Bank, adding:

“I know that Signature had activities involved in digital assets, but I don’t believe that is the main [cause].”

As reported earlier by Bitnation, Barney Frank, a member of the Signature Bank board and a former Congressman known for co-authoring the Dodd-Frank Act following the 2008 market collapse to prevent a global crisis, said the bank was closed down by the NYDFS to send a message to crypto investors and make a point that blockchain-based digital currencies are dangerous

 “Crypto panic generated that set of withdrawals,” said Frank. “But I believe the regulators, especially the New York state regulators, wanted to send the message that crypto is toxic.” 

Parth Dubey
Parth Dubey Verified Author

A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.

Latest News