The US Federal Deposit Insurance Corporation (FDIC) has asked would-be rescuers of some failing US banks not to support any cryptocurrency services.
FDIC regulators have asked banks interested in acquiring failed US lenders such as Silicon Valley Bank (SVB) and Signature Bank to submit offers by March 17, reported Reuters.
The authority will only accept offers from banks with an existing bank charter, giving priority to traditional lenders over private equity firms, the report notes, citing two sources familiar with the matter. The FDIC’s goal is to sell the entire business of SVB and Signature, although offers by parts of the banks could be considered if the sale of the entire company does not take place.
The FDIC has also required any buyer of Signature to agree to relinquish all of the bank’s cryptocurrency business.
New York-based Signature is one of the leading crypto-friendly banks in the United States. The bank is known for its many partnerships in the cryptocurrency industry, serving companies such as exchange Coinbase, stablecoin issuer Paxos Trust, crypto custodian BitGo, and bankrupt cryptocurrency lender Celsius, among others.
The news comes amid a letter sent by US Representative Tom Emmer to the FDIC, expressing concern that the federal government is “weaponizing” trouble around the banking industry to go after cryptocurrencies. .
“These moves to weaponize recent instability in the banking sector, catalyzed by catastrophic government spending and unprecedented interest rate hikes, are profoundly inappropriate and could lead to broader financial instability,” Emmer said. in the letter to FDIC Chairman Martin Gruenberg.
Today, I sent a letter to FDIC Chairman Gruenberg regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legal crypto activity from the US pic.twitter.com/fDmaA0XGWv
— Tom Emmer (@GOPMajorityWhip) March 15, 2023
Today, I have sent a letter to FDIC Chairman Gruenberg regarding reports that the FDIC is weaponizing recent instability in the banking sector to purge legal cryptocurrency activity from the US.
The New York State Department of Financial Services officially closed and took over Signature on March 12, naming the FDIC as receiver. To protect depositors, the FDIC transferred all deposits and most of Signature Bank’s assets to Signature Bridge Bank, a full-service bank that will be managed by the FDIC as it markets the entity to potential bidders.
According to Barney Frank, a former member of the US House of Representatives, New York regulators closed Signature Bank despite not being insolvent. Frank speculated that the move was to demonstrate strength over the crypto industry, being a “very strong anti-crypto message.” However, the FDIC in January said it did not prohibit or discourage banking organizations from providing banking services to customers of “any specific class or type, as permitted by law or regulation.”
Subsequent reports suggested that Signature CEO Joseph DePaolo and Chief Financial Officer Stephen Wyremski allegedly committed fraud by falsely claiming that the bank was “financially strong” just three days before it closed. The bank has also been investigated for alleged money laundering.
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