The sale of Signature Bank's deposits and loans to Flagstar Bank, a subsidiary of New York Community Bancorp, has been approved by the United States Federal Deposit Insurance Corporation (FDIC). However, it is important to note that crypto-related deposits will not be included in the deal.
Under the "purchase and assumption agreement," Flagstar Bank will take over $38.4 billion worth of non-cryptocurrency-related deposits and $12.9 billion in loans. From March 20, all deposits assumed by Flagstar Bank will continue to be insured up to the $250,000 insurance limit.
This acquisition is a significant development in the banking industry, and it highlights the importance of ensuring the safety and security of deposits. It is a testament to the resilience of the banking sector and its ability to adapt to changing circumstances. As we move forward, it is crucial that banks continue to prioritize the needs of their customers and provide them with the best possible service.
The takeover agreement between Flagstar Bank and Signature Bank's digital assets business did not include approximately $4 billion in deposits. However, the FDIC has confirmed that it will transfer these deposits directly to customers who have opened a digital banking account. This means that customers associated with the digital banking business will receive their deposits directly from the FDIC.
It's worth noting that the $4 billion figure represents 4.5% of the total $88.6 billion deposits that Signature Bank had as of Dec. 31. This is a significant amount of money, and it's important that customers receive their deposits promptly and efficiently.
Interestingly, Coinbase, Celsius, and Paxos are three crypto firms that have recently confirmed having some exposure to Signature Bank. This highlights the interconnectedness of the crypto industry and the importance of transparency and accountability in financial transactions.
Overall, it's crucial that all parties involved in this transaction work together to ensure a smooth and fair transfer of deposits to customers. This will help to maintain trust and confidence in the digital banking industry and promote a healthy and sustainable financial ecosystem.
According to a report from Reuters last week, two sources suggested that any potential buyer of Signature Bridge Bank would be required to divest their crypto activities as part of a rescue plan. However, an FDIC spokesperson denied this claim, stating that the agency did not require crypto divestment as part of any sale. Despite this, Castle Island Ventures partner Nic Carter believes that the latest announcement proves that the FDIC was not truthful in its response to Reuters.
The FDIC took over Signature Bridge Bank on March 12 after the New York Department of Financial Services closed the bank and appointed the FDIC as its receiver. This takeover has raised questions about the future of the bank's crypto activities, with some speculating that the FDIC may force a divestment of these assets. While the FDIC has denied this claim, the situation remains uncertain, and many are watching closely to see how it will unfold.
Also, read - Russian Crypto Industry Seeks Clarity on Proposed Criminal Liability for "Gray" Miners
