According to reports, the U.S. Federal Deposit Insurance Corporation has asked potential rescuers for some failed banks in America not to support cryptocurrency-based services. According to Reuters, FDIC regulators asked banks that are interested in purchasing failed lending institutions such as Silicon Valley Bank and Signature Bank to submit their bids no later than March 17th.
According to sources, the U.S. authority will be accepting bids from banks that have an existing charter. This prioritizes traditional lenders over private-equity companies. The FDIC intends to sell Signature Bank and Silicon Valley Bank as a whole, although offers for a portion of the banks may be accepted if no whole purchase offers are submitted. Signature Bank’s purchaser must also agree to stop all crypto-related transactions at the bank, according to the FDIC.
Signature Bank has long been known for being very crypto-friendly. The bank is well-known for its partnerships within the cryptocurrency industry, having provided financial services to companies such as Coinbase, Paxos Trust, BitGo, and the now-bankrupt Celsius.
This report came just after United States Representative Tom Emmer penned a letter to the FDIC expressing his concern that the government has been weaponizing problems within the banking industry in an effort to attack crypto. In his letter, he said the following:
“These actions to weaponize recent instability in the banking sector, catalyzed by catastrophic government spending and unprecedented interest rate hikes, are deeply inappropriate and could lead to broader financial instability.”
On March 12th, New York’s Department of Financial Services closed Signature Bank, appointing the receiver as the FDIC. The FDIC then transferred Signature Bank’s deposits and the vast majority of its assets over to Signature Bridge Bank in an effort to protect customers. Signature Bridge Bank will be managed by the FDIC while it markets the financial institution to prospective buyers.
Barney Frank, an ex-member of the United States House of Representatives, has claimed that regulators shut down Signature Bank despite there being no true insolvency. Frank suggested that the action was meant to exercise force over the cryptocurrency industry and to send a “very powerful anti-crypto message.”
However, the FDIC has recently stated that it has not prohibited or discouraged banks from offering services that were of “any specific class or type, as permitted by law or regulation” to customers.
Several reports have indicated that Signature Bank’s CEO Joseph DePaolo and CFO Stephen Wyremski may have committed fraud by stating that the bank was “financially sound” a mere three days before it was officially closed. The bank is also being investigated for potentially laundering money.