The Federal Deposit Insurance Corporation (FDIC) has announced that it is seeking bids for the shuttered Signature Bank, media reports said. This comes follows the recent closure of two other crypto-friendly banks, Silvergate Bank and Silicon Valley Bank.
Interestingly, any potential buyer of Signature Bank will have to agree to a major caveat: no crypto. This decision was reportedly made due to the bank’s crypto clients accounting for a quarter of the deposited money and its alleged involvement in potential money laundering practices.
It has been reported that Signature Bank is being investigated by the U.S. Securities & Exchange Commission (SEC) and the Department of Justice (DOJ) for inadequate monitoring practices that could have facilitated money laundering.
In February, a lawsuit was registered as a class action against the bank, claiming it was aware of and assisted in the “notorious FTX fraud.”
The failure of these three cryptocurrency-friendly banks has raised concerns that regulators may be working to choke off the crypto sector from the banking system. Brian Brooks, who previously served as the acting Comptroller of the Currency and CEO of Binance.US at one point and Signature Bank panel member Barney Frank have both suggested that there may be an anti-crypto intention behind these closures.
However, NYDFS has not accepted any connection between crypto and the decision to close Signature Bank. Instead, the NYDFS has cited a “lack of confidence” in the bank’s leadership as the reason for its closure.
According to Reuters, bids for Signature Bank are due by March 17. It remains to be present what the future holds for the bank and its former clients in the crypto industry, but the decision to ban crypto could potentially make it less attractive to potential buyers. It also highlights the ongoing tensions between the traditional banking system and the rapidly evolving crypto industry.