As of today, the Forty branches of crypto-related financial institution Signature Bank will no longer be addressed as “Signature Bank” but as Flagstar Bank after a change in ownership.
According to the United States Federal Deposit Insurance Corporation (FDIC), Signature Bank’s deposits and loans excluding crypto assets are set to be acquired by a subsidiary of the New York Community Bancorp, Flagstar Bank.
The acquisition deal was inked on 19th March and based on the terms of the “purchase and assumption agreement,” Flagstar Bank will take over $38.4 billion worth of deposits which are non-cryptocurrency-related, and $12.9 billion in loans.
This would mean that Signature Bank depositors; apart from its digital banking customers, will now become depositors of Flagstar Bank.
FDIC Remains Responsible for Crypto Depositors
Meanwhile, the FDIC will be responsible for providing digital banking services directly to the other depositors whose $4 billion deposit Flagstar did not bid for. These digital banking customers’ deposits represent only 4.5% of the total deposits held in Signature Bank by December 31st which is almost three months before its collapse.
“The FDIC will provide these deposits directly to customers whose accounts are associated with the digital banking business.”
American cryptocurrency exchange Coinbase, Binance USD (BUSD) issuer Paxos and defunct crypto lender Celsius Network which already announced their exposure to Signature Bank will fall into this category. Also, the non-cryptocurrency-related depositors and their deposits will continue to be insured by the U.S. top regulator up to the $250,000 insurance limit.
The partial acquisition of Signature deposits by Flagstar seems to align with information from two sources who claimed that the FDIC suggested that any buyer of the former would have to relinquish the crypto businesses.
In response to this accusation, an FDIC spokesperson denied that the regulator made such a suggestion while also citing a prior statement by FDIC chairman Martin Gruenberg clarifying that the agency has no plans of halting any particular activity carried out by banks.
Silvergate Bank, another crypto-friendly bank has equally liquidated its assets and shut down its operation owing to the market pressures and the instability in the U.S. financial sector.
