- The FDIC is looking for bidders for Silicon Valley Bank and Signature Bank.
- One of the main conditions for the regulator is to stop any crypto work from Signature Bank.
- US regulators have been hard on crypto companies, as these companies have to deal with a lack of banking options and more regulator intervention.
As the dust settles after the collapse of Silvergate, Signature and Silicon Valley Bank, US regulators are looking for buyers to snap up parts of collapsed institutions.
The US Federal Deposit Insurance Corporation (FDIC) has asked banks interested in acquiring Silicon Valley Bank and Signature Bank to submit their bids by Friday, March 17. ReutersThere is a caveat behind buying a signature.
“Any buyer of Signature must agree to give up all the crypto business at the bank,” two sources revealed.
While all three of these financial institutions have been known to serve the crypto industry, Signature has had partnerships in the crypto industry with major companies such as Coinbase, Paxos Trust, BitGo, and bankrupt crypto lender Celsius. At the end of September 2022, nearly a quarter of its deposits came From the cryptocurrency sector.
banking crisis
Signature Bank closed due to a “significant crisis of confidence in the bank’s leadership,” the New York financial regulator He said. The shutdown left a hole in the crypto-banking space, but it also shook confidence in banking, which faced a collapse in 2008.
US President Joe Biden has it He said That the taxpayers would not bear the cost of these failing banks because the government fund would cover any capital shortfall. Undertaking to cover the loss of money from the government is likely to put pressure on innovative fintechs as regulators become more risk averse.
General fear in the banking sector and increased government intervention may raise doubts about the future of startups that have turned to these cryptocurrency-friendly banks for financial services. Crypto companies are in a position where their future in the US is currently up in the air, as offshore jurisdictions look more attractive.
crypto migration
US regulators’ approach to cryptocurrency has turned quite hostile, as has Ripple CEO Brad Garlinghouse. highlighted. The SEC is watching the sector with an iron rod, and a lack of banking options could turn companies into Europe.
.@tweet He was asked, “If the United States does not cooperate…so will all of this [crypto] Go abroad? ”
Me: “It really is.”
I’ve said it before, and I’ll say it again – offshore cryptocurrency is not good for American innovation. period, period. https://t.co/OWz8uoRHrI
– Brad Garlinghouse (@bgarlinghouse) March 2, 2023
on the flip side
- Coinbase held $240 million in Signature when the bank collapsed, but the FDIC Certain That this money will be fully refunded to the users of the exchange.
Why should you bother
Not only did the likes of Coinbase and other major crypto institutions lose several banking partners, but it also appears that regulators at the FDIC are trying to make the future of crypto banking in the US difficult with an ultimatum to new buyers of Signature.
Read more about how the banking collapse affected cryptocurrency:
Major exchanges claim ‘we had no money in Silvergate’.
Read more about preferring Binance TUSD over BUSD:
Binance’s new Flame TUSD secures fee-free BTC trading as BUSD takes the plunge.
