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Crypto Depositors of Signature Bank Face April 5 Deadline for Account Closure

Crypto Depositors of Signature Bank Face April 5 Deadline for Account Closure WikiBit 2023-03-29 15:47

The Federal Deposit Insurance Corporation (FDIC) has urged customers of Signature Bank, a defunct bank that used cryptocurrencies, to close their accounts by April 5 by finding a new bank.

The Federal Deposit Insurance Corporation (FDIC) has asked cryptocurrency clients of collapsed Signature Bank to close their accounts by April 5 by finding another banking partner. Otherwise, the regulator will close the accounts and mail a check to the registered addresses.

Signature Bank's Crypto Clients Get a Deadline

The FDIC's decision on Tuesday came following the acquisition of Signature Bank's deposits and loans by Flagstar Bank, a part of the New York Community Bancorp (NYCB). However, the deal with the FIDC did not include the “approximately $4 billion of deposits related to the former Signature Bank's digital banking business.” In addition, it excluded Signature Bank's blockchain-based real-time payments platform, Signet, which crypto companies extensively use.

“Flagstar's bid did not include about $4 billion in deposits related to Signature's digital-asset business,” a FDIC spokesperson told the media. “Those are the deposits we are encouraging customers to move before April 5. If they have not by that day, we will mail checks to the address on record.”

Which Bank Will Replace Signature Bank?

Signature Bank was one of the few crypto-friendly lenders with major crypto companies as its customers. Following the bank's collapse earlier this month, several crypto companies disclosed their exposure to it. Crypto exchange Coinbase held a deposit of $240 million with the failed bank, while stablecoin issuer Circle had $250 million.

Though the US government rescue plan saved these piles of crypto companies' uninsured deposits with Signature Bank, they now have to deal with another issue. In a business environment where traditional banks are already skeptical of cryptocurrencies, it is unclear which banks these crypto companies are turning to with the pocket load of money.

The New York state regulator, the Department of Financial Services, on March 12 shuttered Signature Bank “to protect depositors.” As the bank's control came under FDIC receivership, the US regulators devised a bailout plan and created a temporary lender to provide depositors access to their funds.

According to the regulators, Signature Bank had total assets of about $110.36 billion and total deposits of around $88.59 billion by the end of 2022. Flagstar Bank acquired all of the deposits, and a part of the loans and took over all 40 branches. FDIC now controls $40 billion of Signature Bank's loan and $4 billion in deposits that were not included in the deal.

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